As Pfizer and its partner BioNTech lead the race to vaccinate the world against Covid-19, the 5.5 million doses allocated to Ireland alone are big business. At a reported €15 each, those jabs are worth over €80 million. Yet this sum will be a drop in the ocean of Pfizer’s Irish presence, where the main accounting unit is the billion-dollar. 

The US-based multinational is not only the largest pharmaceutical company in the world. With up to $100 billion worth of industrial and financial assets located here, it is simply one of the largest businesses operating in Ireland.

The Currency arrived at this figure after an investigation of over 200 corporate filings made by dozens of Pfizer companies in Ireland, across Europe and from its New York headquarters. The group’s corporate structure is a moveable feast, with Irish units regularly shifted between overseas holding intermediaries.

Enlarge the map below to explore the corporate structure of Pfizer in Ireland. It shows where the subsidiaries sit, and where consolidation of financial data may or may not occur.

Later today, Pfizer will release annual results to the New York stock exchange. No doubt they will be positive. The company has not only released the first vaccine against the most disruptive disease in living memory, but it has also refocused its business on the most innovative – and lucrative – drugs in its portfolio, including in this country.

What will not appear in the group’s consolidated accounts is the central role Ireland plays in the development, manufacture and distribution of its ground-breaking medicines around the world – as well as its finances and tax affairs. Pfizer is very shy about its Irish operations, other than to say that it employs around 4,000 people here (3,500 according to the IDA, which has supported the development of all its sites) and has invested $8 billion in facilities since it first set foot in Ringaskiddy, outside Cork, in 1969.

As of last year, four of Pfizer’s 42 industrial sites around the world were in Ireland. Ringaskiddy is home to three organic synthesis plants, where chemicals are processed in reactors to produce pharmaceutical products. It also has a so-called kilo lab, where engineers can simulate the industrial production of new drugs at scale. 

Also in Co Cork, the Little Island factory joined the group in 2003 when Pfizer acquired its previous owner, Pharmacia. It has been manufacturing high-demand medicines such as the historic cholesterol buster Lipitor.

In 1992, Pfizer established a new plant in Newbridge, Co Kildare. “Since then, successive expansions have seen the site grow from 40 to over 120 acres in a facility of over 1,000,000 sq ft, making it one of Europe’s largest manufacturers of solid dose pharmaceuticals,” the company’s website states. Over 80 different products are shipped from Newbridge to 100 countries.

Pfizer’s most recent development took place in Grange Castle, Co Dublin, where it opened a €1.8 billion biotechnology plant in 2005, expanding it two years later to a similar size to Newbridge’s. This is where some of Pfizer’s most advanced drugs are made, such as those used to treat rheumatoid arthritis, as well as its best-selling product, the Prevenar 13 vaccine against pneumococcal disease. Grange Castle is also equipped to develop new treatments and conduct clinical trials. According to the IDA, “the Global Biotherapeutics Technology group at Grange Castle was established in 2006 and is part of a world-leading protein drug discovery unit within Pfizer Worldwide R&D”. The group’s research division spends over $6.5 billion a year globally on potential new medicines.

Pfizer manages the group’s cash and intercompany debt arrangements outside the US from its Dublin Treasury Centre and provides finance to customers across Europe from the same office in Ringsend. This includes an in-house leasing firm. Meanwhile, Pfizer Healthcare Ireland serves the domestic market out of Citywest in Dublin. 

In November, Pfizer announced a fresh round of €300 million in capital investment and 300 new jobs across Grange Castle, Newbridge and Ringaskiddy. This includes the construction of a new development facility at the Cork site to research new drugs and conduct clinical trials there, described as “particularly exciting” by Pfizer Global Supply Vice President Paul Duffy. 

Duffy, who marks 30 years at Pfizer this year, first managed the Little Island plant before moving to Ringaskiddy. He has been a director of multiple Irish group subsidiaries including those currently involved in manufacturing and export here. He was not available for an interview with The Currency.

How much is all this business worth? Only Pfizer knows exactly. None of its 25 current or recently liquidated Irish subsidiaries publish financial data. Instead, they are consolidated into CP Pharmaceuticals International CV, which is the central holding entity for the group’s non-US activities. Each year, CP Pharmaceuticals provides a blanket guarantee for the liabilities of Pfizer’s Irish subsidiaries, for the specific purpose of exempting them from filing accounts in Ireland.

