Ireland's Exports Set to Fall Off the Patent Cliff
The patent cliff is like a yurt. It has many sides. To Big Pharma, it's been a looming threat for years. To generics makers, it's a multibillion-dollar boon. To India, with its generics-heavy pharma industry, it's a once-in-a-lifetime economic development opportunity. But to Ireland, which produces some of the world's biggest-selling branded drugs, it could be an economic sinkhole.
As Bloomberg reports, 5 of the globe's 12 top selling medicines are made in Ireland, including Pfizer's (NYS: PFE) Lipitor, Eli Lilly's (NYS: LLY) Zyprexa, and Merck's (NYS: MRK) Singulair. Those 5 meds accounted for $27 billion in 2010 sales. By 2013, those same 5 drugs will generate less than half that amount -- $13 billion. As those sales decline, so do Ireland's exports.
And if you look beyond the dozen best-sellers, the impact only grows. An economic geography expert at the National University of Ireland tells Bloomberg that about 19 billion euros, or $26 billion, of Ireland's exports could be at risk as drugs lose patent protection. To put this in perspective, Ireland exported 49 billion euros of chemicals and pharma products last year, the news service says, and that's 55% of the country's merchandise exports.
The threat to exports comes at a bad time for Ireland. The country has more than its share of economic challenges, and exporting has been one of the few bright spots. The real question now is whether drugmakers will actually stick around after the blockbusters lose exclusivity. Pfizer has already put its Lipitor-formulation site in Cork up for sale, although it plans to continue making the drug's active ingredient in Ireland. "Will the pharma companies keep producing the drugs in Ireland as they come off patent?" was the question Matt Moran, director of PharmaChemical Ireland, posed to Bloomberg. He noted that this was a big issue for the country.
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