Abbott Laboratories yesterday announced plans for a €36 million investment in Donegal, creating 155 jobs.

The US group, which already operates six plants in the Republic, said it would acquire the Donegal town plant of Hospira Ireland, originally part of the Abbott group.

Abbott's diabetes care division will manufacture test strips for use in the company's blood glucose monitoring systems.

The company says its diabetes care division is one of the fastest-growing areas of the group's activities, with sales in excess of $1 billion (€830 million) per year.

The strips that will be manufactured at the Donegal plant will be incorporated in the group's FreeStyke product, which allows patients to monitor glucose levels in seven seconds through a tiny blood sample.

Ed Fiorentino, president of Abbott Diabetes Care, said: "The success of other Abbott operations in Ireland was an important factor in our decision to locate in Donegal."

Abbott employs more than 2,200 people in the State, making it one of the country's most significant multinational employers and making the Republic one of its largest overseas locations.

The US group spun off its hospital products division into a separate publicly-listed company, Hospira, in April 2004. Last August, Hospira announced it was closing its medical goods factory in Donegal, with the 560 jobs there being phased out by the end of 2006.

The company blamed the high cost of doing business in the Republic, which it said had forced it to switch production to factories in central America.

Many of the new jobs are likely to be filled by laid-off by Hospira workers. Abbott said it expected to begin production in Donegal in 2007. Recruitment will start in the second half of this year with the 155-job target being achieved over several years.

Minister for Enterprise Micheál Martin yesterday thanked Abbott for its "ongoing commitment to Ireland".

He said the decision was the result of the combined effort of IDA Ireland, the local authorities and the community.