Decision is only a surprise because company and Minister dismissed the idea, writes Dominic Coyle
The decision of biotechnology giant Amgen to pull the plug on the €800 million plant under construction in Carrigtwohill came as a surprise only because of the series of robust denials on several occasions by both the company and the Governemnt of any intention to pursue such a course.
As recently as August, a spokeswoman for Amgen said the US group's decision to cut 2,600 jobs globally would not affect its Irish operations in Cork.
Before the general election, Micheál Martin, the Minister for Enterprise, Trade and Employment, hit out at "outrageous" rumours that the plant was in trouble after its opening was deferred for two years.
The world's largest biotechnology company has been embattled for months following publication of studies, including one conducted by Amgen itself, showing that its highly successful anaemia drugs Aransep and Epogen could be harmful in higher doses - increasing the danger of heart attacks, strokes and death.
Doctors have cut back on the drugs following a warning in March from the US regulator, the Food and Drug Administration (FDA). Subsequently, US health insurer Medicare and others restricted conditions under which it would reimburse for the drugs' use.
Last week, regulators in Europe indicated they were minded to follow suit by imposing tighter prescribing guidelines. Sales of Aransep, Amgen's top-selling drug which, along with Epogen, accounted for 48 per cent of its $13.86 billion in product sales last year, dropped 19 per cent in the second quarter.
A better indication of the impact of the regulatory and insurance clampdown on the drugs will emerge with third-quarter figures, which are due later this month.
The company's shares are 18 per cent below their end-2006 level, having fallen as much as 28 per cent at one point. In mid-August, Amgen announced it would cut jobs for the first time in its 27-year history as well as close plants and cut back on capital spending.
When Ireland originally beat off competition from Singapore and Switzerland to win the Amgen deal back in January 2006, the investment was seen as a coup for IDA Ireland, which had been targeting landmark biotechnology projects.
Yesterday, the "indefinite postponement" of the project was greeted with resignation.
The Minister said he was "personally very disappointed" by the decision. "That said, it is a very volatile industry and the company has been very clear that it is a consequence of the company's own problems."
While the current project appears doomed, at least it is not being lost to a rival jurisdiction. On this occasion, the loss of the Irish plant is seen as collateral damage in a broader companywide issue rather than any loss of competitiveness by Ireland Inc.
The decision by Amgen to retain the site at Carrigtwohill leaves open the possibility that something can be retrieved later.
"Amgen was fantastic to get but it is not the only such investment," said Barry O'Leary, divisional manager for pharmaceuticals at IDA Ireland, pointing to recent investments by Centocor, Genzyme, Eli Lilly and Wyeth, whose €1.8 billion Grange Castle is one of the largest biopharma operations in the world.
"We still expect to win a significant portion of future investment in biopharmaceuticals, which is a growing area," he said.
Amgen: an on-off saga
January 24th, 2006: The Minister for Enterprise, Trade and Employment, Micheál Martin, announces that the largest biotechnology company in the world, Amgen, is to invest more than $1 billion in a plant at Carrigtwohill in Co Cork that will employ 1,100 people by 2010. "This is a landmark decision and one which is welcomed not just by Cork but by all of Ireland."
April 3rd, 2007: Amgen announces that following a global review of business needs, it has been decided to reschedule the opening of the bulk manufacturing plant and the plant will not now go into production until 2012.
June 28th: Mr Martin offers reassurance after meeting the Amgen executives that the company is committed to the Cork project, despite laying off some staff at the site at Carrigtwohill.
"I met with key people in Amgen like Fabrizio Bonanni [ senior vice-president, manufacturing] and they were adamant to me, eyeball to eyeball, that they were going to deliver this project with the jobs that were announced but that there was a delay of two years."
August 15th: Amgen announces it is to cut up to between 12 and 14 per cent of its workforce, amounting to about 2,200 to 2,600 job cuts but a spokeswoman says the job cuts relate to the US and will not have any effect on Irish operations.
September 11th: Mr Martin, speaking in Midleton, moves again to offer reassurance. "Amgen reiterated its commitment to Cork and the IDA continue to work with the company. The position has not changed - the company stands over its commitments to the plans for Cork."
October 3rd: Amgen announces that following an updated review of its business plans, the company has decided to postpone indefinitely its planned design of the Carrigtwohill site.
Compiled by Barry Roche