LUẬN văn THẠC sĩ (KINH tế) an analysis of the potential impact of brexit on the irish life science industry

TableofContents Declaration...i Abstract...ii TableofContents...iii ListofFigures...vii ListofChart...viii ListofTables...ix Chapter1.Introduction...1 1.1 ResearchBackground...1 1.2 Aima

Declaration

I,CarolinaCujabantedeclarethatthisresearchismyoriginalworkandthatithasneverbeenpresentedtoanyinstitutionoruniversityfor theawardofDegreeorDiploma.Inaddition,IhavereferencedcorrectlyallliteratureandsourcesusedinthisworkandthisworkisfullycompliantwiththeDublinBusinessS c h o o l ’ s academichonestypolicy

Signed:

Date:21stMay2018

TheIrishlifeSciencesectorplaysasignificantroleintheIrishEconomy,positioningthecountryasthelargestexporterofLifeScienceproductsintotheEuropeanUnion.ThegeographicpositionandstrongrelationshipbetweenIrelandandtheUKhaveplayedaneminentroleinIreland’ssuccess.Assuch,anydisruptionintherelationshipbetweenthetwocountrieswillcauseeconomic,political,andsocialeffects.Asofthe29thofJune2016,theUKpresentedaformaldecisiontoleavetheEuropeanUnion,inwhatwasknownas“Brexit”.ThisstudyaimstofindouthowtheIrish

LifeScienceIndustrywilldealwiththis,lookingatwhatmajorissuesarefacingthesectorinthisuncertainenvironmentofchange.Althoughtherehasbeensomeresearchdoneinthearea,existingliteratureshowedalackofresearchintotheIrishLifeSciencesectoritself,inrelationtothispotentialchange.Thus,thisstudywillfillsuchgaps

Theaimsofthisdissertationweremetbyan

extensiveanalysisofrelevantliteratureandt h r o u g h thei m p l e m e n t a t i o n ofa qualitativemethodology(interviews).TheresearchisbasedondatacollectedfrommajorIrishentitiesintheIrishLifeSciencei n d u s t r y : HealthProductsRegulatoryAuthority(HPRA),I r

i s h PharmaceuticalAssociation(IPHA),andtheIndustrialDevelopmentAuthority(IDA),withcollaborationfromtwopharmaceuticalco mp an ie s Datacollectionwascarriedoutthroughsemi-structuredinterviews

ThekeyfindingsofthisresearcharethatIrishLifeScienceindustriesseeBrexitasarealityandarepreparingfortheworst-

casescenario,withlabelling,regulatory,andphysicalchangesbeingthemainissuesaffectingtheindustry

ThekeyconclusiondrawnfromthisresearchwasthatBrexitwouldnotheavilyaffecttheIrishLifeSciencesector,butthatasocialimpact,duetoashortageofmedicines,wastobeexpected.DuetotheunstableanduncertainnatureofBrexit,thisresearcherr e c o m m e n d s furtherstudiesbeconductedaftertheagreementbetweentheUKandtheEuropeanUniongoesthoughinordertoachievemoreconcreteconclusions

