Mr. Brian Cotter:

I will finish on the issue of tax and then go on to that question. In terms of the history of Irish tax policy, the corporate tax rates were even lower at one stage but Ireland did not attract the same level of investment as it does now. Today we have a combination of a strong competitive position, particularly with the talent that we have here, and a very good business proposition, with the certainty surrounding the 12.5% rate. There are other locations that have lower rates but we are not advocating any change. We want certainty, which is a very valuable commodity.

Regarding the patents cliff in the pharmaceutical sector, the Deputy has a very perceptive insight into the industry and this is an issue that has been predicted for some time. The large pharmaceutical companies have had a gap in their research and development platforms for some time. It was always known that at the end of the last decade or the beginning of this one, their product portfolio would look a little weaker and hence, they have been acquiring a lot of companies. I do not know if the committee is aware of the life sciences task force, established by the IDA and Forfás, which is very interesting.

In recent years we have seen a strengthening of the pharmaceutical sector although there is no doubt that a transformation is under way. Companies are making major decisions about their product mix. Some, whose products are going off patent, are still interested in competing in those markets, while others are not. In terms of the number of companies in the sector, new ones have come into Ireland in recent years, like Amgen and Mylan. The sector looks quite dynamic and there will be some churn there, but that is no different from any other sector which has transformed over recent decades. Companies are doing very different things now to what they were doing ten or 20 years ago. That is something that we will all have to watch. It is heartening, however, that from a policy perspective, this change is well understood and is under constant examination to determine how we can strengthen those companies in the longer term.

In terms of the aforementioned value chain, some of the pharmaceutical companies, such as MSD, for example, are looking at other opportunities in their business, beyond manufacturing. Some are considering research and development opportunities and indeed, research and development activity is expanding quite healthily in Ireland. Other issues like centralised services, European headquarters, IT development, finance and so forth are being considered and the companies in question are expanding in many different ways within the sector. That is all playing to the strengths of Ireland as a location for international businesses to set up and run their regional headquarters. There is a lot to be optimistic about and the sector is definitely one to watch.