Seamus Fives, who heads the Pfizer plant in Cork, which includes responsibility for two of the pharma giant’s facilities at Little Island and Ringaskiddy, said that the business would have to redouble its efforts to keep costs in check after having cut production costs of key drugs by 34% in recent years.
Staff at the two Cork sites have “stopped the rot”, which had, at one stage in 2012, threatened the closure of the Little Island plant, but more must be done to remain competitive, Mr Fives said.
His comments came in the wake of a renewed crackdown in the US on so-called tax inversions, which has led to Pfizer and Allergan to review their proposed $160bn (€140.5bn) mega-merger, driven by tax considerations, that would have led Pfizer to incorporate in Ireland.
During a US election year, the merger plans had again sparked controversy in Washington, which in turn had uncomfortably placed Ireland’s tax regime in the spotlight. US president Barack Obama yesterday praised the US Treasury, telling reporters there was a “basic principle” people pay a “fair share” of taxes in the US.
Shares in Allergan, which is based In Ireland, slumped almost 16% at one stage in New York, as investors bet the deal would collapse. Pfizer shares rose over 2%.
Ireland has attracted a lot of heat over tax inversions mainly because US pharma giants have been driving the process.
And with low-tax Ireland hosting most of the world’s largest drug firms, the country has become a popular destination, but at an unfortunate political time during the White House race.
Two years ago, Pfizer eyed the UK’s AstraZenca, which would have led it to invert its corporate home into Britain to avail of a lower global tax rate under the current US tax regime. The deal was never finalised.
It turned its attention to Allergan, which is incorporated here. That plan led to renewed focus in Washington on tax inversions. Pfizer US chiefs argued in the past it operates at a disadvantage to US rivals, who have incorporated in low-tax jurisdictions.
“Without a commercial rationale, inversions wouldn’t be effective for tax purposes,” said Brian Keegan, director of taxation at Accountants Ireland. “There have to be substantial business activities already in the country where the new inverted company will end up.”
The companies said they are reviewing the US action.