Inside the world of business
Amgen announcement a fillip for Government
THE ANNOUNCEMENT yesterday that US biotech giant Amgen has taken control of Pfizer’s Dún Laoghaire facility was a timely fillip for the new Government. Just 10 months ago, the 280 staff working at Pottery road thought their jobs were gone as the plant – in operation since 1971 – was slated for closure despite a major upgrade just a couple of years earlier.
Now, with the new Government just two days in office, the arrival of the world’s largest biotechnology company is a statement of delivery on the first instalment of the administration’s determination to focus on jobs growth. The fact that it came in the constituency of Labour leader and Tánaiste Eamon Gilmore made it only more welcome.
Of course, the confirmation of the deal is hardly a surprise. It had been mooted strongly some time ago and there was a strong feeling that the timing of the announcement had been choreographed to coincide with the change of government.
The fact that it also pointed out the failures of the previous administration – Amgen’s initial plan to establish a $1 billion operation in Carrigtwohill back in 2006 was hailed as a landmark achievement by the then minister – made the news only sweeter to Enda Kenny’s new officer corps.
Leaving aside the machinations around the timing of the deal, there is no doubt that it is a major success for Ireland, and for IDA Ireland which had been assiduously courting the group for many years. Amgen is the major player in the biopharma sector which is expected to trump the more traditional pharma businesses on which Ireland built much of its export success in a previous era.
Ireland is now home to most of the leading biopharma firms and the arrival of Amgen in the depth of our recession allows IDA Ireland to make its annual St Patrick’s Day pilgrimage to the United States next week with increased confidence.
This is all the more important as Sanofi-Aventis digests its recent acquisition of Genzyme and mulls that company’s future in Ireland. Genzyme has a large plant in Waterford but its new French parent has never been heavily involved here. Amgen’s presence may boost the IDA’s chances of retaining the Waterford investment.
Yesterday’s announcement signals that, for all our woes, Ireland is still a serious player when it comes to attracting foreign direct investment in the key business sectors that are likely to dominate over the coming years. The prospect of expansion by the company – alluded to yesterday in the statement of senior vice-president for manufacturing Madhu Balachandran – in the coming years is also welcome.
Tough love is what is needed in stress tests
THE IMMINENCE of the Central Banks latest capital and liquidity reviews has meant that Irish interest in the upcoming European banking stress tests has been somewhat academic.
The results of the Prudential Capital Assessment Review (PCAR) and the Prudential Liquidity Assessment Review (PLAR) should be known by the end of the month.
The European tests, which are being carried out by the European Banking Authority (EBA) will not be published until June.
But it would be a mistake to dismiss the European tests as irrelevant in the Irish context and likewise the debate currently going on about exactly how stringent they should be.
The EBA is currently briefing to the effect that this year’s test will be far tougher than last year’s which gave the thumbs up to most of the 91 banks involved, including AIB and Bank of Ireland.
The subsequent need to recapitalise the Irish banks within months undermined the credibility of the entire process. The view in the market is that more banks will have to fail this year if the test is to have the desired effect of reassuring the market that the European banking system is fundamentally robust.
Whilst this may be in the interest of Europe as a whole, it will be bad news for the countries whose banks fail the tests as they will have to be swiftly recapitalised, overcapitalised probably. That will create its own problems as Ireland knows all too well.
Hence the behind the scenes horse trading going on in Europe about tests. It is clearly in Ireland’s interest that the test be as tough as possible and at least as tough as the ones being carried out by the Irish regulator.
Not only should this bring a bit of much needed perspective to the Irish banking crisis, it should push Europe closer to the inevitable solution. It is becoming clear that the Irish banking problem is part of a wider European systemic issue which has been brushed under the carpet. Once it is out in the open a systemic solution with the “burden sharing” that will entail can be implemented.
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