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
The (merchandise) trade statistics released by the CSO today showed that exports fell in December (here). “From a November high of €8,252m, seasonally adjusted exports decreased by 9% to €7,503m in December… A substantial part of the decline in the value of exports was due to a high value product in the Chemicals and related products sector coming off patent in December”.
This is the beginning of the “bad news (for Ireland) from big pharma” that I posted on back in December.
We have reached the long-awaited “patent cliff”. Lipitor, which Pfizer produces in Ireland, has just gone off patent and others are set to follow shortly. Big Pharma’s new product pipelines are sparse. Bloomberg reported on this a few weeks ago here.
I don’t think Chris Van Egeraat is quite as pessimistic as he appears to be in the article, and he tells me that the figures quoted come from Bloomberg’s database rather than from him.
Furthermore, Big Pharma is fighting back. And we know that mergers and acquisitions in the sector have increased in recent years, against trend, as the pharma companies diversify into biotech, from which the new innovations are likely to emerge. (See the section on pharmaceuticals, pps. 16-17, here).
But worrying all the same!
An important argument for the adoption of the euro was the expectation that it would boost trade. This paper analysed the effects of the euro on Irish exports over the period 1993-2004. The results indicate that the impact of the euro on Irish exports to euro area countries relative to the rest of the Irish trading partners was significant and positive from 2000 onwards. This effect has increased over time. Furthermore, it apperas that the impact of the single currency on Irish exports has varied across industries.
I was asked to write this chapter for a forthcoming RIA volume on Irish foreign policy. A summary:
A country’s foreign policy is largely driven by what it perceives to be in its economic interests. That this does not provide a complete picture is evidenced by the fact that Irish development assistance has never taken the form of tied aid. Nor can the influence of powerful vested interests be discounted. A case can be made that Ireland turned protectionist again once membership of the European Union had been achieved. Agricultural and sheltered-sector interests have sought to stymie the liberalisation efforts of the WTO and the European Commission respectively. A further complicating factor is that a society’s own economic interests can occasionally be miscalculated. Joseph Lee has noted that “while the ‘political’ skills of Irish representatives in negotiating positions are widely acknowledged… there seems to be no comparable criterion for assessing the calibre of conceptualisation of the Irish case.” Irish foreign policy through the years has nevertheless recorded many successes in defending the economic interests of the citizens of the state.
The paper considers the political and economic determinants of Irish trade policy, the evolution of its inward foreign direct investment strategy, and the country’s position on international migration and on the broadening and deepening of European integration. A separate case study focuses on how successive governments have sought to defend and exploit the advantages of Ireland’s low corporation-tax regime in international negotiations.
Doug Irwin provides a nice account of the historical links between exchange rate and trade policy here.
The festive season is almost upon us and we all need a bit of cheering up. I have always found Swiss trade policy to be good for a giggle myself, and apparently their Finance Minister agrees with me. Bündnerfleisch: an old one but a good one.
This is a very useful primer on interwar protectionism by the leading historian of US trade policy. (I had never heard of ‘Smoot Smites Smut’, which is worth the price of admission alone.) Although Doug could have usefully mentioned that the biggest costs of protectionism then were geopolitical, and those ended up being fairly catastrophic.
Economists sometimes assume that the right way to talk about protectionism is to moralize. I prefer analyzing the causes of protectionism: it may be a very bad idea, but sometimes, in democracies, it becomes inevitable. Doug, in a manner reminiscent of Adam Posen, argues that expansionary monetary policies in the US are a good way of keeping the protectionist wolf at bay there right now. The same logic applies to Europe as well.
The government’s latest strategy document is Trading and Investing in a Smart Economy. Apparently, the strategy is going to create 150,000 jobs directly and a similar number indirectly. Sounds good, though how exactly it’s going to achieve that was a bit unclear to me. Admittedly, my persual of the document was a bit brief as I’m suffering from glossy strategy brochure burnout.
This FT article is well worth reading. It asks a question I had been idly wondering about: is German growth just a reflection of Chinese growth? If so, then the issue of whether Chinese (or more broadly, perhaps, Asian) growth can become self-sustaining, or will continue to largely depend on sales to over-indebted American households, is a question with major implications for the European economy.
Update: I have just come across this piece by David McWilliams on similar themes. I guess the hope for Germany is that their growth is based on more, ultimately, than Chinese exports to the likes of us.
Floyd Norris in the New York Times last weekend put together some interesting comparative charts for twelve countries including Ireland showing trends in their trade up to the beginning of this year. The relatively small dip in Irish exports during the recession comes through clearly. He draws attention to the welcome rebound in trade globally, but classes Ireland among the four Euro laggards including Greece, Portugal and Spain. However, the data for Ireland only go to the end of 2009, whereas for other countries the data includes the first three months of 2010. As all of the rebound in the other countries has occurred in this first quarter of 2010, the charts give an unfavourable, but misleading, impression of Ireland’s comparative trade performance.
À propos of nothing in particular, I can’t resist posting a link to this.