Waterford will be the focal point for future product development by Genzyme, company chairman Mr Henri Termeer said yesterday.

Mr Termeer, who is also president and chief executive of the Massachusetts-based group, was in Waterford to lay the foundation stone of the company's new Irish base. Up to 500 people will be employed serving the European market.

"Waterford is part of our global manufacturing strategy. One of the predominant features of our company is that we manufacture the products we sell. We have built the skills globally to do that, we take on the costs, supply the capital to build the plants and we are prepared to go through the effort to manufacture," he said.

"In a global sense, Ireland in pharmaceutical and biotechnology manufacturing is a very important skills base, not just in labour force but in the whole organisation behind it. We have been assisted greatly by the existing skills and experience base as well as the Government and institutional systems," said Mr Termeer.

The group already has plans to diversify its new Waterford base to accommodate a number of extra products and to increase production levels.

Work is well advanced on the €150 million construction programme of a 31-acre site, which will see the completion of a state-of-the-art pharmaceutical and biotechnology facility at the former Luxottica sunglasses plant.

Founded in 1981, Genzyme employs 5,500 people worldwide and in 2001 had a turnover of $1.2 billion (€1.22 billion). The corporation consists of three divisions - general, biosurgery and molecular oncology.

Mr Termeer underlined the commitment of the corporation to development at its Irish base.

"Such plants are the root of a company - they are expensive to build, expensive to get approval for and expensive to get started. So you want to continue to build off the skills base and your investment. Generally you would look at plants like this to be here until technology really changes and the minimum outlook is 25 years," he said.

The outlook for biological products is even longer and they do not change as quickly as other pharmaceutical products, according to Mr Termeer.

"We intend to be around for a very long time," he said.

In response to suggestions that the pharmaceutical industry was facing a slowdown, Mr Termeer was confident that it was just part of a natural cycle.

"All of the slowdown is based on pharmaceutical products and research and development cycles. For almost 25 years there has been a continuous yearly expansion of investment in biotechnology by us and other pharmaceutical companies.

"That expansion is still continuing but what you are seeing is a slowdown of approval of new products and it is just a matter of time before new products come through this pipeline," he said.

Genzyme was fortunate to have a lot of products that regularly go through the cycle and become approved and find good markets, he said. "That is the big challenge - there are no guarantees," he said.

Another problem is that there are quite a number of old products running out of patents and the big challenge is for pharmaceutical companies to come up with new products, according to Mr Termeer.

"We have to ensure that we have a number of products coming behind the ones that are becoming obsolete. That is why we invest 20 per cent of annual revenue in research and development to come up with new products," he said

Although Mr Termeer was reluctant to discuss other planned phases for the Waterford plant, an area being looked at is bulk manufacturing of products.

Investment in manufacturing in the biological and technological industry is highly specialised and very few companies do it. Genzyme hopes to work in collaboration with other companies developing new products to utilise its Waterford plant.

The first phase of the Waterford facility has been transformed into a pharmaceutical plant to manufacture Renagel tablets, a product used in the treatment of patients with kidney disease who are on dialysis. Manufacture of the product will commence next month.

Mr Termeer said one option for expansion was to produce raw materials involved in the production of Renagel. "Depending on the market result of the product, which is already ahead of planned targets at revenue of $200 million, while the target is $1 billion, we are hopeful to build more of this kind of plant and the Irish site is an ideal candidate for such production."

As part of the second phase of Genzyme's plans for the site, construction has commenced on an 80,000-sq ft facility for the formulation and filling of biological proteins and enzymes into sterile vials. Construction is expected to be completed by the end of 2003, with approval for commercial manufacture expected in 2005.

Genzyme claims its competitive advantage lies in focusing on areas untapped by other pharmaceutical companies, particularly in the area of rare genetic diseases.

One of the many enzymes produced by Genzyme is for the treatment of Gaucher disease, where patients miss an enzyme that is normally present in the blood to break down lipids. Without the enzyme, the lipids accumulate in the liver, spleen and bone marrow, causing serious illness and leading to early death. The company has developed an enzyme that is taken on a regular basis and targets the lipids to break down in a natural way.