State agency's head of life sciences says sector must concentrate on convergence to develop, writes DOMINIC COYLE

LIFE SCIENCES are seen as central to the future health of the Irish economy. Covering areas like pharmaceuticals, biotechnology and medical devices, the sector accounts for some of the most significant inward investment into the State over the past decade.

Their importance was accentuated with the appointment of Barry O’Leary as head of IDA Ireland at the start of last year. Prior to his move, he had been responsible for life sciences and certain elements of informational and communications technology (ICT) at the agency. And the decision of the State agency to go outside its ranks in selecting his successor in the life sciences sector confirms it.

The prospect of taking up the challenge in the midst of a global recession and at a time when companies, especially in the US – the single largest source of foreign direct investment into Ireland – are being encouraged to look closer to home does not deter Dave Shanahan.

Shanahan, who takes over in July, has a lifetime of experience in the pharmaceuticals sector. A former managing director of Pfizer Healthcare Ireland, he was responsible for the extensive Irish operations of one of the largest firms in the sector, a role that would have involved regular interaction with the State agency.

More recently, his role as chief executive with private healthcare provider Charter Medical group since June 2007 has given him an insight into the challenges of building a new business as well as the necessary interaction between pharmaceuticals, diagnostics, medical devices and people in the efficient delivery of healthcare.

And it is this theme of convergence which he returns to time and again. Health, he says, “needs to be managed holistically and that means a convergence of sectors such as food, health, pharmaceuticals and neutraceuticals.

“The piece missing in Ireland is this convergence between the different groups. We have a lot of smart people in this country, but we do not always join up the dots. We need to think broadly – don’t think of barriers but about connectivity.

“Research is great, but it is the applications that come out of it that fascinate me. In food, for instance, it is not so much research that is needed, it is development and taking what we know and putting it into new products.”

He cites the recent US-wide launch by Procter Gamble of a new probiotic supplement effective in addressing irritable bowel syndrome that is based on research carried out by UCC spin-off firm Alimentary Health as well as the potential of companies like Glanbia, Danone and Kerry Group.

Shanahan also believes Ireland can do more to capitalise on the green agenda. “If we think green in the areas that matter most – areas like energy, food and tourism – the solutions are there for us.

“There are several areas in which we are strong and where we can compete. On the energy front, you have both wind and wave energy potential and the possibility of building businesses around these areas. Food is another natural strength as is tourism, where we have the product but need to work on our costs, especially with the adverse foreign exchange situation.”

Other areas where he is confident Ireland can continue to punch above its weight include ICT, pharmaceuticals and medical devices, as globally traded services – areas where Ireland has built a significant presence through the IDA.

Shanahan believes there are a lot of good companies in the Irish market but not enough of them are concentrating on the early part of the product cycle – the innovation phase. That is where he sees the best chance of maximising our potential.

However, success will come not only from getting different sectors to examine how they can interact to mutual benefit but in being more imaginative in how we do business.

“We could do huge things in terms of promoting the talent we have available. For instance, it should be possible to put people into companies on a subsidised bases. That would get over the relucatance of employers who do not at the outset want to take risks on the unknown. Once they are in these companies, it is far easier for the companies to see how well they can perform in the roles required.

“That is part of an agenda in making ourselves more competitive to potential investors.

“One of the things we have to think about is internal costs. The exchange rate movements over the last few years, both with sterling and the dollar, have really hurt us. We have to get after our cost base. The idea that we can pay ourselves more than other countries and still expect to compete is simply unrealistic.

“If you are going to ask people to come and look at establishing a presence here, the sort of questions they will ask concern infrastructure and costs. We still need to see signficant drops in energy costs and wages as well as continuous investment in all areas of infrastructure. Anyone locating a plant in a country is looking at a five to 20-year commitment and they need to be confident that the business environment will be accommodative over that period.”

He says people “need to understand that, without foreign direct investment, our capability to produce wealth is very limited”.