US Medical Giants Big Beneficiaries Of State Aid
Pharma and med-tech multinationals bring thousands of jobs to Ireland and are boosted by large taxpayer-funded grants, writes John Kinsella
Medical devices manufacturer Stryker Corporation, based in Kalamazoo, Michigan, isn’t short of a few bob. Dr Homer Stryker started the venture in 1941 making the Turning Frame, a mobile hospital bed that allowed for repositioning of injured patients. Today Stryker’s monthly sales average $1,460m, and the company’s profit margin is 13.9%. Net profit in H1 2022 was $979m and shareholders received $525m in dividends.
Stryker has been manufacturing in Ireland for around 40 years and IDA Ireland says c.4,000 people are employed in Belfast, Limerick and Cork. In August, the company officially opened its new 156,000 sq ft facility at Anngrove in Carrigtwohill, Co Cork, with Taoiseach Micheál Martin on hand to cut the ribbon.
Stryker uses 3D printing to manufacture products to treat bonerelated conditions across knees, hips, shoulder, ankle, craniomaxillofacial and spine, as well as patient-specific solutions for people with significant disease progression.
Anngrove is also the corporation’s HQ for its AMagine Institute, the centre of excellence for additive manufacturing across the Stryker group. The R&D centre develops technologies, from early research and development to full commercial launch and scaling, and deploys these new technologies across its full portfolio of products and services.
The Anngrove facility adds capacity for up to 600 additional jobs, though in 2020 Stryker Ireland Ltd reduced headcount by 80 people as Covid stalled hospital procedures around the world and depressed demand for Stryker products.
The company’s accounts illustrate the importance of large US multinationals to Ireland’s economy. Stryker Ireland paid €5.5m in employer’s PRSI in 2020, and the taxman was also rewarded with a large chunk of the company’s €59m outlay on wages and salaries.
In this context, the large grant aid paid to Stryker by taxpayers makes sense, at least for the Exchequer and 1,280 Stryker employees who enjoyed average pay of €46,000 in 2020. The €46m in IDA grant aid approved for Stryker in November and December 2019 came from current tax revenue levied from other workers through income and spending taxes.
At the official opening ceremony, Micheál Martin commented: “Government will work to ensure Ireland continues to be an attractive location for the med-tech sector, and business in general, supported by our highly skilled and talented workforce.”
Stryker Corporation isn’t the only US giant that benefits from large taxpayerfunded state aids. In January 2022, Eli Lilly announced 300 new jobs are to be created at a new manufacturing plant in Limerick. Biologic ingredients will be produced in the plant for a range of therapies developed by the company.
Eli Lilly already employs 2,300 people in Co Cork, at its Kinsale manufacturing campus and Global Business Solutions centre located in Little Island. In 2021, IDA Ireland sanctioned four grant payments to Eli Lilly Kinsale Ltd totalling €23.2m
In April, Boston Scientific unveiled a plan to expand its operations at Ballybrit, Co Galway, that is expected to create over 300 jobs in the coming years. The company has operated in Galway for nearly 30 years and has expanded site capabilities to include advanced product design, R&D and manufacturing.
The Boston Scientific workforce across its sites in Galway, Clonmel and Cork is c.6,500 people, making it the
largest life sciences employer in Ireland. According to the IDA, Ireland has the highest per capita number of people employed in the European medical device industry.
Boston Scientific booked a net profit of $1,040m in 2021 and the company says the Galway expansion investment will amount to €100m. To help the company on its way, taxpayers will be stumping up €11.3m through five IDA grant payments approved by the agency in 2021.
Earlier this year, Janssen Sciences commenced construction of a biopharmaceutical supply chain facility in Ringaskiddy, Co Cork, with the potential to create 180 new jobs in addition to the 700 people currently employed. The project is expected to take two years to complete, with up to 300 people employed during the construction period.
Operating in Ringaskiddy since 2005, the Janssen site manufactures medicines for immunology and oncology patients, and the plant upgrade has a stated investment cost of c.€150m. This year Janssen is commencing commercial production at its new manufacturing suite, which started development in 2017.
In May 2021, IDA Ireland approved a €7.4m grant payment for Janssen Sciences Ireland, which booked a net profit of €1,902m in 2020. The state aid is almost matched by the company’s employer PRSI payment of €7m in 2020, while the Exchequer took at least €24m in income taxes from the €61m in salaries paid to Janssen employees. Average gross pay for 725 Janssen Sciences staff in 2020 was €84,500, and the company operates a final salary defined benefit pensions scheme for employees.
In August 2022, healthcare company Abbott announced investment of €440m in a new greenfield factory in Kilkenny and expansion at its Donegal diabetes care site. The projects will add c.1,000 staff at both locations. The new 250,000 sq ft manufacturing facility will be located on the IDA Business and Technology Park in Loughboy, Kilkenny, subject to planning permission. It will allow Abbott to substantially increase production of its FreeStyle Libre technology for people with diabetes.
Abbott has been active in Ireland since 1946, and its manufacturing activity here seems to be handled by a Luxembourg company. Its commercial business in Ireland, Abbot Laboratories Ltd, booked a net profit of €7.8m on turnover of €60m in 2020. For the new manufacturing project, €3.7m in taxpayer funding has been committed by IDA Ireland.
Total state aid approved by IDA Ireland in 2021 amounted to €105m. The agency estimates that expenditure in the Irish economy by IDA grant recipients was €27.9bn in 2020, made up of expenditure on payroll (€16.8bn), Irish services (€8.4bn), and Irish materials (€2.6bn).