CP Pharmaceuticals is a Dutch-registered limited partnership between US-based Pfizer parents and is not subject to corporate tax. Its registered address is in an office park facing a canal in a suburb of Rotterdam, but it gives the Manhattan address of Pfizer’s global headquarters in some Irish corporate filings. It directly or indirectly owns over 300 subsidiaries including those in Ireland and in other Pfizer manufacturing hubs such as Belgium – where the Covid-19 vaccine is made – Germany, Puerto Rico or Singapore.

While the Dutch partnership doesn’t give any information about the accounts of individual Irish subsidiaries, some of their intermediary holding companies in Luxembourg do. At the end of 2019, Pfizer filings in that country showed that six of the 25 Irish subsidiaries held net assets worth over $23 billion.

The two largest Irish subsidiaries for which balance sheet data is available are Pfizer Investment Capital and Pfizer Holdings Europe, with around $10 billion each in net assets. A spokeswoman for the group declined to explain the purpose of these companies. According to group filings, they are not part of the ownership structure for Pfizer’s manufacturing units in Ireland.

In recent weeks, Pfizer Holdings Europe and Pfizer Holding Ventures have gone into liquidation. 

The Luxembourg parents of these companies also report their annual profits. The Currency was able to track them through shifting holding structures as far back as 2008 – and earlier for some of them. For those 11 years, profits reported across seven Irish subsidiaries totalled $18.5 billion, or $1.7 billion annually on average.

Over the same period, the majority of these profits were distributed out of Ireland as dividends totalling $11 billion. This doesn’t take into account regular capital increases and reductions between Irish subsidiaries and overseas parents. Irish companies have also been lending funds to other group entities – the few Luxembourg units tracked here alone had short-term debt of $4.8 billion owed to Irish counterparts at the end of 2019. This figure was much higher in previous years, up to $13 billion at the end of 2017. 

We know any group company can borrow from Pfizer’s Dublin Treasury Centre. A Reuters report from 2015 quoted an employee presentation estimating the Centre’s cash reserves to $50 billion. A subsidiary central to these short-term intercompany debt arrangements appears to be Pfizer Service Company Ireland, to which multiple group companies around Europe each report owing hundreds of millions year after year. No financial data is available for Pfizer Service Company Ireland.

Sounds impressive? This is just the tip of the iceberg.

Billion-dollar profits and dividends from Little Island

The Little Island factory in Co Cork is the only Irish business unit to offer a glimpse into its financial performance. Pfizer acquired it as part of its global takeover of Pharmacia & Upjohn in 2003. Prior to this deal, the Luxembourg parent of Pharmacia Cork Ltd reported that the Irish company had net assets of $223.8 million.

The following year, the Little Island subsidiary renamed Pfizer Cork Ltd saw its corresponding balance sheet equity jump to just under $1 billion. Its net profit for the financial year 2003 was $967.9 million.

Over the decade following its acquisition, Little Island’s net assets grew to nearly $3 billion in 2012 and it recorded total profits of $7.8 billion. Pfizer Cork Ltd’s parent has received a total of $4.6 billion in dividends from Little Island.

Luxembourg filings show that Pfizer Cork Ltd stopped accounting for manufacturing at the plant in 2010 and went into liquidation five years later with over $500 million in assets, a process that is still ongoing. Pfizer announced plans to close the factory amid the so-called patent cliff of 2013, when it lost its exclusivity to manufacture high-value drugs. This, however, was reversed two years later and production continued under the control of another group company.

The Little Island plant recently changed owners when Pfizer spun off its off-patent medicines business into a new company, Viatris, as detailed below.

The last time an Irish subsidiary of Pfizer filed independent accounts in Ireland was a decade ago, when Pfizer Global Supply Ltd was still in operation. The company was in charge of the “finishing, packaging and distribution of pharmaceutical products on behalf of fellow group undertakings”. It was based in Ringaskiddy and had branches in Belgium, the US and Hong Kong. In 2008, its revenue topped $8 billion, which was equivalent to 16 per cent of Pfizer’s consolidated sales worldwide. In 2009, this grew to $9 billion, or 13.3 per cent of Pfizer’s expanded revenue following the acquisition of Wyeth.

Pfizer Global Supply, which did not conduct any manufacturing, had up to $2 billion worth of drugs in stock at the end of 2010. However, its business wound down from that year and it went into liquidation in 2012. Pfizer Export Company, another Irish subsidiary, took over and has not published financial statements since.

