Turnover and Exports in Irish Pharma – guest post from Chris Van Egeraat

Last week The Irish Times published their annual TOP 1000 Companies list. The list includes figures on, amongst others, turnover. A quick inspection of the list and CSO export data would suggest that exports of Irish pharmaceutical companies account for 248% of turnover!

The turnover figure I took from the TOP 100 list. I added Pfizer, which was missing from the hard copy but included in the on-line version. I excluded companies in Northern Ireland. I also excluded pharmacy groups and national distribution/sales companies on the basis that most of these will export little. I also excluded a small number of companies that were erroneously listed as pharmaceuticals. The turnover of the resulting list of firms adds up to €20.9bn.

CSO export figures suggest that in 2011, Ireland’s pharmaceutical exports stood at €51.8bn [pharmaceutical sector is here defined as to include organic chemicals (= mainly active ingredients), pharmaceutical preparations and essential oils].

I can’t figure out the problem. The issue cannot be explained by adding the turnover of the sub-1000 companies. The smallest Top 1000 company has a turnover of €6m. You would need a lot of small pharmaceutical companies to cover the difference.

I thought the difference could be explained by the fact that some pharmaceutical companies (e.g. Pfizer) operate separate export companies. But, the (separate) table with top financial enterprises includes no pharmaceutical companies. Still, could it be that exports of these export units are included in the Irish pharmaceutical export figures but not in the turnover of the Irish operations?

I appreciate that the Irish Times TOP 1000 list may not be perfect (Dell Ireland is reported to employ 796 Irish employees while the Dublin unit alone employs 1000 plus!) Still, the difference between the two figures seems too big to be explained away by recording errors. Any suggestions welcome

Below I include a selection of the methodological notes included on page 27:
• Where companies filed consolidated accounts, the group turnover was taken.
• The Irish subsidiaries of multinational or overseas companies are included if they are significant employers. If no financial information is available for the Irish operations, then turnover is estimated by The Irish Times on the basis of revenue per employee as per publicly available figures
• If a multinational has several subsidiaries in Ireland we have where possible treated them as one entity grouped under the main Irish company. In some circumstances this was not possible and they appear separately

11 replies on “Turnover and Exports in Irish Pharma – guest post from Chris Van Egeraat”

Zsolt Darvas has responed below on the Kevin O’Rourke thread on Qs on Zsolt’s Working paper ….

‘But I can highlight that the assessment of this issue is severely hindered by the lack of publicly available data. Ireland is among the few EU countries for which manufacturing sub-sectoral gross value added is available only in current prices, but not in constant prices (I used Eurostat data). Constant price value added data is available only for the total manufacturing industry and therefore one cannot assess the discrepancy between value added and gross production at the sub-sectoral level.

Follow the link: http://www.irisheconomy.ie/index.php/2012/06/23/on-the-efficacy-of-internal-devaluations-questions-i-would-ask-zsolt-darvas-in-a-seminar/#comment-301325

Think I made a relevant assertion #2 on the Crilly, Pentecost, Tol Working paper in relevant thread below ..

I wouldn’t put much mass on those turnover figures. Depending on the corporate structure of the Irish pharmaceutical entity they may not be required to file accounts showing the Irish turnover, for example, if they are established as a branch of a foreign company as is the case for several of the companies listed. The IT seem to realise this and their turnover figures in many cases are drawn from no more than fingers in the wind.

The 2010 Economic Impact Survey from Forfas has a Total Sales figure for the Chemicals sector of €39,985 million with Exports equal to €39,202 million. More on this sector from the Forfas survey is here.

Any reading of John le Carre suggests you don’t go there

Although perhaps Churchill may shed some light on this Mystery…..

“I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest.”

Or maybe we need to look further back


Given the guesswork involved, this ranking is a work of faction.

Pfizer has a lot more than the 1,100 employees as stated; Icon’s 7,580 global employees have a low per capita revenue while most of Elan’s 1,200 jobs are not likely to be in Ireland after selling its Athlone plant.

A big company e.g GSK (Europe’s biggest drugs company) has 1,600 Irish employees but a turnover of €450m.

Pfizer Ireland’s Dutch parent does not give a breakdown of Irish sales.

Intel is a branch of a Cayman Island mailbox company hosted at the office of the island’s biggest law firm Maples and Calder and last week, Minister Bruton announced that 65 jobs were being added at Maples and Calder’s Dublin office.

The estimated turnover of €3.5bn for Apple is too low while Dell reports turnover of $12bn for Ireland in 2011 and the accounts make clear that selling computers is its main business (the 796 employee number comes from the main Irish accounts).

Dell’s Polish plant at Lotz, which took over production from Limerick, is now owned by Foxconn, the Taiwanese contarct company which also assembles Apple’s products in China.

So, shock horror, we are likely booking the output of the plant in Poland as Irish exports!

Another miracle, surely?

Where in Jannsen on this list, probably the number 1 Irish based company.? BSX is not a phamra company but a med tech company.

Not sure what MH is doing comparing ICON turover per cap to PFE-one is a pharma company, one is not.

Back to square 1.

I heard someone on the RTE morning show (John Murray show?) proclaim that the main reason the pharmaceutical industry is in Ireland is due to the quality of the country’s water.

And I thought all those tax incentives were important…

Thanks for your comments.

@ Seamus

According to the notes, “if no financial information is available for the Irish operations, then turnover is estimated on the basis of revenue per employee”. Not sure what this precisely means but we must assume they did so consistendly?

@ Michael Hennigan and tulmcadoo

On Elan, the drug delivery in Athlone merged with Alkermes only in the second half of 2011. Since KPMG based themselves on “the latest audited accounts”, Elan’s inclusion may be methodologically correct.

ICON is offering its services from different overseas units and the services exports from its Irish base will probably not be included in the Irish merchandise exports. As such, I probably should have excluded it from the analysis (given my specific purpose). This would, however, only have increased the discrepancy between output and export figures.

Pfizer Ireland is probably not properly accounted for (I think they ignored the former Wyeth business). Same with Janssen Biologics and Janssen Pharmaceuticals. I first presumed that Janssen was included in Johnson & Johnson, but, reflecting on the turnover, this is unlikely the case.

All in all, as I suggested, there are serious issue with the Irish Times data but I don’t think that these can explain the enourmous discrepancy between output and export figures. Either the Irish Times turnover figures are underestimated by at least 30bn, or the CSO export figures are overestimated by 30bn (or a combination involving smaller figures). Could the answer lie in the CSO export data and what is included there…?

Firm-level financial reporting data can be real messy to work with.

Any Multinational like Pfizer will have multiple subsidiaries in Ireland. That means, multiple legal entities. If this “top 1000 companies” data comes a regualtory/statutory reporting requirment, then you might be picking up only the data for, say, one of the 15 suds that someone like Pfizer have in Ireland.

If a U.S. multinational has 15 subs in Ireland there won’t be any requirement for them to file a set of consolidated financial reports that combine all of these 15 legal entities (i.e., folding all the Irish operations into one set of financial statements). The only reason I could see them putting thgether a set of financial statements that consolidate everything in Ireland might be for some local debt contracting purpose. That won’t be publicly available.

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