TableofContents

Declaration i

Abstract ii

TableofContents iii

ListofFigures vii

ListofChart viii

ListofTables ix

Chapter1.Introduction 1

1.1 ResearchBackground 1

1.2 AimandObjectivesoftheResearch 2

1.3 Organisationofthedissertation 3

1.4 Scopeandlimitationsoftheresearch 5

1.5 Industryandmajorcontributionsoftheresearch 5

Chapter2.LiteratureReview 7

2.1 Introduction 7

2.2 UnderstandingBrexit 7

2.3 IrishEconomy 8

2.4 RelationshipbetweentheUKandIreland 10

2.5 GlobalLifeScienceIndustry 12

2.6 IrishLifeScienceSector 14

2.6.1 UnderstandingIrishLifeScienceIndustryandItsOperations 18

2.7 MajorIssuestobeaddressedinapotentialBrexit 20

2.7.1 TradeandCommercialissues 21

2.7.2 OperationsandSupplyChainIssues 21

2.7.3 RegulatoryIssues 22

2.8 BilateralTradeAgreements 24

2.9 PotentialImplicationsoftheIrishLifeScienceSectorandtheIrishEconomy252.9.1Dra

wbacks 25

2.9.2Advantages 26

Chapter3.ResearchMethodology 28

3.1 MethodologyIntroduction 28

3.2 ResearchPhilosophy 29

3.3 ResearchApproach 31

3.4 ResearchStrategy 32

3.5 ResearchChoice 33

3.6 TimeHorizon 33

3.7 Sampling-SelectingRespondents 34

3.8 Datacollection 35

3.9 ResearchEthics 37

3.10 ResearchLimitations 38

3.11 Validityandreliability 38

Chapter4.SurveyResearchDataAnalysisandFindings 40

4.1 Introduction 40

4.2 Survey Participants 40

4.3 DataOverview 41

4.4 DataAnalysisandFindingsfromentities(IPHA,HPRAandIDA) 41

4.4.1 Theme1:BrexitandImpactsintheIrishLifeScienceIndustry 41

4.4.2 Theme2:IrishLifeScienceRelationshipwiththeUK 42

4.4.3 Theme3:Plans,ExpansionandRelocations 44

4.4.4 Theme4:ImpactontheIrishEconomy 46

4.5 DatadisplayofLifeScienceCompanies(PC1andPC2) 47

4.6 DataAnalysisandFindingsfromCompanies(PC1andPC2) 48

4.6.1 Theme1:BrexitandImpactsintheIrishLifeScienceIndustry: 48

4.6.2 Theme2:IrishLifeScienceRelationshipwiththeUK 49

4.6.3 Theme3:Plans,ExpansionandRelocations 50

4.6.4 Theme4:ImpactontheIrishEconomy 51

Chapter5.Discussion 52

5.1 Introduction 52

5.2 HowdoestheIrish LifeScienceIndustryviewBrexit? 52

5.3 WhatarethemajorissuesfacingthesectorintheuncertainenvironmentofBrexit? .52 5.4 What,potentially,isthemajorimpactBrexitwillhaveontheIrishLifeScienceindustry? 53 5.5 WhatareIrishLifeSciencecompaniesactivelyplanningorimplementingino r d e r top repareforBrexit? 54

5.6 Investments,RelocationsandExpansions 54

5.7 OnwhatbasisareLifeSciencecompaniesmakingthosedecisions? 55

5.8 WhatimpacthavethosedecisionsontheIrishLifeSciencesectorandontheI r i s h eco nomy? 56

Chapter6 ConclusionsandRecommendations 57

6.1 Introduction 57

6.2 Conclusions 57

6.2.1 ResearchObjective1:IdentifyhowtheIrishLifeScienceIndustryviewsBrexit 57

6.2.2 ResearchObjective2:Identifythemajorissuesfacingthesectorintheuncertainen vironmentofBrexit 58

6.2.3 ResearchObjective3:ExplorewhatIrishLifeSciencecompaniesareactivelypla nningorimplementinginordertoprepareforBrexit 59

6.2.4 ResearchObjective4:Identifyo n whatbasisIrishLifeSciencecompaniesarem akingthosedecisions 60

6.2.5 ResearchObjective5:EvaluatetheimpactofthosedecisionsontheIrishL i f e S ciencesectorandpotentiallyontheIrishEconomy 60

6.3 Recommendations 61

6.4 Conclusion 62

Chapter7.Reflection 64

7.1 Introduction 64

7.2 LearningStyles 64

7.3 Researcherbackground 65

7.4 MasterofBusinessAdministrationinFinance 65

7.5 Dissertation 66

Bibliography 69

Appendices 78

Appendix1:GoodExportsandImportsclassifiedbycommodity 78

Appendix2:InterviewIndustrialDevelopmentAuthority(IDA) 79

Appendix3:InterviewIrishPharmaceuticalHealthcareAssociation(IPHA) 83

Appendix4-Interview HealthProductRegulatoryAuthority(HPRA) 87

Appendix5:PharmaceuticalCompany(PC1) 90

Appendix6:PharmaceuticalCompany(PC2) 93

Figure1.IrishLifeScienceIndustry 1

Figure2.IrelandandUKTrade 11

Figure3.ResearchandDevelopment 13

Figure4.US'stopfivesourcesofimportofPharmaceuticalProducts(2015) 16

Figure5.ImpactofBrexit 26

Figure6.Theresearchonion 29

Figure7.SamplingTechniques 34

Figure8.QualitativeInterview 36

Chart1.LifeScienceIndustry 14Chart2.ValueChain 15Chart3.IrelandTradewiththeUKandtherestoftheworld 18