Hundreds of patents and trademarks

The structure in place for the past decade through Luxembourg and Dutch holding structures has remained opaque when it comes to the volume and performance of business conducted in Ireland – except for the sparse Luxembourg filings reported above. Buried deep in this multi-layered corporate pyramid, Pfizer Ireland Pharmaceuticals Unltd is at the core of the group’s Irish operations.

Pfizer Ireland Pharmaceuticals is a registered manufacturer of the active substances in the Prevenar 13 vaccine and Enbrel arthritis treatment, two of Pfizer’s multi-billion-dollar global blockbuster drugs. It owns 236 patents and 400 trademarks linked to scientists and markets all over the world, according to the World Intellectual Property Organisation. The company also holds the environmental licences for all of the group’s Irish factories. 

In nearly ten years in existence, Pfizer Ireland Pharmaceuticals has only ever reported three figures on its finances. In October 2011, it reduced its issued share capital, freeing up $642.5 million. In October 2018, it conducted another capital reduction, “crediting the amount of US$3,767,325,404 (representing the aggregate amount of the reduction in issued share capital) to the reserves of the company”. Filings in several jurisdictions show that this is standard practice within the group, with multiple subsidiaries routinely increasing and decreasing their capital to transfer sums running to hundreds of millions or billions of dollars with their parents.

The third filing is much more recent and reports an eleven-figure sum. It needs to be put in some context. 

Exclusive and lucrative: focusing on patented drugs

For years, Pfizer has been focusing its business on the most lucrative, innovative drugs. These are the products of recent research, covered by exclusive patents, such as the Prevenar 13 vaccine, which generated $5.8 billion in sales worldwide for the firm in 2019, or Enbrel, with $1.9 billion. Both are made here and feature among the 15 top-grossing prescription medicines worldwide. In the commercial structure in place since the start of 2019, code-named “Organizing for Growth”, this division is called Pfizer Biopharma.

Biopharma is the jewel in Pfizer’s crown, and everything else must go. In 2012, the group sold the nutrition business it had bulked up with the acquisition of Wyeth, leading to the sale of its infant formula milk plant in Askeaton, Co Limerick to Nestlé. The following year, it floated its veterinary medicines division into a new company called Zoetis.

In 2019, Pfizer combined its over-the-counter medicines business with that of UK-based GlaxoSmithKline, spinning it out into a joint-venture in which the US giant has retained a 32 per cent stake pending an expected IPO. 

Finally, in July 2019, Pfizer announced the disposal of its “established medicines” business, called Upjohn in the new group structure. These are historic off-patent or generic drugs, such as those that fell off that famous 2013 patent cliff. Some are still enormously lucrative, especially in emerging markets. Lipitor continues to generate around $2 billion in annual sales and Viagra, which used to be made in Ringaskiddy, $500 million. Upjohn was slated for yet another spin-off – this time merging with US-listed, Dutch-headquartered Mylan. The resulting new company, called Viatris, was 57 per cent owned by Pfizer’s shareholders and 43 per cent by Mylan’s when it floated on the Nasdaq in November 2020.

The most immediate consequence for Irish operations was Viatris’s announcement in December that it would close Mylan’s factory in Baldoyle, Co Dublin as part of a $1 billion global cost-cutting drive. Making off-patent and generic drugs is a highly competitive business and the newly formed company was not going to keep two similar plants manufacturing oral solid doses (known to you and me as pills) in Ireland. Little Island got the upper hand.

In preparation for the deal, Pfizer set up a new subsidiary called Upjohn Manufacturing Ireland Unltd to hold the Irish assets destined to be spun out to Viatris. On May 27, 2019, Upjohn Manufacturing Ireland allotted new shares to its parent Pfizer Ireland Ventures Unltd, also based in Cork, “in exchange for transfer by Pfizer Ireland Pharmaceuticals of the assets and liabilities comprising its established medicines manufacturing business to Upjohn Manufacturing Ireland Limited”. The consideration paid for this transaction was $18.7 billion. The funds were advanced by Pfizer in the US, then returned up the group’s Dutch holding structure through an equivalent dividend paid by Pfizer Ireland Ventures on the same day.

The cheaper section of Pfizer’s industrial operations in Ireland, including the Little Island plant, had just been carved out for an equity value of $18.7 billion. 

