22 June 2005

The Web

Gonzi’s pharma ‘silicon valley’ faces hurdles

Prime Minister Lawrence Gonzi’s announcement that his government is planning to establish a pharmaceutical “Silicon Valley” in Malta at the Generic Pharmaceuticals Conference on Monday, has definitely raised a few sceptical eyebrows.
Key players in industry and education told The Malta Financial and Business Times that this grandiose idea was somewhat wishful thinking.
“Let’s keep our feet firmly on the ground,” a Maltese employee at a foreign-owned pharmaceutical company in Hal-Far said.

“This industry is not labour intensive. It will not employ thousands. It will, at best, employ a couple of hundreds within the next three years. It will not solve our unemployment problems, not even our graduate unemployment.”
An economist at a leading consultancy firm warned against the illusion that Malta has all it takes to turn itself into a centre of excellence overnight, although there is agreement that the government had done well to target the sector of generic pharmaceuticals.
Gonzi told the conference at the Malta Hilton that his government was committed towards enhancing Malta’s position as a hub of activity for the manufacturing of generic pharmaceuticals, as well as a research and development scientific community.
It is a commitment that would certainly aid the balance of trade deficit. A senior Malta Enterprise official said that pharmaceutical firms showing an interest in Malta are capable of reaching very high levels of local value added, especially those producing active pharmaceutical ingredients (APIs).
“It is true that they will not employ thousands,” he said, “a typical industry in APIs will employ perhaps 40 when in full production, but they will certainly boost exports.”
So what about the labour supply side of the story? Government has certainly exaggerated the demand we can expect for graduates in pharmacy and chemistry. This, key players in industry have observed, has unrealistically boosted graduates’ salary expectations when applying for jobs in this sector.
Applicants have in fact been known to reject well-paid job offers, expecting to get a better deal in the next round of advertised posts, creating an artificial bottleneck.
It has also led some prospective foreign investors to reconsider their plans. “With the salaries some of these inexperienced graduates are expecting,” a foreign API investor seriously considering an investment in Malta remarked, “this country cannot compete in this industry.”
When it will have become clear that graduate supply will exceed actual demand, expectations will fall. Claims that companies favour holders of ‘A’ levels in chemistry that can be trained by the company, over university graduates who lack industry-based experience, shows the need for university education to cater for the needs of the market.
That is because the industry needs skilled operators, not just graduates. A good pharmaceutical plant operator will generally have a good chemistry ‘A’-level with a solid background in organic chemistry, probably typically familiar with Good Manufacturing Practice (GMP) rules and procedures.
One of the first foreign-owned firms to start up in Malta in the field of APIs said that the Employment and Training Corporation, together with the chemistry department at the University of Malta, had done their best to train a selection of students in record time.
“Out of around thirty students who attended an intensive summer course,” a company representative admitted, “only one accepted to proceed abroad for further training. The others opted to start a degree course at University”.
Human resource bottlenecks are not the only problems facing foreign direct investors in this sector.
Prospective, as well as actual investors, complain about bureaucratic delays and government induced costs. Industrialists were very critical of the separation of Malta Industrial Parks (MIP) Ltd – formerly the industrial estates’ management arm of MDC – from Malta Enterprise.
“What sense does it make to have merged MDC, METCO and IPSE into Malta Enterprise and then to split MIP from all of them?” one angry investor objected. The Malta Environment and Planning Authority is another target of passionate criticism, an irate API manager said, who blamed civil servants for inflexibly applying EU regulations lock, stock and barrel:
“They are simply unable to cope with the needs of industry, and new EU regulations they presume to apply without having fully digested yet.”

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