Over the last ten years, the Irish government has actively promoted the biotechnology industry. Following an extensive series of funding and investment programmes introduced in the early 1990s, Ireland is beginning to emerge as an attractive location for multinational biotechnology and pharmaceutical companies worldwide, with nine of the ten major international pharmaceutical companies now carrying out manufacturing operations within the state (US Department of State, 2005). To date, the Irish government's strategy has tended to focus on building up an industrial profile and in developing world-class bioresearchers. However, more recently attention has begun to shift to developing Ireland's emerging indigenous biotech sector (Enterprise Ireland, 2003). Currently there are less than sixty indigenous bioenterprises in Ireland, most of which are micro companies and at an early stage of development. Furthermore, due to the nature of their activities, most bio-enterprises do not generate profit in the early years. Even those bio-companies that have some revenues tend to invest the bulk of their turnover in long-term product development. This paper provides an overview of the Irish biotechnology sector and examines the government's strategy for promoting the sector to date. Drawing on examples from the UK, France and the USA, the authors consider the use of tax credits as a possible means of encouraging R&D within the sector and thus open the discussion on whether such incentives might be used to promote R&D within the Irish biotech sector. In this regard, some issues that would require further research and analysis are identified.