At the same time, Pfizer and Mylan were putting the finishing touch to the global agreement that would see Upjohn merge into Viatris in exchange for $24.6 billion ($12 billion in cash and a stake in the new company estimated at $12.6 billion at the time). Stock exchange documents show that a crucial meeting between Mylan’s board and its advisors to examine the deal took place in Dublin on June 20, 2019. The figures disclosed suggest that up to three quarters of Upjohn’s equity value was located in Ireland prior to the Viatris deal (save for  the consolidating effect of any financial overlaps between the Irish business and Upjohn units elsewhere). 

The valuation of Pfizer’s Irish-based Biopharma business was not revealed in these transactions because no accounts are available for any of the ten companies involved.

Pfizer declined to share any balance sheet information about its Irish business with The Currency, including specific queries about the valuations of the Biopharma business remaining within Pfizer Ireland Pharmaceuticals, its intellectual property or the resources of the Dublin Treasury Centre. However, the Upjohn transaction allows us to suggest estimates by triangulation with company figures reported elsewhere.

One way of looking at the Viatris deal is that three quarters of Upjohn’s global equity value was reported to be located in Ireland; assuming a similar ratio for the wider Pfizer group, this would value its Irish-based equity at $48.2 billion. Another approach is to consider that the Pfizer group’s total equity, at $63.4 billion, was 2.5 times greater than that of the global Upjohn division as valued in the spin-off. Again, applying this ratio to Upjohn Manufacturing Ireland’s share issue corresponds to $48.2 billion in Irish-based group equity value prior to the Viatris spin-off.

One caveat in this estimate is that we assume the same distribution of value between Upjohn and Biopharma in Ireland as there is at the global level, which cannot be verified. In Ireland, the high-value Biopharma business remains under the control of Pfizer Ireland Pharmaceuticals, its sister company Pfizer Manufacturing Ireland and their common parent Pfizer Ireland Ventures. 

This Irish branch of the group saw its holding structure change under the new Organizing for Growth (OFG) strategy. Pfizer Ireland Ventures’ immediate parent is now a Dutch company called PF OFG Ireland 2 BV. Over the course of one day, on June 11, 2019, ownership of PF OFG Ireland 2 was transferred from a US holding company to six successive Dutch parents. Two months later, it was acquired by yet another American intermediary. The valuation of Pfizer’s Irish-based Biopharma business was not revealed in these transactions because no accounts are available for any of the ten companies involved.

To get a more complete picture of Pfizer’s Irish business, we need to go back to the start of this article. As detailed above, a number of Irish investment subsidiaries with $23 billion in net assets belong to holding branches of the group different from those manufacturing and trading medicines here. Their value is therefore additional to that of all the factories. Then there’s the $50 billion in treasury reserves reported by Reuters five years ago, which may overlap with part of the figures reported for some subsidiaries. And there are six Irish subsidiaries directly owned and consolidated by Dutch-based CP Pharmaceuticals International, for which no figures are available at all.

Up there with Microsoft

Overall, it is fair to estimate that the value of the business assets and financial resources located by Pfizer in Ireland prior to the de-merger of Upjohn into Viatris last November was in the order of $100 billion, over half of which would be cancelled out by overlaps in asset ownership by the time it is reported on Pfizer Inc’s global consolidated balance sheet. And it is a distinct possibility that the majority of Pfizer’s value worldwide is, in fact, located in Ireland. 

This places Pfizer among the very largest businesses operating in this country from a balance sheet perspective. The equity value of its Irish business dwarfs that of any domestic player – CRH’s is €20 billion, for a market capitalisation under €30 billion. Instead, Pfizer is up there with the largest tech multinationals operating in Ireland. Its figures are probably close to Microsoft’s, which employs over 3,000 people and has based over $100 billion in equity in Ireland, or Google’s, with a comparable workforce and $60 billion in net assets two years ago before the dismantling of its double Irish tax structure.

As for transparency, Pfizer’s Irish business is closer to those of Apple or Intel, who don’t publish any disaggregated figures on their operations in this country. It is impossible to estimate how much profit Pfizer generates or transfers here, and the world’s largest pharmaceutical company declined to say how much tax it pays in Ireland. At the global level, Pfizer’s effective corporation tax rate has been at least 12 points lower than the US statutory rate for the past five years – as low as 7.8 per cent in 2019. “The reduction in our effective tax rate resulting from the jurisdictional location of earnings is largely due to lower tax rates in certain jurisdictions,” the company reports every year.