Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News

Ireland outlaws “ghosts” but won’t end “Double Irish” break for multinationals.

Ireland is world famous for castles and cabbage, for the Blarney Stone and Bono. And in recent years, a sizeable biopharma cluster co-anchored by nine of the industry’s 10 largest companies.

Two of those pharma giants are now shrinking their presences in the Emerald Isle. Merck said November 29 it will shut its Swords manufacturing plant, idling all 570 workers over three years as operations shift to Belgium, the Netherlands, and the U.S. Less than a week later on December 4, Pfizer said it will axe 150 of its 670 workers at its Newbridge plant in County Kildare.

In public statements, the companies cited their still-large Irish workforces (3,200 for Pfizer, 2,000 for Merck), while linking their Irish job reductions to overall corporate cost-cutting—like Merck’s plan to eliminate 8,500 jobs by the end of 2015. Pfizer, similarly, said its layoffs were a response to growing generic competition following the patent-cliff expiration of exclusivity on blockbusters.

“Ireland remains a key strategic location for Pfizer with many of our leading and newest medicines manufactured here, and the company continues to make investments in the Irish operations,” a Pfizer vp, Paul Duffy, told the Irish Independent. In July, for example, Pfizer and Ireland’s economic development agency, IDA Ireland, announced company plans to spend $130 million to expand two manufacturing sites, Grange Castle in Dublin, and Ringaskiddy in County Cork.

News of the layoffs comes weeks after Ireland took aim at multinationals by changing its tax code to outlaw Irish-incorporated “ghost” or stateless entities that have no tax residency but collect royalties in offshore tax havens, like Bermuda or the Cayman Islands, from Irish tax-resident subsidiaries that pay royalties for IP. The practice, nicknamed “Double Irish,” has been a perfectly legal way for multinationals to cut their global tax bills, given U.S. tax rates reaching 35% for the highest-income corporations.

The change would not end “Double Irish” since multinationals could still register subsidiaries in Ireland, then shift profits to offshore companies that declare residency in a tax haven. Yet Irish officials hope the change will deflect U.S. and European criticism that the Emerald Isle is too business-friendly.

With a corporate tax rate of just 12.5%, Ireland beckons for CEOs, and biopharma’s no exception. In July when Perrigo said it would acquire Irish-based Elan for $8.6 billion, Perrigo Chairman and CEO Joseph C. Papa told analysts his company would cut its effective tax rate to 17% (from about 30%) in the first 12–18 months after closing, at an annual after-tax savings of more than $150 million annually. Actavis included reduced taxes along with synergies in the overall $400 million in yearly savings it said it generated by acquiring Dublin-based Warner Chilcott, in a deal completed October 1.

Neither IDA Ireland, nor the trade group Irish BioIndustry Association responded at deadline to GEN queries on the job cuts and the effect ending Double Irish may have on biopharma job creation.

NOVARTIS: More Emeryville Cuts as Oncology Shifts to Cambridge

Two months after JobWatch broke the story that Novartis’ Vaccines & Diagnostics Division was trimming some 50 jobs from its workforce in Emeryville, CA, the pharma giant has disclosed plans to cut an additional 167 positions now based there—though many if not most of the people affected may yet land new jobs to be created elsewhere.

Layoff date for the 167 positions will be February 28, according to a WARN Act notice Novartis sent to California’s Employment Development Department on November 12.

The 167 jobs to be eliminated at Emeryville were among 500 R&D jobs Novartis told the Boston Globe it would eliminate companywide: “It’s an attempt to reallocate resources in a more efficient way,” Novartis research chief Mark C. Fishman told the newspaper.

However, Novartis also said it will more than make up for the lost California jobs with new positions at its research headquarters in Cambridge, MA—where oncology research is being consolidated from Emeryville.

“175 new positions will be opened in Cambridge to support Oncology research as well as a new respiratory research group,” Julie Masow, a Novartis spokeswoman, told GEN on Tuesday. “The impacted Emeryville associates can apply for the open positions in Cambridge.”

The company had some 900 jobs at Emeryville in October, when Novartis confirmed plans to lay off some 50 staffers in global legal, IT, HR, finance, procurement, and vaccines research positions.

JOBCETERA: Optimer Pharmaceuticals, Forest Laboratories

  • Optimer Pharmaceuticals told New Jersey’s Department of Labor and Workforce Development it will lay off 177 employees effective June 30, 2014. The layoffs follow the company’s acquisition in July by Cubist Pharmaceuticals for $535 million.
  • Forest Laboratories said it will lay off an as-yet-undisclosed number of staffers to achieve $110 million of the $500 million in savings to be attained through the company’s cost-cutting effort, dubbed Project Rejuvenation. The majority of savings ($270 million) will come from R&D.

Share your news of biopharma employment ups, downs, and trends with JobWatch. Please email Alex Philippidis at [email protected] or via Twitter at @AlexWestchester.

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