The medical technology industry employs 22,000 people in the Republic but there is some concern over competitiveness and a possible skills shortage, writes Jamie Smyth

A decision by the US-based medical device firm Guidant to create 1,000 jobs at its Clonmel plant this week will have brought back memories of the rapid jobs growth of the Celtic Tiger years.

The Tipperary-based company already employs 1,000 staff to make pacemakers and heart defibrillators. It is now strengthening its division that conducts advanced manufacturing of miniature devices, which enable doctors to unblock arteries without conducting invasive surgery.

The scale of the investment by Guidant will have taken many people by surprise because of the recent technology downturn. But it follows a trend of steady investment in the Republic by medical device firms in the past decade.

Fifteen of the top 25 global medical device firms have set up operations in Ireland, including Abbott, Boston Scientific and Bausch & Lomb. The medical technology industry employs 22,000 staff directly and growing.

"The industry is throbbing at the moment," says Mr Richard Hendron, the IDA Ireland executive in charge of the attracting medical technology firms to the State. "Usually we expect to bring four new firms into Ireland in a given year as well as expanding existing projects. But this year we will surpass that easily."

The medical technology sector is closely aligned with the pharmaceutical sector and follows a similar pattern in terms of investment. Of the 81 overseas-owned operations in Ireland, some 75 per cent are US corporations.

One of the key advantages that the sector offers to the State is its willingness to locate in regional locations, says Mr Hendron, who pinpoints Galway and Cork as important clusters for the sector.

Baxter, one of the first foreign investors in Ireland, is a good example of this regional policy with a factory in Mayo. The firm, which manufactures liquid solutions that can be attached to stents for use in medical processes, has been one of the biggest employers in Mayo since 1972.

Mr Pat Gallagher, Baxter's managing director, says the robust nature of the industry is also a key benefit for the State.

"Healthcare is very steady and there aren't the ups and downs or the bubbles that affect the computer industry," he says. "We've seen growth of about 4-5 per cent for the past 10 years plus."

But the State's strong success in attracting medical device firms, combined with the general robustness in the economy, is creating problems for existing firms.

"We are becoming less competitive as a location as time goes on and it is becoming more difficult to justify manufacturing jobs," says Mr Paschal McCarthy, managing director of GE Healthcare, which is based in Co Cork.

GE Healthcare, which recently acquired the Cork site when it bought Amersham International, manufactures dyes that are used by doctors to help them conduct scans of the human body.

It employs 500 staff at its production facility and is feeling the effects of higher labour costs, stricter European regulation and escalating freight costs. To help combat higher costs it would like to move up the value chain by conducting research activities, says Mr McCarthy, who admits this is a difficult task at present.

"There is always a desire to keep research and development close to home base but we will try to start by doing development work and then moving into research. But it is slow going."

Increasingly, medical technology companies are adding research and development functions to their existing manufacturing facilities in the Republic.

A recent study by the Irish Medical Device Association into the cardiovascular industry - the biggest medical technology sector in the Republic - shows 338 out 8,055 people are now employed in research.

These researchers generated 60 disclosures or patents in 2002. But this increased significantly to 113 last year and it is hoped this trend will continue. In recent months, there has also been a major success in the field of medical technology with the establishment of The National Centre for Bioengineering Science at the National University of Ireland Galway.

The centre will act as a link between the various branches of academia that are needed to conduct cutting-edge research in the area of medical technology. One of the first big research projects, which is being supported by Science Foundation Ireland, will develop new delivery methods to enable stem cells to be used in medical procedures. The €19 million project is being supported by Medtronic, a Galway-based firm that makes stents and catheters to treat coronary artery diseases.

"One of our goals is to attract new investments and new companies to Ireland," says Mr Tim O'Brien, director of medicine, the National University of Galway.

The research centre will act as a kind of one-stop shop that can offer firms access to a broad range of specialised equipment and expertise. It should create a cluster of expertise in the field that will attract interest, he says.

There are early signs that the Government's policy of developing new centres of excellence will draw in new investment.

The IDA will announce two new investment projects from early stage medical device companies in Athlone and Galway in coming months. Both firms have been attracted to the areas by research and development being carried out at nearby colleges.

Mr Hendron of the IDA says the State agency is deliberating focusing on attracting more early stage international firms in the the hope that they will decide to locate research the Republic.

One area of future concern is the sector's ability to attract staff. Aware of a potential skills shortage, Guidant is forging links with universities and institutes to help it recruit employees. For the past three years, Guidant has been running a masters in Business Administration (MBA) at its Clonmel facility to train its staff.

The firm plans to use the University of Limerick and the Institute of Technology in Cork as key recruiting grounds in coming years. It is planning to organise an internship project with the colleges, which will enable it to identify future talent for the firm.

But if a skills shortage is the only problem on the horizon , Mr Dave Skelton, managing director of Millipore, a Cork-based company that makes filtration devices will take it. "The world is a big place and, if necessary, we can bring people in to work here," he says.