Impact of expiry of global patents ‘less than feared’

Irish pharmaceuticals’ dependence on imported raw materials means the impact on GDP of the expiry of key global patents will be far less than has been feared, according to chief economist with Davy Stockbrokers Conall MacCoille.

In a research report issued yesterday, Mr MacCoille says fears of the so-called pharmaceutical patent cliff are misplaced.

He notes that just a third of pharmaceutical export revenues count towards GDP.

The value added of pharmaceuticals was €13.8 billion in 2011 or 8.7% of GDP. This is despite the fact that pharmaceutical exports totalled €50bn in 2011, 54% of total goods exports, or 31% of nominal GDP.

The Davy report notes that the large gap between revenue and value-added reflects high import intensity, mainly royalty and licence fees on intellectual property.

Mr MacCoille stated: “In 2011, exports of chemicals, medicinal and pharmaceutical products were €49.5bn, equivalent to 31% of nominal GDP. These exports accounted for 54% of total goods exports.

“But the Irish pharmaceutical sector is highly import-intensive — mainly due to high costs relating to intellectual property.

The Davy report notes that companies do not always disclose which drugs are manufactured here.

In terms of blockbuster drugs thought to be produced here, Davy cites the following, with US patent expirations in brackets: Lipitor (expired); Enbrel (Jan 2016); Actos (Aug 2012); Singulair (Aug 2012); Zyprexa (expired); Lexapro (expired); Diovan (Sept 2012); Tricor (Jan 2013), and Cymbalta (Dec 2013).