Ireland as a Life Sciences Hub

Ireland has a highly developed and vibrant life sciences sector. It is home to most of the leading multinational pharmaceutical, medical devices and medtech companies, as well as boasting a thriving medical device and medtech start-up community. Key life sciences hubs have developed around Dublin, Cork and Galway.

2023 was a year of continued growth for the life sciences industry in Ireland. During the past year, companies such as Astellas, Bristol Myers Squibb, Jazz Pharmaceuticals, Pfizer, Gilead, and EirGen Pharma have announced plans to open new or extend existing facilities in Ireland. Several significant deals concluded in the past 12 months and the Irish courts have been busy dealing with a number of high-profile pharmaceutical patents disputes.

Irish life sciences companies are adapting to an evolving regulatory landscape, driven by the introduction of new EU legislation. They are also innovating with the use of AI, particularly in the drug development and diagnostics areas.

In other developments, Ireland was due to hold a referendum in June 2024 on ratification of the Unified Patent Court (UPC) Agreement (the “UPC Agreement”). Ratification would be good news for patent-rich life sciences companies in Ireland. The referendum has now been postponed as the government has said more time is needed to inform and engage the public on the Unitary Patent and the UPC.

This article summarises the key trends and developments in the life sciences sector in Ireland during the past 12 months.

Some statistics on the Irish life sciences sector

According to figures from the Industrial Development Agency (IDA), Ireland is now home to more than 90 pharmaceuticals companies. Leading originator companies AbbVie, Bristol Myers Squibb, Novartis, Pfizer, Astrazeneca, MSD, Janssen, Sanofi and Lilly and top generics and biosimilars companies such as Teva, Sandoz (Rowex), Viatris, Accord and Stada (Clonmel Healthcare) have significant operations in the country. Ireland has also established itself as a global player in the medtech space, with more than 300 medtech companies operating in the country, including 14 of the 15 top global medtech companies.

Ireland is the world’s third largest exporter of pharmaceuticals, according to the UN International Trade Statistics database. Annual exports of pharmaceuticals amount to more than EUR116 billion.

Unified Patent Court and Referendum

Ireland is one of the signatories to the UPC Agreement; however, a referendum is needed before Ireland can formally ratify and participate in the UPC. In June 2024, Irish citizens were set to be asked to vote on an amendment to the Irish Constitution, which would enable Ireland to ratify the UPC Agreement. This in turn would allow Ireland to join the Unitary Patent and UPC system, which became operational across 17 EU member states on 1 June 2023. The date of the referendum has now been postponed, owing to the lack of public awareness concerning the unitary patent. The Irish government, in a statement on 16 April 2024, announced that it continues to believe that participation in the UPC is “essential” and that the referendum should be pursued – although “more time was needed for public discourse and engagement on the matter to help inform the debate”.

Why is a referendum necessary?

Article 34(1) of the Irish Constitution states that justice shall be administrated in courts established by law by judges appointed in a manner provided by the Irish Constitution. The UPC Agreement provides for the setting up of an international court between contracting states. As the UPC Agreement involves the transfer of judicial powers from the Irish courts to the new international court, it is necessary to amend Article 29 of the Irish Constitution to allow this. The Irish Constitution can only be amended by popular vote.

If the referendum is passed, legislation will be introduced allowing Ireland to ratify the UPC Agreement. Steps will then be taken to open a local division of the UPC in Dublin. This is expected to attract international patent litigation (including in the life sciences sector) to Ireland and thus provide a considerable boost to the Irish economy.

Benefits of joining the UPC

The UPC represents a significant opportunity for Ireland to further increase its reputation as global innovation hub and to continue the flow of foreign direct investment into the country. The Irish Business and Employers Confederation (Ibec), a representative body for Irish businesses, noted in a statement on 24 January 2024 that “a conservative estimate of the value add to the Irish economy for (Ireland’s) participation in the UPC could be worth as much as EUR1.66 billion per annum”.

If Ireland ratifies the UPC Agreement, this will have a significant impact on the sector. It will offer global pharmaceuticals companies a common law, English-speaking route into the UPC and scope for indigenous pharmaceuticals and medtech companies to obtain protection for their innovative products on a much wider scale.

