Biotech throws Ireland a valuable lifeline

The “double Irish” is dead, long live biotech. Exactly one month after the Government embarked on a contentious overhaul of the corporate tax regime, a big new Bristol-Myers Squibb (BMS) project in Dublin suggests talk of Ireland’s demise as location for foreign investment is overdone.

BMS will invest $900 million (€720 million) in its new Blanchardstown plant, creating 1,000 jobs in the construction phase and 400 posts for scientists, engineers and other denizens of the lab. The initiative brings to $3 billion the total amount pledged in two years for Irish biotech investments by an assortment of large firms. From a standing start ten years ago, when there was but one biotech site here, the total up and running or in planning is now 19.

When IDA Ireland resolved many years ago to move up the value chain, this is what they meant. The basic strategy is to follow medical advances forged in biotechnology, as the treatment of serious disease moves on from chemistry-based drugs.

From an investment perspective, the advantages are clear. Biotechnology is a specialised arena, in which skilled professionals are required to operate sophisticated industrial systems. The combination of high upfront costs and heavy regulation means that projects in the sector tend to be “sticky”, or less susceptible to a sudden corporate fiat to move manufacturing to a cheaper location.

The BMS deal was in gestation for more than a year, so the argument over elimination of the “double Irish” and its trappings did not deter the company.

The Irish investment is all about substance, hence the warm Government embrace and a meeting in New York between Taoiseach Enda Kenny and BMS chief executive Lamberto Andreotti. At a time of international pressure over Ireland’s tax arrangements, it all fits in with the narrative that there’s rather a lot more going on here than tax planning.

For all that, BMS is not immune to the practice. Following on from the “Luxleaks” disclosures, it is shown today to have a €22.7 billion subsidiary in Luxembourg which has a branch in Swords with one part-time employee.