Home to 18 of the world’s top 25 medical device companies, Ireland is the second largest employer of medtech professionals in Europe. In the first of a three-part series, Irish journalist Gary Finnegan explores how the Emerald Isle built one of the world’s biggest medical technology sectors – from scratch
The history of Ireland’s medical devices sector is short but spectacular. From humble beginnings just a few decades ago, a diverse and innovatory industry has sprung up. So just how did this small European nation learn to punch above its weight in one of the world’s most advanced industries?
‘The story dates back four decades and started with manufacturing,’ says Michael Lohan of Ireland’s Industrial Development Agency (IDA). ‘Early arrivals included Becton Dickinson (BD) and a few others followed. But medtech really took off over the last 15 to 20 years as Ireland began attracting companies that produce very sophisticated devices.’
The jobs created by companies churning out low-end, single-use products in the 1970s and 1980s were very welcome. The country was suffering chronic unemployment and had been struggling to find its place in the modern world. Back then, the talent pool was shallow. Belated investment in education had yet to pay off, and graduates with technical skills were frequently swept up in one of the many waves of emigration that exported young people to the UK, Australia and North America.
Fast forward a generation and all has changed beyond recognition. Third-level education has been free since the 1990s (notwithstanding relatively modest, but much detested, ‘registration fees’) and Ireland is consequently an altogether more modern and outward-looking EU member. To borrow the jargon beloved of ‘policy wonks’, the country has moved up the value chain and is now a location of choice for EMEA (Europe, Middle East and Africa) service departments, research and development, and high-end manufacturing of invasive devices.
Today, 80 per cent of the world’s cardiovascular stents are manufactured in Ireland. The combined output of several big-name producers – including Johnson & Johnson and Bausch+Lomb – export one third of all contact lenses sold in global markets, and around one quarter of diabetes patients rely on products manufactured in the Republic.
Most of the 400 medtech companies that call Ireland home are engaged in R&D, often plugged into the tertiary education sector, and an ecosystem of indigenous companies has sprung up to serve one of the country’s biggest industries.
For many, the short answer to how Ireland pulled off this medtech coup is ‘tax’. Successive Irish governments have stepped up to defend the corporate tax rate which, at 12.5 per cent, is occasionally a source of controversy at home and abroad.
The official response in Ireland is that the tax rate is low but transparent. It is not the lowest in the EU, and some countries with higher headline tax rates offer various tax breaks and incentives in pursuit of foreign direct investment. Translation: everyone is throwing sweeties at multinationals in return for job creation and the other taxes that inevitably flow from employment.
But for Lohan and his team at the Irish Industrial Development Agency, while tax helps to pique the interest of investors and executive, you still need a much more rounded package to back up the competitive tax rate.
‘There’s no doubt that tax plays a part but you also need to have talent and to be competitive – companies wouldn’t invest and reinvest purely for tax reasons,’ he believes. He says that the companies setting up shop in Ireland also see it as an English-speaking gateway to Europe.
For Ireland, the medtech boom followed an earlier influx of big pharma companies – Pfizer’s plant in Cork has produced billions of euros’ worth of Viagra and much more besides. And the knowledge and expertise gained by local firms providing support services to the medicines sector has benefited growing medtech firms.
Ireland has built up a pool of engineers that can design production sites, regulatory professionals that understand Food and Drug Administration (FDA) and European Medicines Agency (EMA) compliance, and marketing experts with an eye for global markets. This, says Lohan, explains why Ireland is a magnet for continuous medtech investment. The country won 33 per cent of all medtech investment last year and is intent on building on this position.
For Enterprise Ireland, a government agency responsible for helping Irish companies grow in world markets, the influx of foreign medtech firms has been a welcome boost for home-grown firms. Tom Kelly, a senior executive at Enterprise Ireland, says the sector has continually gained momentum over the past two decades.
‘The arrival of multinationals has given rise to a wider ecosystem of Irish sub-suppliers,’ he explains. ‘We are increasingly seeing a trend towards local companies working as co-developers with big medtech firms.’
