Servier just the tonic for Irish pharma sector

The investment by the French pharmaceutical company of up to €185 million in research and production signals its long-term commitment to Ireland, writes Lara Marlowe in Paris

Looking at Jacques Servier, it is hard to believe that this gentle, mischievous and exquisitely courteous gentleman has built the research laboratory he founded 52 years ago with a staff of nine into France's second largest pharmaceutical company.

The 84-year-old Frenchman, who is about to invest between €115 million and €185 million in the pharmaceutical industry in Ireland, has sparkling blue eyes, apple cheeks and an elfin's smile.

Servier established a plant in Arklow, Co Wicklow, in November 1989 which now supplies medicines for the company's Canadian, European, South African and Australian markets.

Today, the company will announce a €70 million investment that will double its capacity in order to keep pace with demand.

By 2010, Arklow will produce 140 million boxes of medicine each year.

Servier is also investing €45 million in a plant at the Belview industrial estate on the Kilkenny/ Waterford border that will produce active pharmaceutical ingredients for three new Servier products: Ivabradine (whose market name is Procoralan), which regulates heart rhythm; the anti-depressant Agomelatine (Valdoxan) and Terutroban, which protects the walls of the arteries.

Servier says it is "almost certain, depending on the evolution of the market," that his company will decide early next year to invest a further €55 million-€70 million at Belview - to manufacture Strontium Ranelate (Protelos), a drug invented by Servier laboratories to stop osteoporosis in post-menopausal women. The site would employ 155 people by 2014.

The manufacturing plants are not the French company's only involvement with Ireland.

Yesterday, French scientist Dr Marc Devocelle, a member of the Royal College of Surgeons in Ireland, received the €10,000 Dr Jacques Servier prize.

The two-year-old prize is one example of Servier's constant emphasis on research. The firm has invented 30 new medicines in as many years and recycles 25 per cent of its turnover back into research - double the average for the industry in France.

Servier already conducts research in Ireland through individual contracts with the Conway Institute at University College Dublin. The company has even established the Servier chair of molecular pharmacology, currently held by Eoin O'Brien.

Servier's intention to further strengthen research activity in Ireland coincides with the Taoiseach's recent announcement of a multibillion euro investment in research in coming years.

"Twenty years ago, no one thought of Ireland as a country for research," Servier says. "The Irish have made an extraordinary effort, even more impressive than Canada's.

"Research creates good jobs and it is unlimited. Medical research cannot satisfy needs for at least another century. It's the discovery of new products that keeps a laboratory alive."

Last summer, executives from Servier met Minister of Health and Children, Mary Harney.

"She wanted to show how keen the Irish Government is to develop medical research in Ireland," says Christian Bazantay, the secretary general of Servier, who looks after much of the daily running of the company for Servier.

"Ireland is a country that likes the pharmaceutical industry, that is proud to have a highly developed pharmaceutical sector. All the big laboratories are present in Ireland."

A glance through statistics provided by IDA Ireland shows how significant a part of the economy pharmaceutical companies have become.

Thirteen of the world's top 15 pharmaceutical companies have substantial operations in Ireland. There are 83 foreign-owned pharmaceutical facilities in Ireland. The sector employs 17,000 people and had a production value of €34 billion in 2002.

Servier compares Ireland to Switzerland. "The Swiss have had the same policy towards pharmaceuticals since the time of the French Revolution," he says.

"It's been a complete success, a considerable, reliable source of wealth. Ireland and Switzerland are both countries with few natural resources but talented populations."

Servier established the Arklow plant in 1989.

"Our clients didn't like the fact that everything was manufactured in France," Servier adds. "They were afraid of another world war or a revolution.

"Among the prejudices about France, there is always the image of a revolutionary country. They wanted a peaceful country, which is why we thought of going to Ireland, a neutral country and what was more, an island."

The company was also seduced by IDA Ireland, which took Servier and Bazantay on a tour of 200 sites, including a salmon-stocked river near a ruined castle, so beautiful that Servier refused to build a plant there. The IDA arranged appointments with high-ranking officials and negotiated a grant agreement, which subsidised the creation of Irish jobs.

Servier says Ireland's 12.5 per cent corporate tax rate "wasn't what made up our minds, even if it was pleasant" - especially when compared with the 33 per cent rate in France.

He admits his company considered the zero corporate tax offered by Estonia, but found the language and small population an obstacle.

"When we're happy in a country, that comes before everything else," he says. "I don't want to tempt fate, but I think we would stay in Ireland (even if the corporate tax rate changed and the IDA stopped grants)."

Another advantage of working in Ireland is the relative absence of what Servier calls "red tape" or dirigisme.

After a new medicine is registered, the pharmaceutical company negotiates its price with the Government. In Ireland, the process takes three months; in France, Italy and Spain, it takes more than a year.

Only recently, Servier says, has the French government realised the importance of investing more in research and helping rather than hindering its pharmaceutical industry, the biggest in Europe.

Pharmaceuticals are a slow industry that is forced to work fast. "We apply for a patent the day we discover a molecule," Servier explains.

"It then takes 12 years to develop the product, which leaves only eight years of exclusive rights until the patent runs out and we are into price competition. One year out of eight is a huge amount of time to lose."

He says his decision, half a century ago, to turn Servier into a foundation, is the way of the future.

"I was always alarmed at the difficulties encountered on the stock market by companies in slow professions like ours," he explains. "We have never had to pay dividends, so we can reinvest our profits in research.

"If you have pension funds as shareholders, you are under pressure to pay high dividends. This western financial system was fabulous, because it made it possible to build railroads, ports and cities. But it's outdated for industries with a long lead time."

Factfile

Name: Dr Jacques Servier

Position: Since 1954, founding president of Servier Research, the second largest pharmaceutical company in France.

Family: He is a widower with three daughters and seven grandchildren.

Background: He graduated from medical school in Paris in 1947. Now a worldwide group with 17,500 employees in 140 countries, Servier has a turnover of €3.2 billion and has been in Ireland since opening a plant in Arklow in 1989.

Interests: Gardening, reading non-fiction - the last book he read was Pierre Joannon's Histoire de l'Irlande et des Irlandais - and walking in Paris.

Why he is in the news: Minister of Enterprise, Trade and Employment Micheál Martin will today announce a major expansion by Servier in Ireland. The company will spend €70 million to double the capacity of its Arklow plant, which produces 15 medicines for cardiovascular disease, diabetes and depression.

Mr Martin's announcement will take place at the Belview site, a new industrial zone on the border between Kilkenny and Waterford, where Servier will build a €45 million plant. Dr Servier says it is "almost certain" the Belview plant will be further expanded for a total investment of €115 million.