In the post-Brexit climate, Ireland’s position as an English speaking gateway to one of the world’s largest markets will be even more significant than in the past. Given Ireland’s proximity to one of the world’s largest markets, it is plausible that life sciences and medtech companies may move or plan to move some or all of their operations or business lines to Ireland in order to retain access to the European market.
Ireland’s existing infrastructure for life sciences and medtech companies bolsters this attraction. Ireland is already the largest net exporter of pharmaceuticals in the world. 18 of the world’s top 20 pharmaceutical companies have substantial operations in Ireland and 6 of the world’s top 10 selling pharmaceutical products are exclusively produced here. Ireland has also one of Europe’s leading medtech sectors, with 13 of the world’s top 15 medtech companies having operations here. A central feature of the evolution and growth in this sector is the productive collaboration between industry, academia and government agencies, which facilitates the ease by which life sciences companies can do business in and from Ireland.
Establishment / Start up
IDA Ireland is the Irish Government enterprise agency responsible for securing foreign direct investment for Ireland. Enterprise Ireland is the Irish government agency responsible for the development and promotion of Irish enterprise. These bodies provide significant support programmes for life sciences companies seeking to establish operations in Ireland.
Enterprise Ireland’s ‘High Potential Start-Up’ team provides hands-on support and advice to entrepreneurs and early stage companies that are considered by Enterprise Ireland to have an innovative product, service or technology, and have the potential to achieve international sales and create employment. It also operates a national incubation programme, called the ‘New Frontiers Entrepreneur Development Programme’ which offers a package of supports to help accelerate business growth and equip individuals with the skills to start and grow their company.
InterTradeIreland, a cross-border trade and business development body jointly funded by the Irish and Northern Ireland governments, runs a programme called ‘Elevate’ to assist with sales development by providing financial or mentoring assistance to help identify cross-border markets or customers, and win new business throughout Ireland and Northern Ireland. On a broader scale, the Enterprise Europe Network assists SMEs who are looking for EU programmes and supports. It organises international brokerage events and provides a central database for SMEs to offer, or search for, business opportunities, technology transfer and licensing deals in the EU and in many other countries.
There are a number of funding supports available for life science companies establishing in Ireland and conducting business in and from Ireland. For example, InterTradeIreland provides funding advice for early stage companies and established businesses giving companies the opportunity to meet with a corporate finance expert to discuss their funding requirements and consider how new funding can help their business grow. InterTradeIreland also operates a programme called ‘Acumen’, which assists companies grow their business on an all-island basis by targeting new cross-border markets and providing funding for market research or hiring sales staff.
The Dublin Business Innovation Centre runs the ‘Halo Business Angel Network’ which connects private investors with investment opportunities in start-up or early stage companies. Enterprise Ireland also operates a ‘Competitive Start Fund’ which operates to accelerate the growth of start-up companies that have the capability to succeed in global markets and the ‘Innovative HPSU Fund (Equity)’ which offers equity investment to high potential start-up clients to support the implementation of company business plans.
Finance and Tax Incentives
In addition to the attractive low Irish corporation tax rate of 12.5%, there are a number of further Irish tax incentives for emerging and existing life sciences companies in Ireland, including:
- a 25% tax credit for qualifying R&D expenditure carried on within the EEA. This tax credit is in addition to the normal business deduction for such R&D expenditure (at the 12.5% rate), thus incentivising expenditure on R&D at an effective rate of 37.5%. These credits may also be surrendered to key employees actively involved in R&D activities, thereby reducing the effective rate of Irish income tax for such employees.
- a best in class ‘knowledge development box’ which complies with the OECD’s ‘modified nexus’ standard. This incentive reduces the rate of Irish corporation tax to 6.25% for profits derived from certain IP assets, where qualifying R&D activity is carried on in Ireland. This incentive can also be claimed in conjunction with the R&D tax credit.
- tax depreciation for certain intangible assets. Such assets can be ‘amortised’ for Irish corporation tax purposes in line with their accounting treatment or alternatively on a straight basis over 15 years.
- the Employment and Investment Incentive (EII) and Start-up Refunds for Entrepreneurs (SURE) schemes which allow individual investors in life sciences companies to obtain Irish income tax relief (of up to 41%) on investments made, in each tax year, into certified qualifying companies. Relief is available in respect of funding of up to €10 million.
Skillnets is a government funded body which runs a ‘Training Networks Programme’ which provides subsidised and relevant training for companies. There are also a number of employer incentivised employment schemes run by the Department of Social Protection, such as ‘JobsPlus’ and ‘JobBridge’.
Research, Development and Innovation
Science Foundation Ireland is the national foundation for investment in scientific and engineering research. It funds oriented basic and applied research in the areas of science, technology, engineering and mathematics in order to promote and assist the development and competitiveness of industry, enterprise and employment in Ireland. For example, it operates an ‘Industry Fellowships’ programme which enables staff and postdoctoral academic researchers based in Ireland to spend time in industry worldwide and individuals from industry based anywhere in the world to spend time in an eligible Irish academic or research institution.
‘Fusion’ is InterTradeIreland's all-island technology transfer programme, which links companies up with third-level institutions providing them with the specialist expertise of a high calibre graduate working directly in the organisation to deliver a new product or process improvement project.
Enterprise Ireland runs the ‘Innovation Partnership Grant Programme’ which provides financial support to companies who engage in collaborative research projects with Irish universities or Institutes of Technology.
In addition, the Irish Government has provided funding to establish industry-led ‘Technology Centres’, coordinated by Enterprise Ireland, IDA Ireland and Science Foundation Ireland. These centres are resourced by highly qualified researchers undertaking market focused strategic research and development for the benefit of industry.
These are just some of the numerous support programmes and incentives available for life sciences companies doing business in and from Ireland. The level of support and collaboration for start-up, emerging or expanding companies and the level of support and collaboration between industry, academia and the Irish Government makes Ireland one of the most attractive places for pharmaceutical and medtech companies to conduct their business.
This article first appeared in the Business and Finance Life Sciences 50 edition.