Irish Process Industry Capex Outlook – 2020

Protel tracks capex project activity across the main process sectors to help suppliers win new business. In this article we aim to present a quick and easy to digest run-down of the main trends and developments in a highlighted sector of the process manufacturing industries in one of our covered regions. For more information on the areas we cover, click here.

In our previous Irish process manufacturing industry outlook, we reported that pharmaceutical and biotech investment remained strong, despite a backdrop of Brexit uncertainty. Unfortunately this same uncertainty had negatively impacted the future outlook for the Irish food and beverage sectors, as manufacturers attempted to plan for a range of potential outcomes with their biggest export market.

Brexit uncertainty persists into mid to late 2020, while the future of the transition extension is decided. However, it has been eclipsed as the primary focus of most organisations by the impacts of the novel Coronavirus pandemic.

Pharma & Biotech

After another strong year of new capex projects, we are anticipating new large-scale capex in the Irish pharmaceutical and biotech sectors for 2020. Ireland still remains a premier destination for global organisations and growing demand resulting from the global health crisis is expected to further boost investment levels for the year ahead.

Implementation levels remain buoyant and planning phase projects are entering the pipeline at a good rate. However, there are difficulties and delays for schemes both under construction and in concept/design as organisations grapple with the effects of social distancing requirements on site work. See our current coverage for yourself.

Some projects may continue to see delays in delivery due to ongoing resource shortages combined with a strong pipeline of large scale capex plans (the average biotech project value is just over €50m in Ireland on our online project search engine, MyProtel). Further, there is expected to be an increase in overall project costs as plans are adjusted to ensure compliance with social distancing requirements.

Some major projects currently active in the last 12 months include new drug development, biologics manufacturing and vaccine production. The latter is expected to be an area of even greater focus in light of current global health circumstances and the race to scale up production of any potential vaccines for Covid-19. Request a call from one of our team to discuss a tailored subscription option.

Major investors in capex projects emerging in the last 12 months include (data taken from our MyProtel project search engine, full details available to subscribers):

• WuXi Biologics Ireland Ltd – €350m
• MeiraGTx Ltd – €200m
• MSD Ireland – €500m
• Zoetis Ireland Ltd – €100m
• Pfizer Ireland – €80m
• Allergan Pharmaceuticals – €115m
• DePuy Ireland – €40m
• Takeda Ireland – €35m

Food & Drink

As the future trading status between Ireland and the UK remains in limbo, Brexit uncertainty is still having an impact on capex in the Irish food and drink sectors. The food and drink sectors remain particularly exposed to global issues due to their strong export balance. There is also the future challenge of the potential lack of demand from the hospitality and leisure industries, which face ongoing difficulty under Covid-19 social distancing requirements.

Another difficulty for manufacturers is the ongoing cost increases of complying with social distancing and Covid-safe manufacturing practices. This has been brought into stark focus in Ireland after localised outbreaks in meat processing plants and has effects on capex plans and budgets.
All this has meant that in response to this uncertainty companies are generally more wary of investment and expansion, which has had an impact on the capex pipeline for the year ahead.

Distilleries and beverages in general are still areas of investment. We are also seeing a short-term pivot of some distilleries away from whisky into hand sanitiser production as they seek to produce supplies in response to a surge in demand and shortages.

Major investors being tracked on our system include Pepsi-Cola Manufacturing Ireland, Jewelfield, Irish Distillers, Glanbia Ireland and Diageo Ireland.

Our Coverage

On our MyProtel project search engine we are currently tracking:

Pharmaceutical, Biotech & Laboratories – Ireland: 132 projects

Food & Beverage – Ireland: 36 projects

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Summary

The overall outlook for the year ahead is mixed. There is a large volume of capex being tracked at all stages. The quantity and average size of capex projects in the pharmaceutical and biotech sectors remains buoyant for the year ahead, with suppliers able to find advantage in this area. Schemes that relate to the global efforts to combat or control Covid-19 are expected to move extremely quickly, with procurement routes disrupted in favour of speed of delivery. This represents a potential opportunity for new suppliers with the correct timing and contact details.

The food and beverage sectors still hold potential for suppliers of capital equipment and services in Ireland, although the outlook is less positive than previous years due to mounting external pressures of uncertainty and enforced closure of the hospitality industry in Ireland and beyond.

For more information on our project coverage and subscription options, please contact us.