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Life science companies benefit from the ‘cluster effect’

Through knowledge-sharing and collaboration, clusters create a pipeline for new products and technology to provide significant value to the industry

Abbott Nutrition Supply Chain Facility, Sligo, winners of the 2018 Shingo Prize.

Abbott Nutrition Supply Chain Facility, Sligo, winners of the 2018 Shingo Prize.


Clusters are a geographical concentration of related businesses that arise because they raise a company’s productivity, influenced by location and the presence of similar organisations, universities and research centres, and the infrastructure that surrounds it.

Globally, the economy is being characterised by ‘clusters’ and this is also the case for the Irish life sciences economy, with historical clusters in Dublin, Cork and Galway being augmented by increasing concentrations of life sciences organisation in Limerick and elsewhere.

With more than €45 billion in revenue annually and six of the seven diagnostic operational sites being based here, Ireland provides a world-class life sciences landscape, hosting a cluster of pharmaceutical, bio-pharmaceutical and medical devices companies, Tim Cotter, associate director of business consulting at Grant Thornton, says.

“This cluster effect creates opportunities to collaborate and share research between organisations and healthcare developments boost the regional and national economy.

“Through a well-managed programme and extensive collaboration, clusters create a pipeline for new products, technology, new business models and talent recruitment to provide significant value to the industry,” he says.

Dermot O’Neill from Cobotics Skillnet also sits on the Executive Advisory Board of the Shingo Prize, which is often called the Nobel for manufacturing. He says Ireland has the highest number of Shingo accreditations per capita in the world, and much of that is down to knowledge-sharing, he says.

“I’ve been involved in the Shingo prize since 2003 and a lot of those companies with accreditations are medical device companies. A lot of companies from outside of Ireland ask why Ireland has so many accreditations and the reason, whether it’s to do with Ireland as storytellers, or the culture, but we are very good at knowledge-sharing, even with competitors.

“That does not happen and I have not seen that in any other jurisdiction I have worked with over the last 30 years. That’s a critical part of the cluster effect and there is no point in having it if there isn’t sharing of knowledge,” he says.

Lake Regent Medical, which holds the Shingo bronze medal for 2013, shared its knowledge with other companies after winning the prize and 10 of those companies have been accredited since. O’Neill says there is no coincidence in that.

Lake Region Medical shared knowledge with the second company and the second company shared with the third. This is not the Coca Cola recipe they are looking for but IP stuff – management of the systems and people management,” he says.


Benefits of this cluster effect include: collaboration, companies remaining in Ireland, advanced and personalised medicine, R&D and innovation.

In terms of collaboration, Cotter says these cluster initiatives have been fuelled in part by EU policy and targeted funding programmes to promote economic development through clusters of regional specialisation. The impact of bodies like Enterprise Ireland, the IDA and Science Foundation Ireland (SFI) has led to a ‘cluster effect’ through major investment in infrastructure and research partnerships between academic and industrial researchers.

“For example, Pfizer is collaborating with SFI to promote new bio-therapeutic breakthroughs in Ireland through academic-industry collaboration. The agreement will develop novel drug-targeting ideas by providing researchers with access to Pfizer’s drug discovery platforms and expertise in addition to accessing appropriate tools and molecules,” he says.

We are also on the cusp of an age of enormous potential for personalised medicine to save and improve lives. However, there are a number of significant challenges to the integration of personalised medicine into healthcare practices, Cotter says.

“Personalised medicine is a highly complex field, and no single organisation or industry possesses all the resources, knowledge and tools needed to implement solutions in this space. Therefore, the importance of the cluster effect to facilitate cross-industry collaboration cannot be understated,” he says.

So while competition is fierce from countries around the world bidding to attract significant investment from global life sciences companies, what can we do to attract more?

“While many commentators cite Ireland’s corporation tax rate as a determining factor for attracting such investment, this selling point is rapidly being diluted into a hygienic factor as medicines and technology rapidly advance and increase in complexity.

“As manufacturing becomes increasingly automated, research, development and innovation offers Ireland a unique opportunity to build on the strength of our clusters. A collaborative environment with a steady supply of skills and expertise to meet industry needs coupled with a business environment that is fair and conducive to the IP needs of the sector are where Ireland’s competitive advantage could lie,” Cotter says.