1. Ireland’s economic future and its implications for healthcare in Ireland IPHA Annual Meeting Jane Suiter 26th November 2008

2. To Be Discussed International Background & Outlook Irish Economic Background & Outlook The Way Forward Trends in the Pharmaceutical Industry Challenges Ahead

4. International Background Global trade decline in 2009 - 1st time since 1982 US, UK, Euro Zone, Japan in recession Oil prices and strong official response offer hope, but wealth destruction & credit issues will take some time to resolve Very challenging external environment 2009

5. After the party…

6. …a new age of thrift Stock market to levels of a decade ago House values almost 20% from peak Consumer spending down 3%+ steepest since Carter credit controls Unemployment from 4.4% to 6.5% rising BUT inflation actually falling “The golden age of spending for the American consumer has ended and a new age of trhift has begun,” Richard Berner of Morgan Stanley

7. Housing market a drag

8. Money markets dysfunctional

9. And our trading partners UK – 1 st recession for 18 years in 2009 Unemployment 5.6% to 8% House prices to fall 25% to mid 2009 Euro zone in 1st recession in 10 years since euro introduced. Exports badly hit. Germany baldy hit. France less so. Good decline in euro and rates

10. GDP Forecasts (IMF) 200820092010 US1.60.052.04 UK1.0-1.32.2 Euro zone1.30.21.3 Ireland-1.8-0.62.5

11. An Economy in Recession

12. Irish Economic Forecast 2007 (f)2008 (f)2009(f) GDP4.1%-1.8%-2.1% GNP6.0%-1.7%-1.7% Consumption6.3%-0.3%-0.8% Investment1.2%-18.6%-18.7% Government6.0%1.0%0.7% Exports6.8%2.2%2.1% Imports4.1%-1.0%-1.3% CPI4.9%4.3%1.8% Unemployment 4.5%6.2%7.8% Summary of Forecasts DKM

13. Changing make-up of GDP

14. The Irish Economic Outlook Economy in deep recession Construction collapse Unemployment rising sharply - public sector up Consumer sentiment badly hit Export sector challenged by cost competitiveness Self inflicted fiscal crisis Compounded by developments financial markets

15. New Home Completions

16. House Prices (YoY)

17. Sweden’s bust lasted nearly three years

18. Retail Sales (YoY)

19. Irish Consumer Confidence - Falling Sharply

20. Breaching the rules Cupboard bare - no room fiscal expansion Surplus of 3% ‘06 - deficit 6.5% ‘08 - 9% ‘09 EBR -€11.0 bln end-Oct (-€3.9 bln Oct 2007) Yield spreads 100bp second only to Greece Commission launched excessive deficit procedure Management of public finances weakest of 18 EU states

21. Economic Recovery Prospects Recovery prospects in 2010 contingent on international recovery, bottoming out of housing market & ending of credit crunch Ireland needs to restore competitiveness on all fronts - wages, public spending, IT capability, education & taxation Need real public sector reform - Budget 2009 nip/tuck, An Bord Snip II to come Back to the future - export dominated growth Strong political leadership now required

22. Recent Trends in Pharmaceutical Industry

23. Pharma contribution FDI in pharma 40 years old €29.7 billion exports (40% of total manufacturing exports) Direct employment 17,000 Largest payer of corporation tax 13 top 15 companies operations in Ireland 6 out of 10 of the world’s top selling drugs Government, academia, and industry: r&d tax credit, NIBRT, SFI

24. Recent highlights Wyeth Medica and Wyeth Biotech added pioneering state of the art investments GlaxoSmithKline invested €250m in its existing facilities in Cork and €30 million in Waterford Merck Sharpe Dohme to develop a €200 million strategic vaccine facility Pfizer develops €353 million biological facility in Ringaskiddy, Co Cork Teva to invest €65 million in its Ivax pharmaceutical plant in Waterford 1,000 PhDs expected to graduate in 2008

25. Recent output volume trends July 08-Sept 08 Manufacturing Output-2.2% Modern sector-2.2% Traditional sector-2.1% Pharmaceutical, medicinal chemicals and botanical products 0.4%

26. Issues for pharmaceutical industry Thinning pipelines Increasing cost and effectiveness R&D Generic substitution Eroding cost competitiveness Impact emerging countries The Obama factor Innovation & flexibility essential - growing bio sector Ireland: continued investment in education, R&D

27. Words of warning ‘Financial stress that is rooted in the banking sector typically has more adverse economic effects than stress in stock markets or exchange rates’ IMF October 2008

28. Thank you