M&A and Investment Activity

Many spin-off businesses have developed from the multinational pharmaceuticals sector in Ireland. While decisions to locate in Ireland may initially have been tax-driven, the sector is now well established and has the advantages of Ireland’s well-educated workforce, an English-speaking common law jurisdiction that is within the EU, and access to governmental supports through the IDA. The pharmaceuticals sector generates high levels of employment in Ireland and is a very significant contributor to Ireland’s corporation tax revenues.

In addition, a large cohort of medical devices, biotech and medtech businesses has developed in Ireland. A significant number of these are concentrated in Galway and the west of Ireland. This is due in part to some large multinational companies such as Boston Scientific, which was established in Galway in 1994. Galway also has a very good ecosystem of accelerator programmes such as Bioinnovate and the Excel programme developed by the National University of Galway (NUIG), with the availability of support from governmental agencies such as the Western Development Commission. Many successful Irish life sciences businesses have been spun off from technologies developed in universities such as NUIG, Trinity College Dublin, University College Dublin and University College Cork.

The fundraising environment is active and, despite being subject to the same funding constraints that all industries have experienced during the couple of years as a result of global uncertainty and a higher interest rate environment, the life sciences sector has weathered this better than some other sectors. The funding environment in Ireland is categorised by good support for very early-stage companies, with Enterprise Ireland and the Atlantic Bridge University Bridge Funds focusing on university spin-offs. The next stages of fundraising can be more difficult and many businesses rely on a cohort of high net worth investors for funding. There are two venture capital life sciences funds, Seroba and Fountain Healthcare, that are particularly active in the Irish market and private equity is increasingly becoming a feature of life sciences transactions.

There have been a number of quite significant transactions and developments in the market during the past 12 months to April 2024. Notable deals include the purchase of Amryt Pharma by Chiesi Farmaceutici.

The acquisition of County Galway-based Chanelle Pharma by private equity fund Exponent is notable as an example of international private equity becoming a feature of the Irish market. Also of note is Amgen’s acquisition of Horizon technologies, a significant fundraising by Luma Vision (which was originally a spin-off from Bioinnovate), and the acquisition by Sandoz of the stake of its former joint venture partner Rowa in County Cork-based generic drug company Rowex Limited.

Key Life Sciences Patent Cases

The past two years have seen high levels of activity before the Irish Commercial Court and Court of Appeal, with several life sciences companies involved in patent infringement and revocation proceedings. Notably, there has been a series of decisions on preliminary injunctions in infringement proceedings that have shed further light on the interpretation of the 2019 Supreme Court decision in Merck Sharp & Dohme Limited v Clonmel Healthcare Limited (2019) IESC 65, (2020) 2 IR 1 (MSD v Clonmel) and the circumstances in which a generic pharmaceuticals company will be injuncted pending trial in patent infringement proceedings.

The judgment in the long-running Norton (Waterford) Limited t/a Teva Pharmaceuticals Ireland v Bristol Myers Squibb Holdings Ireland Unlimited (2023) IEHC 744 (Teva v BMS) revocation proceedings was handed down in December 2023. This was the first Irish judgment to consider the European Patent Office (EPO) Enlarged Board of Appeal decisions on G2/21/Sumitomo on plausibility and G1/22 on priority.

Finally, Ireland almost played host to the first EU case in relation to the supplementary protection certificate (SPC) manufacturing waiver when Jannsen sued Amgen in relation to Amgen’s attempted reliance on the manufacturing waiver to produce a generic Ustekinumab product. That case was settled in May 2023 following a global compromise of the litigation.

Focus on preliminary injunctions

Prior to the Supreme Court decision in MSD v Clonmel in 2019, it was traditionally quite difficult for pharmaceuticals companies to obtain preliminary injunctions against generic competitors pending trial in Irish patent infringement proceedings.

Before MSD v Clonmel, the applicable test in interim and interlocutory injunctive proceedings in Ireland was taken from American Cyanamid Co v Ethicon Ltd (1975) AC 396, adopted as the Campus Oil test (Campus Oil v The Minister for Industry (No 2) (1983) IR 88). This was essentially a three-stage test, comprising the following steps:

• the court should consider whether there is a serious issue to be tried;
• the court should consider whether damages would be an adequate remedy for the applicant or the defendant; and
• if damages would not adequately compensate either party, the court should consider where the balance of convenience lies and whether to preserve the status quo.

