Ireland’s attractiveness as a location for pharmaceutical investment is being damaged by government cuts to medicine budgets, according to a senior executive at Glaxo Smith Kline (GSK).
Eddie Gray, European president of GSK — one of the country’s biggest pharmaceutical employers — said the cuts could ultimately break the system that lets drugs companies invest in innovation. If that happened, “the factory will be challenged”, he said.
The industry is locked in talks with the Department of Health over the amount the state pays for drugs and how they are made available to public patients. The Irish Pharmaceutical Healthcare Association (IPHA), which represents companies including GSK, claims the department did not honour the most recent agreement, which expired on March 1.
Gray said the industry had delivered €300m in cost savings under an agreement reached in 2006. In 2010 and 2011, it agreed to further price cuts and rebates totalling €300m, but the department is seeking more reductions.
Gray said the continuing cuts put pressure on the revenues of pharmaceutical companies, which threatened future investment.
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“If I’m not able to make a reasonable return on the risks involved in innovation, the next cycle [of investment] doesn’t arrive. If the next thing doesn’t come along to fill the space, ultimately the factory will be challenged.”
The IPHA said the continuing cost-cutting “sends out all the wrong signals to corporate boardrooms”.
If more cuts were imposed on the drugs industry, “the potential damage to employment, both current and in the future, could be significant”. Gray said the government approach was surprising given the importance of the pharmaceutical sector to the “industrial health” of the state. The sector employs 25,000 people and accounts for more than half of Irish exports.
“Significant contributions have already been made. I’m not sure the argument for more [cuts] has any great validity. I’m not asking anybody to give me money I haven’t earned,” he said.
He said the government approach was also affecting Irish people’s access to particular medicines. One GSK product, Revolade, a treatment for people with a low platelet count in their blood, is made in Ireland and sold internationally but is not available to Irish patients.
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GSK has about 1,700 staff in Ireland, mainly in Cork, Dungarvan in Co Waterford, and Sligo. The Cork facility includes high-end research and development and manufacturing.
Gray said GSK was committed to the Irish operations, which had “responded well to the challenges”. “They are always working hard to keep themselves relevant,” he said.