Firms should prosper from the EU-Japan trade deal Japan may have the dubious distinction of being the least understood pharmaceutical market in the developed world, writes John Whelan.
But Irish suppliers to the market have managed to put aside any misunderstanding and push exports of healthcare products to new heights in the market this year.
Exports to Japan have soared by over 50% so far this year, based on latest CSO figures, reaching €1.5bn in the first five months of the year.
The breakthrough comes at a time when exports to the UK have fallen by 7%, as Brexit concerns and the associated continuing weakness of sterling piles pressure on margins.
Inward investment from Japan has been a stable source for the IDA, creating the highest foreign direct investment from Asia to date and may be a safe haven for more investment if the Trump administration turns sour on Ireland’s trade surplus with the US.
The big winners in the export growth to Japan this year are medical devices manufacturers which accounted for one third of the sales to the market, followed by pharmaceutical companies providing a further 25%.
Japan’s lucrative medical device market, the third largest in the world, ahead of China and Germany, imports 40% of its requirements. A growing slice of the demand is provided by the world’s top 10 medical device companies, many of whom are located in Ireland, with Europe’s premier cluster of device companies based in the Cork to Galway region.
Artificial hip and knee joints produced in Cork by Stryker are in high demand in Japan as are heart stents produced by Depuy in Ringaskiddy and Boston Scientific in Galway and Cork.
However, many of Ireland’s homegrown medical devices companies have made their mark in Japan. Cork-based PMD Solutions is one such manufacturer, known particularly for its RespiraSense, which discreetly measures a patient’s chest and gut movement when breathing.
The Japanese government spends €286bn each year on healthcare, making it the third largest globally.
Takeda, the largest pharmaceutical company in Japan, has been using its long-established manufacturing operations in Ireland to supply the market there.
Takeda’s €52bn takeover of Irish-based Shire Pharmaceuticals, which will enable the further expansion of its exports to Japan, is just one of many that can be expected over the coming years, as the recently signed EU-Japan free-trade agreement lowers the regulatory barriers for European manufacturers in the healthcare sector to supply into the market.
Astellas, the second largest pharmaceutical company in Japan, with long-established manufacturing facilities in counties Kerry and Dublin, can be expected to accelerate its global search for acquisitions.
The recent signing of the landmark new trade deal between the EU and Japan has been welcomed in Ireland with the Government and business groups saying it presents new opportunities for Irish companies looking to do business in what is one of the world’s largest economies.
The deal, when approved, will remove tariffs for 99% of the goods traded between the EU and Japan, but more importantly it will provide mutual recognition of standards on medical devices and pharmaceuticals and will eliminate the long process of applying for Japanese regulatory approval for devices and drugs.
John Whelan is an expert and consultant on Irish and international trade