Most applicants fell at the second hurdle, as it was understood that a patentee’s loss was generally capable of being compensated in damages. Under the reformulated test, the Supreme Court noted that adequacy of damages should not be treated in isolation and must be assessed as part of the balance of convenience, and that difficulty in calculating damages ‒ as opposed to impossibility of calculating damages ‒ may be sufficient to tip the balance in favour of the applicant when weighed together with other factors.

The Supreme Court referred to several factors that might be weighed in assessing the balance of convenience in appropriate cases, including:

• whether the generic company has taken steps to clear the way;
• the difficulty in calculating damages for either party;
• the loss of first-mover advantage by the generic;
• the presumptive validity of the patent/SPC;
• the strength of any invalidity arguments, including with reference to successive decisions in other jurisdictions in relation to the validity of the patent.

In the recent cases of Biogen MA Inc & Anor v Laboratories Lesvi SL & Anor (2023) IECA 71 (“Biogen v Neuraxpharm”), Merck Sharp & Dohme LLC v Mylan Ire Healthcare Limited & Others (2023) IEHC 24 (“MSD v Mylan”), and Bristol Myers Squibb Holdings Ireland Unlimited v Norton (Waterford) Limited t/a Teva Pharmaceuticals Ireland (2023) IEHC 159 (“BMS v Teva”), the Irish courts appear to have taken a more patentee-centred approach in relation to preliminary injunctions pending trial. However, there has been a divergence with regard to the issue of whether a preliminary injunction should be granted following a finding of invalidity at first instance and pending appeal.

In Biogen v Neuraxpharm, Neuraxpharm were successful in defending Biogen’s preliminary injunction application at first instance. The case concerned a Biogen divisional patent that protected its dimethyl fumarate product Tecfidera. The High Court judge appeared to be heavily persuaded by arguments that the parent patent had been found invalid and that there was a public interest factor in having the generic proceed to market ‒ namely, savings to the taxpayer. The Court of Appeal overturned this decision, finding that the threshold test for invalidity in injunctive proceedings is high and that there must be successive determinations on the merits invalidating the patent in suit in order to outweigh the presumptive validity of a patent in the balance of convenience.

In MSD v Mylan, MSD were successful in obtaining a preliminary injunction against Mylan in the Commercial Court restraining Mylan from infringing MSD’s SPC for Janumet. The court found that, although successive determinations of invalidity might weigh against the grant of an injunction in an appropriate case, the results in foreign proceedings concerning the patent were mixed in this case. The court was also persuaded by the fact that Mylan had not taken steps to clear the way in Ireland.

In BMS v Teva, the Commercial Court went even further. In that case, Teva had issued revocation proceedings in relation to the compound patent and SPC protecting BMS’ apixaban product Eliquis. The revocation proceedings had been ongoing for two years by the time the preliminary injunction application was heard.

As regards adequacy of damages, the Commercial Court judge felt that neither party had demonstrated that it would be more or less difficult to compute damages. The court also considered the fact that an equivalent patent had been found invalid in England. However, factors such as the fact that the English case was under appeal at the time of the decision and the patent and SPC remained presumptively valid in this jurisdiction undermined this argument. The injunction was therefore granted. The Court of Appeal upheld the decision of the Commercial Court, citing the importance of the presumption of validity of a patent/SPC.

Following the substantive decision in the case, where the patent and SPC were found to be invalid, BMS applied to the Commercial Court again for an injunction against Teva pending BMS’ appeal to the Court of Appeal. This injunction was refused, with the Commercial Court noting that the presumption of validity of the patent and SPC had been displaced by the Commercial Court judgment finding the patent invalid. The Commercial Court also noted that the refusal of an injunction against Teva would not necessarily mean that injunctions would not be granted against other generics companies, who had not been party to the revocation proceedings. This decision is currently under appeal to the Court of Appeal.

Regulatory Landscape

Reform of EU pharmaceuticals legislation

There has been a mixed reception in Ireland to the proposed EU legislative reforms concerning pharmaceuticals. Specifically, the IDA has raised concerns that the new reforms are making Europe more burdensome for pharmaceutical companies, who may favour the “more agile” regulatory system in the USA. That said, Ireland continues to be an attractive destination for life sciences companies to locate, owing to its favourable tax regime, educated workforce and strong links with Europe, the UK and the USA.

