Ireland: The natural home for global pharma

R&D tax credit

Ireland provides a highly attractive Research and Development (R&D) tax credit, which is designed to encourage investment in knowledge building activities. Companies can claim 30% of their qualifying R&D expenditure as a cash refund.

This is available in addition to the standard 12.5% trading corporation tax deduction, making it a significant financial incentive for pharmaceutical companies engaged in research and development.

Importantly the R&D tax credit applies to a wide range of activities, such as the development or improvement of new or existing product, processes, methods etc.

A key distinguishing element of the Irish system versus those present in some of our main competitors is the ability to include capital investments, such as buildings and plant and machinery, in a claim once specific conditions are met.

Given the significant investment required to establish a new facility, this can dramatically lower the cost of establishing a new site or investing in technology to develop a new process. 

Competitive corporation tax rate

Ireland's corporation tax rate is one of the lowest in Europe, standing at 12.5% for trading income. This low tax rate is a major draw for pharmaceutical companies, as it allows them to maximise their profits and reinvest in their operations.

The favourable tax environment has contributed to Ireland becoming a hub for multinational pharmaceutical companies, with many of the world's leading firms establishing significant operations in the country.

Taken in combination the availability of R&D tax credits, grant support, and low corporation tax creates a very supportive environment that encourages the establishment and expansion of pharmaceutical facilities in Ireland.

These incentives help offset the high cost of the initial set up of a pharmaceutical site. This capital investment also helps anchor these companies to Ireland for the future, creating a mutually beneficial symbiotic relationship. 

EU membership

Ireland’s membership in the European Union offers significant advantages for pharmaceutical companies operating in the country. As part of the EU single market, Ireland provides seamless access to over 400 million consumers, allowing companies to manufacture and distribute products across member states without trade barriers.

This access is especially valuable for pharmaceutical firms, as it simplifies regulatory alignment, supports efficient supply chains, and facilitates faster time-to-market for new therapies.

Additionally, Ireland benefits from EU-wide research funding and collaboration opportunities, helping to drive innovation and maintain high standards in science and healthcare. For companies, this means operating in a stable, well-regulated environment with strong international connections.

Geography

One of Ireland’s key strengths is its strategic geographic location, providing direct access to both European and transatlantic markets. Its geographic position also offers a unique advantage for pharmaceutical companies by effectively bridging time zones between North America and Asia. Ireland enables real-time collaboration with both U.S. and European partners during standard business hours.

This overlap is particularly valuable for global pharmaceutical operations that require constant coordination across R&D, regulatory affairs, manufacturing, and supply chain management.

Challenges faced by Ireland's pharmaceutical industry

In recent months there has been significant concern regarding the spectre of US tariffs and other protectionist measures and it was feared that these could disrupt Ireland's multi-billion worth of exports to the U.S., potentially leading to job losses and reduced investment.

However, recent US-EU discussions have indicated that tariffs on pharmaceutical imports would be capped at 15%, with generic pharmaceuticals exempted. While still representing a challenge for the industry, the proposed cap brings a level of predictability and stability to the industry in Ireland and is a far cry from the 250% tariffs that the US administration had previously indicated.

Generics and compliance

An interesting outcome of the recent talks is the proposed exemption for generic pharmaceuticals. This could see an expansion of this type of manufacture in Ireland, especially given the significant numbers of blockbuster pharmaceuticals coming off patent over the next 10 years, such as Ozempic (semiglutide), Keytruda (Pembrolizumab) and Eliquis (Apixaban).

Separately, the current US administration's approach to healthcare and pharmaceutical regulations has introduced uncertainties that could affect the industry's operations and compliance requirements.

Additional risks include infrastructure limitations, such as issues with water, wastewater, energy grids, and the ever-present issue of the dysfunctional housing market. These factors may affect Ireland's capacity to attract new investment and maintain current businesses.

National Development Plan

It is hoped that these limitations will be mitigated by the recently announced €200 billion National Development Plan (NDP). This represents the most ambitious investment programme in the State’s history.

This plan will focus on key areas of interest to the pharmaceutical industry including funding for housing, water, and energy. However, it is yet to be seen how rising construction costs, planning delays, and labour shortages impact on these projects.