ListofTables

Table1.ImpactofBrexitontheIrishEconomy 10

Table2.DataDisplayofentities 41

Table3.DatadisplayofCompanies 47

Table4.Investmentsfrom2017 55

1.1 ResearchBackground

TheL i f e Sciencesectorisc o m p r i s e d ofbiopharmaceuticals,pharmaceuticals,andmedicaldevicecompanies,andistheindustryresponsiblefortheuseoftechnologyandbiologytoimprovehealthcare(Lyons,2017)

TheLifeSciencesectorpl ay s asignificantroleintheIrisheconomy,positioningthecountryasaworldplayerandthemostextensivenetexporterintheEuropeanUnion(Moran,2017;Ibecf o r I r i s h Business,2018;IPHA,2018b).Irelandishometoa p p r o x i m a t e l y 120L

i f e Sciencecompanies,including9 ofthe10worldprincipalc o r p o r a t i o n s , makingthecountryatoplocationfortheindustry(IPHA,2018b)

Figure1.IrishLifeScienceIndustry

(Source:IDA,2018)AftersomediscontentregardingEuropeanUnionrules,inJune2016themajorityofBritishcitizensvotedtoexittheEuropeanUnion,inwhatwasknownas“Brexit”(Pruitt,2017).Thisformaldepartureisscheduledforthe29thofMarch2019(Boyle,2015;H u n t &Wheeler,2017;Lyons,2017).Onthe19thofMarchofthepresentyear,2018,theEuropeanUnionandtheUKagreedonatransitionorimplementationof21monthsafterBrexit,untiltheendof2020,toprovideclaritytopeople,business,andgovernmentsinordertoprepareafterBrexit(ClarkeandNobilo,2018)

DuetothegeographiclocationbetweentheUKandIreland,andthehistorybetweenthecountries,anychangeinthe“SingleMarketFramework”thatbothcountrieshaveshared,ande n j

o y e d , since1973,couldpotentiallydisrupttheI r i s h economyalso,especiallyinrelationtotheLifeSciencesector(Smithetal.,2016;Brozak,2016)

1.2 AimandObjectivesoftheResearch

ThisstudyaimstofindouthowtheIrishLifeScienceIndustrywilldealwithBrexit,lookingatwhatmajorissuesarefacingthesectorinthisuncertainenvironment ofchange.Althoughtherehasbeensomeresearchdoneinthearea,existingliteratureshowedalackofresearchintotheIrishLifeSciencesectoritself,inrelationtothispotentialchange.Thus,thisstudywillfillsuchgaps.SeeingthatBrexitisanew,ongoinganduncertaintopic,therearelimitedstudiesrelatedtoanyspecificimplicationsitwouldhaveontheIrishLifeScienceIndustry.TheliteraturethatdoesexistofferssomepapersrelatedtotheUKLifeScienceindustryandBrexit,withsomegeneralisationtotheIrishsector.However,themajorityarebasedonprojectionaboutpossiblescenarios,

“postBrexit”,suchasborders,customs,andthefreemovementofpeople(potentialoutcomes),limitedonspecificimpactsontheIrishLifeScienceIndustry.Forthatreason,thisstudyaimstoimproveandfillsuchgapswithinformationfromthecollectionofprimarydata

AsstatedbyKavanaghandFarrell(2017),seeingthatIrelandisthelargestexporterofbiopharmaceuticalstotheEU,itisarealitythatBrexitwillaffectthesector.Thea r g u m e n t issupportedbyKazzazietal.(2017)and

