Ireland Industrial Capex 2023 Pharmaceutical & Food Outlook

In this article, we have compiled feedback from our team to summarise the main industrial capex project trends and future outlook for Ireland in 2023, to access full project details and find out more, contact us here.

The Ireland industrial capex 2023 outlook for project activity is looking positive. Many projects first reported in 2022 are now entering procurement in 2023, representing major opportunity for suppliers of capital equipment and capex project services. In pharmaceutical and biotechnology, the makeup of capex projects in Ireland is continuing to trend toward larger and higher value schemes. In food and drink the capex project mix is more varied, with small craft-size operations, SME activity and larger projects all moving through the project lifecycle in 2023.

Pharmaceutical, Biotechnology and R&D Laboratories Ireland Capex Outlook 2023

In our previous article we wrote about the boom in pharmaceutical capex in Ireland. This trend has not changed and is only growing more exaggerated as time has progressed. Some biotechnology projects in the pipeline are starting to reach values of over €1bn individually. The Irish government has historically leaned wholesale into attracting large inward investment and has increasingly now also taken steps to alleviate some of the bottlenecks seen in the last few years. An example of this – separate to the usually cited low corporation tax rate – is the massive focus of technical training and education concentrating on producing the domestic resource to support biopharma and engineering delivery in the future.

In general, there has been more of a move away from API in 2023 toward biotechnology. However, there is still strong requirement for API as a feed in for biotechnology solutions, e.g. protein production. Protel are tracking numerous large schemes targeting this area as large organisations balance their global production capacity.

There is a concerted effort by large pharma and biotech organisations in Ireland to move away from the traditional model of domestic primary manufacturing followed by international finishing elsewhere in Europe or the USA. Now, many organisations are looking to establish or increase fill/finish facilities to complement the primary manufacturing base in Ireland. This represents good potential for our client base such as those looking to supply into secondary pharmaceutical capex projects who may not have previously been as interested in the previously dominant primary pharmaceutical subsector.

Food & Drink Ireland Capex Outlook 2023

The Ireland industrial capex 2023 outlook in the food and drink sectors is generally strong. There has been an increase in the number of new projects entering the planning stages of the project lifecycle. Compared to previous years these projects are on average larger in value.

In food, the main sub sectors for capex activity include nutrition and nutraceuticals, meat, dairy, bakery and seafood. In drink, the main sub sector investment activity is in distilleries, brewing, fruit juices and fizzy drinks.

Challenges

There are still significant challenges for the Irish capex picture in 2023 and beyond. The glut of investment, particularly in the pharmaceutical and biotech sectors has exacerbated extant resourcing issues. There are steps being taken to counter this but there are no quick fixes for persistent skill shortages. Inflation is another potential challenge for capex as planning and forecasting becomes increasingly difficult and project values soar. The generally depressive mood of the global economy is also slowing spending decisions.

Interest rate rises are a major factor affecting the capex outlook in Ireland in 2023. While manufacturing companies were cash rich and rates were low they were investing this money for a good return in capex, now higher rates mean low risks returns are available elsewhere which make investment decisions more complex.

These challenges are affecting all sectors equally, with pharmaceutical, biotech, food and drink sectors in Ireland all having to grapple with some difficulties in 2023 and beyond.

Summary

Overall, there is a healthy amount of opportunity for a diverse mixture of suppliers of capex equipment, machinery, and associated services in Ireland across the pharmaceutical, biotech, food and drink sectors in 2023 and beyond. In the pharmaceutical sector there is an increasingly healthy mix of primary/secondary manufacturing to target. There is both major and minor capital investment to suit suppliers of different size, technology and capability.

Short-term, the outlook looks positive, as plenty of capex projects are coming into detailed design or procurement. Resource issues still persist, and while they are not yet holding back investment it’s requiring client companies to slow down on timescales of project kick-off. An example knock-on effect of this in pharmaceutical. Where the FDA licenses drugs for 17 years, the longer project lifecycles may start to erode the window for exclusivity. As a result, some projects have gone back over to the USA to ensure a faster turnaround – this is a risk to monitor as we move toward 2024 and beyond.

As always, relationship development in Ireland is key. Getting in ahead of the curve and not waiting for procurement schedule date to arrive is becoming increasingly important. It is vital that suppliers give themselves the time to build better relationships and greater understanding with the client company – Protel project intelligence can help give companies this vital head start.

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