Almost 60 years in Ireland, the diagnostic firm has just opened new plants in Longford and Sligo, writes Jamie Smyth, Technology Reporter

If you have been to a hospital or medical centre recently for a heath check then it is likely that some part of your body will have been tested by equipment made by the health-care giant Abbott.

The US firm designs and manufactures diagnostic test kits and sophisticated laboratory equipment to detect a wide range of ailments, everything from standard blood tests to measure a person's cholesterol to more complex tests for life-threatening diseases such as cancer and diabetes.

But what few people realise is that much of the highly sophisticated equipment bought by hospitals, laboratories and health centres is now manufactured in the Republic by an industry with sales in excess of €4 billion.

Boston Scientific, Essilor, Johnson & Johnson, Stryker and Tyco Healthcare all have big operations in Ireland. But the official opening of Abbott's new manufacturing plants in Longford and Sligo last week cements its place as lead player in the Irish medical technologies sector.

"The openings make Abbott the largest diagnostics manufacturing company in Ireland and provide additional capacity required to service the firm's global diagnostics business," says Joseph Nemmers, senior vice-president of Abbott's diagnostics operations.

"The diagnostics market is growing 3-5 per cent every year and laboratories are under growing pressure to cut their costs, so we have to continue to make sure our products are as efficient as possible."

Competition to attract investment is tough from the likes of Singapore and Puerto Rico, so how did IDA Ireland lure Abbott's multimillion dollar investment?

"We have been in Ireland since 1946 and had commercial success with our manufacturing operations here over the past 10 years," says Nemmers.

"There are also tax advantages, great support from the IDA and the educational support that we need for our operations."

Abbott has set up links with the Institutes of Technology in Sligo and Longford to help it recruit and nurture the type of skilled staff it needs. And Abbott's presence in regional locations outside the Dublin area has not had any negative impact on its ability to hire staff, according to Nemmers.

Indeed, Abbott, which is one of the world's biggest healthcare companies with divisions involved in the discovery, development, manufacture and marketing of pharmaceuticals, is no stranger to setting up in regional locations. Its pharmaceutical and medical device units have set up operations in Donegal and Galway, boosting Abbott's total workforce to above 2,100 people.

The expansion of Abbott's diagnostics division in Longford and Sligo will enable the manufacturing plants to diversify the type of equipment and tests that are carried out in the Republic. Its Sligo operation will now begin to manufacture equipment for cancer and congenital tests that will be distributed throughout Europe.

"There is also a growth trend in testing for HIV, hepatitis and Aids and these tests are made in Sligo," says Nemmers, who can point to a 16 per cent increase in first-quarter sales for Abbott's diagnostics division to $887 million (€688 million) when compared to the same quarter a year earlier.

But the exceptional performance in 2004 masks a difficult previous five years for Abbott's diagnostics business. In 1999, the firm fell foul of its US regulator, the Federal Drug Administration (FDA), for "systematic" problems with the way its diagnostic medical tests were designed and manufactured. It was fined $100 million and the firm was precluded from selling some of its diagnostic medical tests within the US.

"We had a consent decree placed on us by the FDA, which by the way had nothing to do with the safety of our products," says Nemmers. "It was a US problem at one of our manufacturing sites and didn't affect our businesses outside the US which were completely unaffected."

The problem centred on one of Abbott's Chicago-based manufacturing plants, which could not convince the FDA that it was capable of producing clean, effective diagnostic test devices and had the processes in place to do so.

"It took four years for us to invest in new systems of quality control, which the FDA found were in compliance in December 2003," says Nemmers, who was elected to his current position in September 2003, shortly before Abbott was given the all-clear.

Abbott's European diagnostics manufacturing plants in the Republic, Britain and Germany were largely unaffected by the US problems, however they were not allowed to manufacture certain diagnostic tests that had been imported from the US. But the requirement for rigorous testing and extremely high levels of quality control during the manufacturing process are equally as important for Abbott's plants in Sligo and Longford.

"It is a very complex situation in Europe, with our plants manufacturing products for almost everywhere else in the world, except the US. So our processes have to comply with European Community regulators and French, German and English regulators."

This means the factories in Sligo and Longford have to be equipped with the most modern and clean equipment available. This includes special water and air filtering systems and a host of other high-technology software systems to ensure that the final diagnostic tests are made to the highest quality.

"It is very complex and a huge investment in buildings is required," says Nemmers, who notes that the firm's current expansion of its European manufacturing base is costing $250 million.

The rapid pace of the Irish expansion in Sligo and Longford is also an important factor, which makes the Republic a good location for diagnostics investment.

"We broke ground on both facilities 18 months ago and to get them up and operational by now is amazing, really pretty extraordinary."

But has manufacturing still got a role in the Republic, which is now targeting research and development (R&D) investment to create a knowledge economy?

"Our Sligo and Longford plants are very sophisticated processes which require a fair amount of knowledge from employees. It is not like the old-style of manufacturing industry, which is moving off-shore," says Nemmers, who demonstrates this by pointing out the high percentage of third-level graduates and PhD-holders among its Irish staff.

"We employ biologists, chemists, people with advanced careers, process engineers and chemical engineers," he says.

Attracting research investment to the Republic from Abbott is a difficult task, according to Nemmers, who cites the efficiencies generated through its consolidated research activities based in the US. "Anyway, we have a lot to do here getting our plants up and running and staffed up."

Nemmers says he expects Abbott's Longford workforce will expand by a couple of hundred positions over the next few years. Its Sligo diagnostics unit will probably only increase marginally, however, other Abbott divisions - such as its finance administration for the European region - could also be targeted by the IDA in the future. And with 2,100 staff based in the Republic, Abbott has plenty of experience of doing business here.