People the most important factor in attracting R&D activity

Talent, tax and the environment for doing business remain the key ingredients underpinning Ireland's performance as a key location of R&D activity, according to KPMG partner Damien Flanagan. "It won't come as news to anyone, but the most important factors are access to the right people and skills," he says. "If you don't have them, you won't attract R&D centres to Ireland. We have been good at that and we have a good talent pool. The global leaders in medtech and pharma and so on are all here and we have quite a good skillset nationally in those areas."

But there are areas to address. “We know that the universities have slipped on the world rankings,” Flanagan adds. “That’s never a good thing and it’s something to be mindful of if we are looking to attract the brightest and the best. It is something to address.”

The business environment is also key. "Multinational companies don't invest for the short term," he notes. "Having confidence in the stability of the environment and that the incentives will continue to be on offer is important. We have clients who are competing globally for R&D projects. They have to put a business case to the internal decision-makers on why the project should come to Ireland. The business environment and the cost of doing business are very important factors. Incentives such as the R&D tax credit and the Knowledge Development Box as well as IDA and Enterprise Ireland support affect that.

“They need to be able to bank on Ireland as a long-term bet and they need the business case to stand up for three, five, or 10 years into the future,” he adds.

Science Foundation Ireland director general Prof Mark Ferguson agrees. "The most important is factor is people," he says. We have to make sure that we attract and retain and grow outstanding people. We want the best researchers, entrepreneurs and innovators. We must maintain a continuous focus on getting the very best."

Equipment, including buildings, is also important. “That’s going quite well and there is EIB finance available to Irish companies who wish to invest in equipment and facilities,” Ferguson adds. “But it is a neverending saga – state-of-the-art today is antique in two or three years’ time. We need to be very efficient in how we use equipment. When we fund equipment, we make sure to give access to it to both researchers and industry.”

Collaboration

That collaboration between research and industry is another factor. “We are doing well there,” says Ferguson. “About 50 per cent of IDA clients are collaborating with the public research base. That’s very good but it means we still have 50 per cent to go. It’s a similar story with the Irish industry base; it’s going in the right direction.”

Enterprise Ireland divisional manager for research and innovation Gearoid Mooney says there are two ways to look at it – the internal capacity in companies to do R&D and the external environment in which they operate. “It is clear to us that companies that do it will not only do better but survive and thrive in dangerous business times,” he says. “Enterprise Ireland has a lot of offers to help companies develop R&D capacity for themselves.”

On the external environment, he says Ireland’s geographic position can help. “Because Ireland is an island off another island off the coast of Europe there are advantages in being close to everything. The challenge is to keep up internationally and tap into the best of what’s happening.”

Enterprise Ireland assists with that through supporting companies to access the EU Horizon 2020 research and innovation programme.

Stephen Creaner is executive director of food, industrial, life sciences and innovation with Enterprise Ireland. He points out that Irish companies are performing very strongly in comparison to their internationally owned peers when it comes to R&D.

“Anecdotally, when you look at SMEs and FDI companies in Ireland, there are roughly the same number of PhD students employed in the two,” he says. “These people are employed in R&D activity. There tends to be a presumption that FDI accounts for the majority of R&D activity but that is because those companies are engaged in larger projects. Taking larger companies out of the mix paints a different picture where the level of activity is slightly greater in the SME sector. Most people think that FDI is so far ahead but that’s only in dollars. There is no real difference in activity on the ground.”

Funding

Funding is a key factor in that performance. “Funding is always going to be important,” says Mooney. “It helps de-risk projects. We have to have the right mix of schemes to support R&D activity and we are constantly course-correcting to take account of changes in the environment. The other piece is the R&D mindset. We are encouraging companies to have an R&D champion in their organisation.”

Companies can use the Enterprise Ireland Key Manager grant, which offers up to 50 per cent of a senior executive’s salary for two years for this. “It’s not just about hiring a chief finance officer or marketing director,” says Mooney. “Companies should think about it in terms of chief technology officer who would become a champion for R&D.”

The R&D tax credit remains crucially important for the future, Flanagan contends. "The Department of Finance is carrying out a review of the tax credit at present and there are some indications that they are considering increasing support for SMEs. We would be very supportive of that, but multinationals shouldn't be left behind. Improvements for SMEs shouldn't be made at the expense of any other sector. At a time when other countries in Europe are looking at introducing similar incentives, it is particularly important that we ensure ours remains best-in-class internationally."