Pharmaceutical goods deliver exports boost

Figures for surging exports, particularly for pharmaceutical goods, have underscored the exceptionally favourable factors currently benefiting Irish firms.

The CSO said yesterday goods’ exports rose to almost €10.3bn on a seasonally-adjusted basis in October, increasing more than €1.53bn in the single month, and surging almost €2.43bn from October 2014.

The slump in the value of the euro against sterling and the dollar in the past year has provided a huge boost to firms exporting into Britain and the US because goods and services sold in those markets are made so much more competitive against local rivals, at a time when wage growth is very low in the Republic.

Exports into Britain and the US are getting a further boost because demand in those big economies is growing at a fast clip.

The recovery of the large global pharmaceutical companies is another factor playing to Ireland’s advantage, analysts say.

Most of the world’s largest pharmaceutical makers have significant facilities in the Republic — particularly in the Munster region.

In recent years, the so-called patent cliff effect — where a large number of the world’s best-selling medicines came off patent around the same time — hit Irish-based multinational pharmaceutical makers hard.

For the first time, they faced competition from generic drug makers.

The latest figures provide evidence of the significance of the pharmaceutical sector to Irish goods exports and some evidence that the patent effect has completely waned.

The CSO said the unadjusted value of organic chemicals grew €1.48bn since October 2014 to €2.85bn, while exports of medical and pharmaceutical products rose by €574m to €2.56bn.

About half, or €5bn worth, of all October’s goods exports went to the EU — with €1.18bn destined for Britain.

Alan McQuaid, chief economist at Merrion Capital, yesterday warned that the outlook may not be less rosy.

“On the surface, the data would suggest a healthy global trading environment, but that would be far from the case,” said Mr McQuaid.

“Ireland benefits enormously from its US multinational components, and in particular the pharmaceuticals industry as regards merchandise trade.

“But other countries aren’t so lucky. World trade growth has slowed sharply this year.”