Ireland Industry Outlook – 2018

Protel tracks capex project activity across the main process sectors to help suppliers win new business. In this article we aim to present a quick and easy to digest run-down of the main trends and developments in the main process manufacturing sectors in one of our covered regions – Ireland industry outlook. For more information on the areas we cover, click here.

Continued positive picture for Irish process industry capex in 2018/19

In our previous Irish process manufacturing industry outlook, we reported that the strong Irish economic outlook was resulting in a large number of project schemes across our reported sectors of pharmaceutical, food and drink in Ireland. We noted global factors that had increased uncertainty, such as the impact of US government trade policy amid the election of Donald Trump and the decision of the UK to leave the European Union.

It is still very much the case that Ireland is experiencing a very strong economic period, with the resulting impact of capex levels being very positive. In the pharmaceutical & biotech sectors, uncertainty seems to have had little impact so far and this is not expected to change as we move through to 2019. However, in food and beverage, political turmoil in the neighbouring UK has impacted the project pipeline in a significant way.

Pharma & Biotech

The quantity of projects coming on stream has remained relatively consistent across biotech and medical device production. We are seeing a large amount of activity both at the planning and implementation stages.

Biotech is currently booming in Ireland, with this expected to continue across to 2019. Large announcements by MSD and WuXiBiologics are just two such examples of major biotech investment in Ireland.

We’re seeing projects being planned in areas outside of the usual Dublin & Cork biopharma clusters, such as WuXi in Dundalk alongside Almac and Wasdell. Regeneron and Janssen Pharma are also planning major capex to further bolster biotech production.

Due to such high levels of capex, there remains a major shortage of engineering resource in Ireland. Many engineering houses are outsourcing concept & design work to other global locations while they focus on the detailed design stages in Ireland.

Engineering companies are all very busy, with innovative joint venture solutions being used to allow organisations to stick to ambitious timescales, as is the case on the Jacobs & PM Group partnership on the MSD Swords project (full details available to subscribers).

A major trend in biotech is the production of biosimilars, with many players consolidating or expanding existing plant for this purpose. Allergan, Pfizer & GSK are all looking into this area in Ireland.

Medical device capex is very strong currently, with Abbvie Sligo and Abbott Diganostics both planning major investment.

API is a little less buoyant, with overall investment levels declining slightly in terms of project quantities, although there remains significant potential investment value in Ireland. Pfizer in Ringaskiddy and Allergan expanding is a good example of this. Although there is some uncertainty at the Pfizer Grangecastle facility, there are rumours of a significant upcoming investment for 2019 (stay up to date using our tracked projects feature on MyProtel, available to subscribers).

Food & Drink

The impact of the Brexit decision on the Irish food and beverage sectors has proven to be major. We wrote previously on the future outlook being complicated for Irish food & beverage processors and this has largely been correct. The devaluation of sterling in the aftermath of the decision has been one such source of change, while continued uncertainty is expected to impact investment plans going into 2019.

To illustrate this, we can take cheddar cheese production as an example. Mostly consumed in Ireland and the UK, this was a significant area of activity in dairy processing. However, previously tight profit margins have now become unviable for producers, so dairy companies are now looking to invest in alternatives, such as infant formula plants. This has been an area of success for some, such as DairyGold in Mallow.

In beverage, we have seen a number of distillery and beverage investment schemes coming through the pipeline, but planning issues and continued uncertainty have seen many of these not reach fruition or experience significant delays.

Overall, organisations and industry players are still adopting a wait & see approach. Until the future EU-UK trade relationship becomes clearer ahead of the UK leaving in 2019, Irish food & beverage manufacturers are still in a state of limbo.

Trends

Opportunities for suppliers persist in serialisation and track and trace, although drifting deadlines mean that some producers are still dragging their feet on decisions in this area.

Single use technology is expected to remain a growth area, as the prohibitive cost & difficult validation requirements of CIP/SIP solutions makes them less appealing to end users.

Multi-use sites are emerging to a greater degree in light of Brexit uncertainty, as organisations seek to perform primary and secondary processing in the same location. Previously we have seen some organisations performing fill/finish in the UK instead of Ireland.

Resource issues have meant that smaller to medium size engineering houses have found plenty of opportunity where previously larger organisations would have remained incumbent.

Our Coverage

Pharmaceutical, Biotech & Laboratories

At Protel, we are currently tracking 131 active pharmaceutical & process related laboratories investment projects with a combined potential investment value of just over €6.5bn in Ireland.

Food & Beverage

At Protel, we are currently tracking 55 active food & beverage investment projects with a combined potential investment value of just over €1bn in Ireland.

Summary

The overall outlook remains very positive. The pharmaceutical industry in Ireland is booming, albeit with fewer new schemes being announced as resource capacity problems persist. However, there is ample opportunity for suppliers of capital equipment and services, particularly in biotech and medical devices as continued US interest provides capital.

In food and beverage, there has undoubtedly been a slow down, although it is hoped that as political and trade uncertainty fade – particularly that related to Brexit – investment will speed up once more.

For more information on any of the organisations, projects or trends covered, including key information required to target specific projects, please contact us.