Pharma patent cliff continues to eat into country’s export performance

The patent cliff continues to eat into Ireland’s export figures but on the plus side the country enjoyed an increase in the seasonally adjusted trade surplus.

Preliminary export and import figures published by the Central Statistics Office (CSO) for Aug 2013 show there was a massive 17% or €1.4bn decline in the value of Irish exports in Aug 2013 compared to the same month last year.

Merrion Economics chief economist, Alan McQuaid, said this was the effect of expiring patents on drugs such as Viagra and Lipitor which had been huge drivers of Irish export figures.

“Comparing August this year with Aug 2012, the value of exports decreased by €1,420m (17%). Organic chemicals (-€579m) and medical and pharmaceutical products (-€422m) were the main contributors to this decline.

“The expiry of patents regarding certain pharmaceutical products was clearly at play here,” he said.

Despite the year-on-year decline the figures point to a marginal improvement. Ireland recorded a seasonally adjusted merchandise trade surplus of €3,245m in August, €39m higher than July’s revised surplus of €3,206m.

Mr McQuaid believes that as the global economies return to growth Irish exports will pick up and offset the collapse caused by certain patents expiring.

“The export sector has been the main driver of Irish economic activity in recent times and will remain the key growth engine for some period to come. Weak global demand has hit Irish exports in the past couple of years, particularly on the merchandise goods side. But there are signs now that the world economy (including the key markets of the US, eurozone and UK) is starting to recover, which augurs well for Irish exports in the coming months.

“This should, to some degree, help offset the negative drag from the patents issue,” he said.

Based on positive trends globally Merrion Economics is predicting that there will be a pick-up in Irish exports towards the end of the year.