IRELAND MAY be in the doldrums but there have been some chinks of light on the investment front – mostly in the pharmaceuticals and medical device sectors, writes DOMINIC COYLE

The pharmaceuticals sector, in particular, has been going through a generational period of renewal and consolidation globally – assisted in part by the significant cash resources held by many of the top players at a time when access to funds has been one of the primary impediments to corporate activity.

The sector faces a number of significant issues, of which a dwindling pipeline of new products and the challenge from generics are among the most acute.

Abbott, one of the longest established multinational companies in Ireland, has chosen Dublin as a base for its new division – a business that specifically looks to leverage value from products that have come off patent, Abbott Mature Products Management.

Olivier Bohuon, senior vice-president (international pharmaceuticals) of Abbott, says these drugs continue to represent a significant portion of Abbott’s business, accounting for $3.8 billion (€2.7 billion) in sales last year.

The growing importance of emerging markets is a key reason behind the establishment of the new business. Abbott estimated that emerging markets will account for around half of the growth in pharmaceuticals sales over the next decade.

Many of the drugs that have come off patent in more developed economies still hold significant potential in these markets once necessary regulatory clearance has been secured.

The Dublin operation is tasked with providing manufacturing, medical, commercial and regulatory support for such drugs. Since it was established a year ago, its remit has extended to about 180 Abbott products.

The idea for the new business came from Bohuon, who is responsible for Abbott’s pharma business in places like Asia and Africa and Latin America as well as more established markets like Europe, Australia and Japan.

Several factors contributed to the decision to base the headquarters for the business in Dublin. First, having operated in Ireland since 1946, Abbott says it is very comfortable with doing business here.

“Our experience in Ireland and educated pool of talent available means we find it easier to find the right sort of people for these jobs,” says Bohuon, noting that while the unit will only have a staff of 50 people, many of them will be at director level.

The fact that Dublin is close to the Paris HQ of Abbott’s European pharmaceuticals business was seen as an advantage while the fact that many of the products that will come under the mature products operation are already manufactured here meant that there was plenty of relevant local expertise.

But what about the threat from to US president Barack Obama to restrict the ability of US multinationals to benefit from working in countries like Ireland offering more favourable tax regimes?

“It [the Obama plan] is still very foggy and we don’t know where it will go,” Bohuon says. “In any case, we are a global company, not just a US company. We are facing a global environment and we need to compete efficiently with other companies.”

Abbott sees potential in its maturing drugs on three different fronts.

First, there is the possibility of developing new markets in emerging countries for successful but more basic primary care products, for which the Dublin plant can provide support in addressing regulatory and, if necessary, clinical trial issues.

Second, reformulating existing therapies can give them new life.

Bohuon and the head of the Irish mature products business Brendan McAtamney point to the case of painkiller Brufen. In 2007, sales of the drug fell 5 per cent and the future looked limited. However, by developing a sugar-free version of the drug in Spain with support from the Dublin business, sales jumped by 16 per cent last year.

A third line of business is providing continued support drugs that the company believes remain the best on the market, even if they are no longer on patent.