PharmaceuticalExecutive(2016),w h o pointoutthatBrexitposessignificantproblemstotheLifeSciencesector,withcompaniesfacingnewregulations,causingdelaysinthed i s t r i b u t i

o n ofmedicines,amongotherissues.Hence,thisstudyaimstoe x p l o r e therelationshipbetweenIrelandandtheUKinrelationtothisindustry,suchasinsupplychain,imports/

exports,financialcashflow,amongotheroperations,tofindoutwhat,ifany,

themainissuesarethatwillpotentiallyaffectthesectorafterBrexit

Primarily,thepurposeofthisresearch,istoassessthefollowing-HowdoestheIrishLifeScienceIndustryviewBrexitandwhatarethemajorissu esfacing

the sectorintheuncertainenvironmentofBREXIT? Theresearchquestionintendstofindout,inapotentialBrexitscenario,howtheIrishLifeScien

ceIndustryperceivesBrexitandwhatthemainissuesaffectingIrishLifeScienceCompaniesare.TheresearchquestionwheninvestigatedwillhelpusunderstandtheunforeseeableimplicationsofapotentialBrexitontheIrishLifeSciencesector,inordertoalleviateanynegativeimpact,ifany,oridentifypotentialopportunitiesfortheIrishLifeSciencesectorgoingforward

Thischapterwilldiscuss,justify,andcontrastandcomparerelevantliteraturetogainanoverallviewofthetopic,highlightinganygaps

Chapter3-ResearchMethodology

Thischapterwilldescribeandj u s t i f y theresearchmethodologychosen,includingsampling,datacollection,andalltheactivitiescarriedoutinthisresearch.Finally,therewillbeinformationonethics,limitations, andthevalidityandreliabilityofthestudy

Chapter4-DataAnalysisandFindings

Inthischapter,theprimarydatacollectedwillbeclassifiedbythemesandanalysed.Thefindingswillbeillustratedandrelatedtotheresearchandsubresearchquestions

Chapter5-Discussion

Thischapterwillreviewandinterpretthefindingstocompareandcontrastitwiththeliteraturereview,concludingwithadetailedexplanationoftheanswersexploredinrelationtotheresearchand sub-researchquestions

Chapter6-ConclusionsandRecommendations

Thischapterwillanalyseandlinkthefindingswiththeaimsandobjectivesoftheinvestigation,todrawuponageneralconclusion.Additionally,itwillexplainhowtheliteraturereviewwillsupportthef i n d i n g s Thischapterwillhighlightsomer e c o m m e n d a t i o n s fortheI r i

s h LifeScienceIndustry,intheeventualityof“Brexit”,a l o n g withhighlightingsomecontributionsofthisstudytotheindustry

Chapter7–Self-ReflectiononOwnLearning

Thischapterwillbeananalysisoftheresearcher’slearningexperiencesinthemaster’s

program

1.4 Scopeandlimitationsoftheresearch

SeeingthatBrexitisanewandongoingphenomenon,alackofliteraturewillbethep r i n c i p a l limitationofthisstudy.Toavoidthisissueasmuchaspossible,theresearcherwillm a k e thenecessaryeffortstoupdateuntilthelastmomenttheinformationcollected(secondaryresearch).Additionally,thisstudycannotdevelopa generalc o n c l u s i o n , asthestudyfinishesb e f o

r e thescheduleddatetheUKwillleavetheEuropeanUnion.Despitethisfact,theresearchermadealltheeffortsnecessarytogetaccesstoIrishLifeSciencecompanies,togathersomedataonthistopic.Thus,thestudywillbeprimarilybasedontheinformationcollectedfromprivateandpublicentitieswithintheindustry

Thisdissertationwillinvestigatetheindustry,detectingandevaluatinganypotentiali m p a c tthatcouldaffecttheindustry,allofwhichwillberelevantinordertohelpplanaheadandfindoutthemostsuitablestrategiestohelpnavigateBrexit.Furthermore,thebenefitofthisresearchisthatitcanofferr e c o m m e n d a t i o n s totheindustry.Additionally,astheIrishL i f e ScienceIndustryoffersavarietyofemploymento p p o r t u n i t i e s , andbecauseitistheresearcher’sintenttos t ayinthecountry,thisdissertationwillhelpprovideanunderstandingofhowBrexitcouldpotentiallyaffecttheIrisheconomyandjobopportunities

AsBrexitisanongoingphenomenon,thereisalackofstudiesrelatedtotheIrishL i f e ScienceSector,whichmakesthisresearchpertinent,andcurrent.

