Three Reasons Ireland’s Orthopaedic Sector Attracts Foreign Investments

Ireland’s medtech industry is well-established, strong and growing. In 2012, exports to the value of $10.6 billion were posted, up eight percent from 2011, according to the Central Statistics Office Ireland. Per capita, Ireland employs and has the highest industrial output in the medical device sector in the European Union (25,000 employed in a population of 4.5 million people). Of the top 20 global medical device companies, 15 maintain operations in Ireland. Successive Irish governments have laid the foundations for a stable, open and competitive economy, supporting inward investments as well as those for indigenous enterprises. The industrial base in Ireland focuses on a growing orthopaedic sector, and companies such as DePuy Synthes, Stryker, Symmetry, Tornier and Zimmer all have active bases here.

Ireland’s competitive advantage comprises three pillars that attract investment from overseas orthopaedic companies: people, taxes and innovation.

An English-speaking nation of 4.5 million inhabitants, Ireland has been part of the European Union since 1973 and currently holds the EU presidency. Ireland’s currency is the Euro, making for easier trade with continental Europe, with stable exchange rates with the dollar and zero foreign exchange risk with most of its European trading partners. It is also said that Ireland has many friends around the world, as we have no imperial legacy, and though a small country, over 80 million people worldwide can claim Irish ancestry.

Ireland’s workforce is young, dynamic and well-educated. Education at all levels is provided free for the most part by the government, and subsidies are provided toward the independent and private education sectors. There is a high participation rate; 65% of high school graduates enroll in university and college institutions. There is strong growth in the rates of applicants interested in participating in science and engineering courses, which will provide an excellent talent pool for the medical device sector.

Irish universities are linked with many international institutions. The Royal College of Surgeons in Ireland has strong connections in the U.S. and around the world including, for example, the Cleveland Clinic. Trinity College Dublin Medical School is one of the oldest medical schools in Europe, founded in 1711. One of its most famous gradates was Abraham Colles, who originally described in detail the typical Colles’ distal radius fracture deformity, many years before x-rays were available. Irish universities continue to serve as a hub for research and innovation.

Key to Ireland’s emergence as an important medical technology cluster has been our ability to attract foreign direct investment (FDI) and, in addition to our strong manufacturing and engineering base, Ireland has a stable and favorable tax base. Ireland continues to attract companies from a variety of sectors including ICT, life sciences, financial services, engineering, digital media, games and social media. While the pace of Ireland’s economic recovery remains modest for now, this country’s FDI performance has remained buoyant. Despite myriad challenges, Ireland’s unique attributes as an investment location remain intact. Over 1,000 multinational corporations have chosen Ireland as their strategic European base, including Google, Microsoft and Intel, attracted by our pro-business, low corporate tax environment, track record of success and young, highly-skilled talent pool. Many of these entities have gone on to expand their facilities in Ireland because of the positive, adaptable attitude of the workforce and the ready availability of highly-educated and experienced managers. Many have moved up their value chain to take on higher-value, knowledge-intensive activities. Ireland’s FDI strategy has continually evolved by scanning the horizons of enterprise and focusing on and securing FDI in new technologies, innovative business models and new markets.

Ireland’s headline rate for corporation tax is 12.5%, which is significantly lower than most of our European neighbors. This 12.5% rate was introduced in 2003 and has been supported by successive governments to attract and maintain foreign corporations here.

In addition, generous tax credits exist for research and development of up to 25% on qualifying activities. Ireland has had an R&D tax credit scheme since 2004. Qualifying R&D expenditure generates a 25% tax credit for offset against corporation tax, in addition to the tax deduction at 12.5%. Its purpose is to encourage both foreign and indigenous companies to undertake new and/or additional R&D activity in Ireland. The R&D tax credit is available to Irish resident companies and branches on the incremental cost of in-house, qualifying R&D undertaken within the European Economic Area. New companies setting up an R&D operation qualify for the credit on all qualifying R&D expenditure.

While retaining this strong manufacturing base, Ireland is also making huge advances in creating a community of vibrant innovation and indigenous company creation. Diverse talents, entrepreneurial spirit and an ability to collaborate efficiently across different disciplines are becoming hallmarks of the sector in Ireland. Manufacturing in Ireland has transformed in recent years with innovative practices and lean operations. There are also many indigenous Irish companies developing innovative devices, with a view to the global export market.

A case study is our own X-Bolt Orthopaedics, which has developed plate and nail systems for hip fracture fixation. Development and testing was performed in-house and in conjunction with Irish universities, such as Trinity College Dublin and Queen’s University Belfast. The X-Bolt is now in clinical use in the U.K. and Ireland. Scientific peer review and ongoing research is crucial to the product development process and this is continuing beyond regulatory approval. The X-Bolt is CE Marked and under evaluation for health technology economic benefits. Throughout, the pool of talent within the medical device cluster assisted in providing solutions and services to the product development process.

Brian Thornes, M.D., is an orthopaedic surgeon from Ireland who invented and developed the “TightRope” concept for ankle syndesmosis injuries. He licensed the technology in 2003 to Arthrex. The ankle TightRope has now become the treatment of choice for sport professionals and the general population alike with this injury, and fostered similar techniques for other anatomical sites, such as the shoulder, foot and wrist. Over 100,000 ankle syndesmosis TightRopes have been implanted to date worldwide.

Subsequently in 2007, Dr. Thornes invented the novel X-Bolt concept for hip fracture fixation and has grown X-Bolt Orthopaedics through all stages of product development, expanding the product offering, gaining regulatory approval, clinical use and surgeon adoption. Dr. Thornes has an MBA from Trinity College Dublin and is a Board Member of the Irish Medical Devices Association, and of the Higher Education Authority of Ireland.

For more on our Spotlight on Europe:
Conquering the German Market in Six Months
The Basics: A Look at France’s Medical Device Market