Foreign investment has led to a growth in expertise and know-how, which in turn has made Ireland attractive to further investment. ‘There have been encouraging developments on the investor side with more specialist venture capital funds available to support good products and strong collaboration with universities,’ says Kelly.
The latest explosion in technology firms investing in Ireland – from chip-maker Intel to internet giants like Google, Facebook and Twitter – also sets Ireland up as a hub for companies interested in Big Data and mHealth. Anyone who attended the MedTech Forum in Brussels late last year will recall much discussion on the convergence between established medtech companies and disruptive technologies emerging from the communications technology sector.
‘We have to be alive to the changes taking place in the industry,’ says Kelly, noting that Ireland’s strength in pharma and medtech has made it a natural place to develop drug-device products such as drug-eluting stents.
And the convergence of IT and production – the so-called Industry 4.0 – is set to transform manufacturing. Whoever embraces this industrial revolution best will have a great chance of being a world leader in medtech.
Ireland has more than 300 medical device companies, employing more than 25,000 people, and 90 per cent of companies in this sector are SMEs.
Looking ahead, Ireland is putting its best foot forward in a bid to protect its reputation as a healthcare hotspot. In January, the government announced a €5 million investment in Health Innovation Hub Ireland at University College Cork. The initiative is designed to deepen links between the Irish health service and vital new technologies.
‘Ireland’s strengths in ICT combine well with expertise in traditional healthcare and medical technology, and many of our indigenous medtech businesses are leading international players in their areas of specialist expertise,’ says Julie Sinnamon, CEO of Enterprise Ireland.
For its part, the Irish Medical Devices Association (IMDA) published a new 2020 Strategy in February this year. Its plan is bold: to make Ireland the ‘Global Medtech Hub’. The plan focuses on growing in areas where Ireland is strong, ensuring companies can access the skills they need and, of course, bringing the fruits of medtech innovation to patients.
‘Ireland’s medtech sector is diverse and can offer people rewarding careers developing and producing life-saving technology,’ says IMDA Director Sinéad Keogh. ‘Programmes such as the IMDA Skillnet have proven to be successful in giving people the skills they need to start new careers, with 4,000 people trained to date. Manufacturing is the second largest employer in Ireland after services, and IMDA is delighted to have successfully gained approval for two major new apprenticeships for technicians and engineers.’
Keogh flags ‘connected health’ as an area that can create jobs and take the pressure off overburdened healthcare systems. ‘These innovations require more, dedicated investment in R&D. However, with all of the top 10 global technology companies having bases in Ireland, we are uniquely placed to become a leader in this emerging area. The IMDA will step up its activities to support collaboration between industries such as ICT to drive innovation among Irish businesses.’
Cook Medical was in the vanguard of US companies that poured into Ireland in the 1990s. The firm now manufactures stents and biopsy needles at its plant near the University of Limerick.
The mix of government support, the availability of skills and cultural proximity to the US were part of the attraction. ‘There was an easy link between the US team and the site in Ireland,’ says Alice O’Dwyer, Vice President for HR at the Cook Group Europe. The original plan was to have a manufacturing facility staffed by 150 people. Today, more than 20 years since the company landed in Limerick, there are more than 800 people on site, and the Irish team is responsible for a sales force of 620 in 16 European countries.
‘We saw a need to streamline our services in Europe and brought a lot of shared services to Ireland,’ explains O’Dwyer. ‘This made the company more efficient, and the Irish-based European operation has become a global model for Cook as we expand into Asia and other regions.’ O’Dwyer has been with the company for 18 years. ‘Over that time we have expanded radically in R&D and taken responsibilities for various global marketing and customer service functions,’ she says.
The company now has more than 50 engineers and scientists in Ireland and is home to several key global marketing roles. Cook’s innovation centre is a hive of activity where doctors from across the region can come to test products and work with designers.
Looking ahead, O’Dwyer sees scope for further growth of the Irish operation as a centre for global support services. Cook is also building on existing links with the local university and backing initiatives to encourage students to study science and engineering – in order to shore up the supply of future graduates.
‘I see the future as being good for Cook here. There’s lots of talent in Ireland that we can tap into. The corporation has great confidence in the work we have done. We’re looked at as leaders in key areas for Cook.’
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