MULTINATIONALS WERE WORTH less to the Irish economy last year than at any time since 2009 as the “patent cliff” for drugs like Viagra ate into big pharma production.
Central Statistics Office (CSO) figures for the sectors dominated by multinationals – mainly made up of chemical, pharmaceutical, software and communications companies – showed production in those industries dropped 8.5% in 2013.
When referenced to 2012 prices, those sectors churned out products with a gross-added value of €38.6 billion last year – down from €42.2 billion in the previous 12 months.
Gross-added value measures the total production in an industry after taking out the goods and services that were consumed in the process.
Last year’s total was the lowest since 2009, when multinationals were worth the equivalent of €37.9 billion to the economy.
In contrast, domestic-dominated industries, like real estate, construction and agribusiness, all showed positive growth and were worth a combined €118.5 billion last year when compared against 2012 prices.
Multinationals off the cliff
The CSO said the fall in multinationals’ contribution was mainly down to software companies making higher royalties payments and the effect of the big pharma “patent cliff”.
The cliff arrived last year when exclusive licenses for several big-selling drugs, like Viagra and Lipitor, expired at the same time.
The drugs’ Ireland-based owners were forced to compete with generic brands churning out the same products once their patents ended.
This year’s manufacturing results have shown the pharmaceutical sector rebounding sharply again as they recovered from the downturn.
Finance Minister Michael Noonan included the sweetener of a “knowledge-development box” – otherwise known as a patent box – in this week’s Budget to offer tax breaks to companies making money from new inventions.
The scheme will still have to get the EU tick of approval and it came as Noonan announced he was winding up the infamous Double Irish tax loophole after international pressure to stop multinationals using the quirk to avoid paying tax.
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