Richard Curran: Trump is playing Russian roulette with Big Pharma
One might wonder about the unfortunate timing of the very good news that US pharmaceutical company IQ Pharmatek plans to create 100 jobs in Tipperary.
The announcement came within hours of US president elect Donald Trump's major swipe at American drug companies making products abroad that are sold to US customers.
Trump took his threats to a whole new level at his first major press conference. While issues around the Russians and the US intelligence services stole most of the headlines, Trump's targeting of American pharmaceutical companies locating overseas knocked $25bn off the value of major drug company stocks.
Once again, he used his trademark threat to impose a large import tax. This time it was on drugs made outside the US. It certainly put the frighteners on the sector - and investors. Around $6bn was wiped off the value of Bristol Myers Squibb.
If he were to go ahead with this, it could pose a very serious threat to jobs and investment in Ireland, as well as put a big hole in our export and GDP figures.
Ireland is the world's 7th largest exporter of medicinal and pharmaceutical products. Around a quarter of our €60bn pharmaceutical exports go to the US. The really big players in the sector here are American companies.
The sector contributes around €1bn per year in corporation tax to the Irish exchequer.
The two big questions are, will he really do this? And just how badly might it affect the industry in Ireland? One of the main reasons billions of euro worth of medicines go from Ireland to the US is because of the Pharma-GATT Agreement, which eliminated customs duties on over 8,000 pharmaceutical products.
The original deal - which covers the EU, the US and Switzerland - was agreed in 1994 and then extended to a further 1,290 products in 2007 under the administration of then US President George W Bush.
If Trump wants to put a border tax on cars coming from Mexico he will have to re-negotiate the entire North American Free Trade Agreement. If he wants to do the same on pharmaceuticals, he will have to crack open the Pharma-GATT Agreement. Not impossible, but it would take a long time and would open a whole new can of worms.
He may even be willing to do this, but actually making that happen while he is in power is very different to issuing tweets or threats at press conferences.
For a start, the replacement value of the pharmaceutical industry in Ireland is put at around $40bn. These companies have made enormous investments in Ireland and will not up sticks and leave quickly.
If Trump was to subsidise their upheaval by lowering corporation tax in the US, they might have more of an incentive to at least look at directing new investments to the US, as opposed to pulling back from what is already here.
A large chunk of the drugs they make in Ireland are exported to Europe. Tariffs cut both ways. If they tried to service the European market from the US by switching investment back there, they would be hit with a wall of counter tariffs that the EU would put up.
The US pharmaceutical market is enormous. The industry there employs nearly a million people and 4.4 million when indirect jobs are included. The biopharma industry in total added around $1.2 trillion to US economic output.
Many US drug companies are using more attractive tax and manufacturing opportunities outside the US to make generic drugs for the American market. In 2015, Americans spent an estimated $70bn on generic medicine.
The US is the world's largest free-pricing market for pharmaceuticals. Trump also wants to see the government negotiate better deals with drug companies on pricing.
The scale of the fights Trump is saying he will take on is enormous. Actually delivering on his rhetoric will be a lot more difficult. The real danger for Ireland is if the drug companies are not willing to take their chances and wait and see.
A bit like motor giant Ford's change of mind about a new plant in Mexico, will they blink first?
AIG move to Dublin might bring more tax than jobs
It looked like some good Brexit news when it emerged that senior executives at insurance giant AIG had asked Minister for Finance Michael Noonan about moving their European headquarters from London to Dublin.
AIG is one of several large financial services giants which has been tipped as examining Dublin as an option. The group employs around 2,500 staff in London but, before we get carried away about adding a few thousand jobs to the Dublin docklands, not all of London staff work for the European HQ operation.
In fact, AIG only moved their European HQ from Paris to London about five years ago. Unfortunately, only around 200 jobs moved with it. Still, it would certainly add to the prestige of Dublin as a financial centre - and others may feel what is good enough for AIG is good enough for them.
It could also provide a significant boost to the corporation tax take here, depending on how the group organises its operations.
A couple of hundred quality jobs are not to be sniffed at, but it might also be enough to jack up house prices in some posh South Dublin areas.
Future looks a hole lot brighter for Tara Mines
They say that when you are in a hole you should stop digging. But the opposite applies if you are in the zinc mining business, where the longer you can keep digging the better.
Tara Mines has been digging since 1977. It announced during the week that it would invest €44m expanding its operations at the mine after it found additional reserves. The new find should keep production going at least until 2026, but it could see the life of the mine go on for another 20 years.
It will make Tara, already the eighth-largest zinc mine in the world, one of the deepest too.
This new find has come at a very opportune time for Tara and its owner, Swedish group Boliden. It has seen zinc prices fall sharply in 2014 and 2015, something which dented profitability.
When zinc prices were higher, Tara was able to knock out profits of around €25m to €30m a year. In 2015 it negotiated a restructuring of its staff pension scheme which, according to its accounts, resulted in a €24m reduction in its net obligation that it booked as an exceptional gain. Employees of the main defined-benefit scheme agreed to transfer to a defined-contribution scheme last year.
Average zinc prices in 2015 were $1,928 a ton, but they have really bounced back in 2016. Zinc was the best performing metal in 2016, with prices rising by 60pc. The outlook for 2017 is also strong with predictions of further gains.
The other plus for Tara is the fact its costs are in euro and its revenues are in US dollars, which has been appreciating in recent months after the Trump victory. The dollar is also expected to increase in value and stay strong.
Tara has lots of reasons to go ahead with the extension, but it will have to contest some objections from locals on planning issues.
Sunday Indo Business