To clarify my previous comment (see post: http://trueeconomics.blogspot.ie/2014/08/2682014-irish-trade-in-goods-h1-2014.html), here is the chart showing 6mo cumulative evolution of the ratio of exports to imports for pharma and pharma-related sectors:
You can see the three recent trends in exports ratio to imports ratios:
- Based on purple line, there is one regime operating through H1 2008 - with shallow decline in ratio of exports to imports roughly from H2 2002 through H1 2008 pointing to relative rise of imports in overall trade. This is the consumption and construction boom. In H2 2008 we have a sharp rise in exports/imports ratio peaking at H2 2010: the period of collapsed imports relative to exports. Thereafter we have a decline in the ratio.
- Based on Organic Chemicals (blue line) and Other chemical products (green line) we have two regimes: between H1 2004-H1 2005 and H2 2008 the two lines are broadly counter-moving. Red line includes some of the inputs into the blue line, but also domestic consumption component. This does not directly imply, but can indicate, rising amount of imports of inputs and rising (even faster) amount of outputs in the pharma sector. The evidence is weak, so not to over-draw any conclusions, it should be qualified. The second period - post H2 2006 through H1-H2 2009 we have a flattening and then peaking in exports of pharma relative to imports of pharma inputs. This is aggressive booking of profits (margin between exports and imports).
- After H1-H2 2009 we have rapid decline in the ratio of exports to imports in pharma sector itself, and more gentle decline in related sectors. This, with caveats once again, can signal re-balancing of tax and operational efficiencies away from Ireland being a profit-booking centre to Ireland becoming a cost-booking centre.
There are many various schemes for optimising tax exposures for pharma firms, as well as other MNCs. Based on the aggregate data, it is virtually impossible to tell, which one is operating across the entire sector. But one thing is very clear from the above data - value added in the broader Organic Chemicals sector is collapsing. Worse, it is collapsing at a faster rate between H2 2013 and H1 2014 than in any period since H1 2009. It would have been good if the CSO were to publish more detailed data on this and produce an in-depth study. Somehow, I doubt they can and/or will, however.