2.1 Introduction

ThisstudyaimstofindouthowtheIrishLifeScienceIndustrywilldealwithBrexit,lookingatwhatmajorissuesarefacingthesectorinthisuncertainenvironment ofchange.Althoughtherehasbeensomeresearchdoneinthearea,existingliteratureshowedalackofresearchintotheIrishLifeSciencesectoritself,inrelationtothispotentialchange.Thus,thisstudywillfillsuchgaps.I n recentyears,Irelandhass h o w n

a healthyrecovery,becomingthe“fastestgrowingeconomyintheEuropeanUnion”(IbecforIrishBusiness,2017a).Asstatedbefore,theUKisIreland’sclosestpartner,thusIrelandisfacingauniquechallengeinrelationtoapotentialBrexit.Inthisregard,anyimpact(threatoranopportunity)ontheIrishLifeScienceIndustryc o u l d extendtotheIrisheconomy,whichmakesthisdissertation’stopic relevanttothoseworkingdirectlyorindirectly,current,orfuture,intheLifeSciencesector.Withregardstothistopic,theliteraturereviewisdividedintoeightthemes:

AccordingtoBlagden(2017),thedecisiontoleavewastheresultof“economicandculturaldivisions”,cross-borderfactors,weakpublic

EuropeanUniononthe29ofMarch2017

TheUK’sdecisiontoleavedoesnotmeananimmediatechange,astheinevitableexitfromtheEUwillhappenthrough proceduresestablishedinarticle50oftheLisbonTreaty.Article50stipulatesthattheprocesstodiscusstheagreementsoftheexitwilltaketwoyearsatleast,andtheprocessincludestwoseparatenegotiations:withdrawalnegotiationsandthefuturerelationshipbetweentheUKandEU.Thelatterisexpectedtobelonger(EY,2016;Smithetal.,2016).Onthe19ofMarchofthisyear,theEuropeanUnionandtheUKagreeda transitionperiodoftwoyears

“from29March2019to31December2020”(Pwc,2018c).Duringthetransitionperiod,theUKwillbeabletonegotiateitsowndealswithothercountries,butitcannotbeput“intoforceuntilafterthetransitionperiod”(Deloitte,2016;Pwc,2018c).Inthesameway,duringthenegotiationsperiod,theUKwillstillbeunderEuropeanU n i o n regulationsandenjoyitsbenefits,butthecountrywillnothavetherighttoparticipateorvoteonissuesaffectingtheEuropeanUnion.Currently,therearefourmainissuesthatarestilloutstanding:Agreementonfuturetrade,R e s o l u

t i o n forfuturetraderelations,Irishb o r d e r s , and“Governanceofthewithdrawalagreements”(Pwc,2 0 1 8 c ) However,asstatedbyMerler(2018),thetransitiondealisnotfullyguaranteed,untilthesuccessfulconclusion oftheissuesabove

ThemajorityoftheliteratureagreesthatBrexitisoneoftheb i g g e s t potentiale c o n o m i

c threatstotheUKandEuropeanUnion.Duetoitsg e o g r a p h i c position,Irelandfacesthehighestr i s k However,them a g n i t u d e ofthei m p a c t ishighlyunpredictable,becauseitisthefirsttimethatacountryhasdecidedtoleavetheEUsinceitscreation,thustherearenohistoricalreferencesoranestablishedprocesstoreferto(EY,2016)

2.3 IrishEconomy

BeforetheFinancialCrisis,I r i s h economicperformancewasrecognisedbytheO r g a n i s

a t i o n forEconomicCooperationandD e v e l o p m e n t (OECD)asan“ E c o n o m i c SuccessStory”.In2008,withthecollapseofLehmanBrothers,Irelandrapidlyfellinto