As part of the Pharmaceutical Strategy for Europe, on 26 April 2023 the EC adopted a proposal for a new Directive and a new Regulation, which aim to reform and replace general existing pharmaceuticals legislation on authorisation and supervision of medicinal products for human use (eg, Regulation 726/2004 and Directive 2011/83/EC) and legislation on medicines for children and for rare diseases (Regulation 1901/2006 and Regulation 141/2000/EC). These changes will focus on affordability, accessibility, innovation, environmental sustainability, and antimicrobial resistance.

It is anticipated that legislative change may include differentiated incentives for drug development, reductions of marketing exclusivity periods, and the introduction of a conditional data protection system. The latter development could see a company’s IP rights being linked to the launch of a pharmaceuticals product in all participating EU member states within two years, at the risk of reducing the length of exclusivity available for new drugs.

Investment in generics

In recent years, the Irish Health Service Executive (HSE) has been grappling with how best to make use of resources available to fund the national medicines bill. Professor Michael Barry, Clinical Director of the National Centre for Pharmacoeconomics (NCPE), has called for an increase in use of and investment in generics and biosimilars in Ireland, noting that the percentage of generics and biosimilars used in Ireland is much lower than its European counterparts. The argument is that increased use of generics leaves more budget available to fund investment in new drugs.

It appears that the Health Products Regulatory Authority (HPRA) has taken note. In 2023, the HPRA took the unprecedented step of designating a drug as “interchangeable” in circumstances where the SPC protecting the branded product remained in force and thus no generic products were permitted on the market.

In order for medicines to be designated interchangeable, they must have the same composition of active substances, pharmaceutical form and mode of administration. Once medicines are designated interchangeable, pharmacies are required to offer a patient the lowest-cost interchangeable medicine, even where a prescription is written with reference to a medicine’s brand name as opposed to its active ingredient. Traditionally, the HPRA has only designated medicines as interchangeable once a number of generic competitors have entered the market.

AI and Life Sciences

Artificial Intelligence (AI) is driving a major transformation in the global life sciences sector, with Ireland at the forefront. Despite regulatory risks and challenges, AI ‒ along with Machine Learning (ML) ‒ offers significant benefits to the life sciences sector and is revolutionising various processes, from drug discovery to supply chain management.

However, a key concern regarding the use of AI in the life sciences sector is how to use AI safely and ethically. Regulatory compliance will become increasingly important, owing to the rapid pace and scale of AI-enabled life sciences development. This makes it challenging for regulators to ensure safety, transparency, model validation, patient safety, and date security. The recently adopted EU AI Act is welcomed by industry and regulators alike, as it provides clarity on the regulatory regime applying to AI. In the life sciences sector, the US Food and Drug Administration and the European Medicines Agency have been in the procress of consulting with industry, academic and other groups to develop AI/ML guidelines for drug development.

AI is making a significant impact in drug development and diagnostics. AI aids in discovering new drug candidates, thus reducing the time and cost of bringing drugs to market by improving clinical trial and manufacturing processes. AI’s ability to analyse large patient data sets and to identify those likely to respond well to specific drugs makes previously incurable conditions potentially treatable.

In Ireland, the HSE is deploying various AI devices in test trials. One device monitors patients with deterioriating respiratory conditions and uses a sensor to relay data, triggering nurse intervention when the data deviates from the baseline. Moreover, the HSE has begun installing sensors in patients’ homes to track their activities and send alerts if no or unusual movement is detected for an extended period. This can save valuable time in emergency response situations.

On the diagnostics side, APC Microbiome (a Cork research centre for food and medicine) has developed an AI system for ulcerative colitis management. This tool expedites the prediction of patient outcomes and reduces biopsy evaluation errors in a clinical setting.

Conclusion

Despite competition from the USA and Asia‒Pacific, Ireland remains a popular jurisdiction within which to do business for life sciences companies. Ireland is an attractive base for multinationals and a fertile environment for indigneous life sciences start-ups.

Life sciences companies are continuing to litigate in Ireland and, if Ireland ratifies the UPC, this trend is expected to continue. It will be interesting to see what influence Irish common law judges have on the jurisprudence of the UPC.

Home not only to most of the world’s major life sciences companies, but also boasting the EU headquarters of major tech companies such as Google, Meta and Microsoft, Ireland is a prime location for pharma and tech collaborations in areas such as AI. The authors expect to see further developments in this space in 2024 and beyond.