The Irish company's research into Verapamil, a long-standing treatment for heart disease, centres on its potential use in treating irritable bowel syndrome (IBS).

So far, according to chief executive John Devane, the Verapamil research has been encouraging. More so than any of the company's six research programmes, in fact. "To date it has been the most exciting set of clinical results, " he said.

Devane hopes Verapamil will move into Phase III clinical trials . . . the last phase of testing before the company seeks approval from US and European regulatory agencies to begin selling the drug . . . in the near future and has an outside hope that it may hit the market by 2010.

Annual sales for such a treatment were it to gain approval could be as much as $500m out of a market for IBS treatments that has been estimated at over $2bn a year, according to AGI.

AGI is one of several Irish biotech firms looking for new, and possibly very lucrative, uses for pre-existing treatments. The specialty pharma sector, where companies focus on niche areas such as re-profiling existing drugs to treat different conditions, is growing in popularity.

Neurocure, an early-stage biotech company, is pursuing a similar strategy to AGI and has amassed a portfolio of drugs that it hopes can be re-purposed to treat a range of conditions which affect the central nervous system, including attention deficit disorder (ADD). Dublinbased Merrion Pharmaceuticals, meanwhile, is focused on drug delivery and on finding new and more efficient ways to administer existing treatments to patients.

In the high-risk, highstakes game that is drug development it makes sense to play the percentages. Finding something that works and making it work better or applying existing technology to a new problem is a lot less risky than starting on a new treatment from scratch.

"The sort of areas that all these sort of companies are in are areas where Ireland Inc can have a significant presence. This is an area that Ireland can be world class in, " said John Lynch, chief operating officer of Merrion Pharmaceuticals. "A small company can actually do quite well in the area. You can do a lot with a relatively small infrastructure, " he said.

Merrion is looking at several potential cancer treatments using its drug delivery technology which can be used to produce a tablet form of a treatment that previously had to be administered by injection.

It's no surprise that much of Ireland's biotech industry is made up of such niche companies. "It's a good opportunity for companies in Ireland where [the alternative] is to go out and raise hundreds of millions to take a new chemical entity through, " said Michael Donnelly, chairman of biotech investment fund Growcorp.

Growcorp has just one 'pure' biotech company among its portfolio, Pharmatrin. The company, founded by researchers working out of Trinity College, has been working on a new treatment for Crohn's disease for 16 years. Only now is it in a position to begin seeking investment to fund clinical trials that will cost tens of millions of euro.

Convincing venture capitalists to part with that sort of cash is no easy task, given the risks associated with drug development. Up to 50% of treatments fail to progress beyond Phase II clinical trials, the stage at which a drug's efficacy is tested on human test subjects. The failure rates in Phase III, the last stage of clinical tests, are even higher. Two thirds of treatments develop serious problems at this stage. After all that the chances of getting a treatment approved by the US Food and Drugs Administration, in order to gain access to the world's largest market for prescription medicines, are about one in five.

Biotech entrepreneur Peter Daly has been involved at an early stage in two Irish companies, EiRx and Neurocure. The former is working with a completely new chemical entity, ERX 3722, with a view to developing a treatment for breast cancer. The latter, however, is working on re-profiling existing compounds. "It's a way of creating value fairly quickly, " said Daly.

Where a treatment has already been approved for sale, a company such as Neurocure can short-circuit much of the pre-clinical trials process, enabling them to move quickly to Phase II testing for its new use. If those trials prove successful, the company has a story to sell to potential investors. "You've got an asset. You can raise some money on it, " said Daly.

AGI, for instance, raised 42.5m on the strength of six drugs it had in Phase II trials when it floated on London's Alternative Investment Market in February.

Daly cautioned however that while some Irish specialty pharma companies have enjoyed success raising money, it's still tough to raise funding for such ventures.

"The finance environment generally is challenging, " he said.

"Unfortunately there isn't a magic formula to getting your product approved, " said Joey Mason, a partner in Delta Venture Capital, which has invested in both AGI and Neurocure. The risks can be off-putting and, said Mason, "there's just not a huge experience among Irish investors of pharmaceuticals in general".

From an investor's point-ofview specialty pharma companies can offer a slightly more palatable risk-profile, though. Mason said that has undoubtedly helped the Irish companies in the sector in their funding endeavours.

"That space is much further away from pure-play biotech and much more commercial, " he said.

And with the prospect of developing a treatment that could bring in hundreds of millions of euro should it gain approval, the rewards are significant.

"You don't need too many products to get through to market. Possibly just one, " said Merrion's John Lynch.

ELAN FAMILY TREE IRISH pharmaceutical company Elan has given investors a rollercoaster ride through the years but it has delivered signi"cant returns to the biotech sector. Several up-and-coming Irish biotechnology companies have either been spun out of Elan or have been started by former Elan executives. The company's former chief "nancial of"cer Tom Lynch recently "oated Amarin, which is researching a treatment for Huntington's Disease, on London 's AIM and Ireland 's IEX exchange.

Another senior Elan executive, Seamus Mulligan, is heading up Azur Pharma, a niche pharmaceutical company which raised 40m last year.

Azur plans to purchase treatments which are in the late stages of clinical trials and help bring them through to market.

AGI Therapeutics is led by Elan alumnus John Devane. Devane was also a key part of the team which founded Athpharma. Athpharma sold the rights to four drugs it had in development to Canadian pharmaceutical company Biovail for 41m three years ago.

Merrion Pharmaceuticals, meanwhile, was founded to exploit drug delivery technology purchased from Elan.