IRISH chemical group Clonmel Pharmaceuticals has been bought by a UK-based biotechnology company in a deal worth £14 million sterling.

The company, Ethical Holdings says is plans to invest £7 million over the next three years in Clonmel which employs 170 people and expand the workforce. Clonmel, which is said to be the 10th largest pharmaceutical company in Ireland, manufactures several well-known branded drugs as well as non-branded generic drugs.

Ethical, which is quoted on Nasdaq in the US, is preparing to list on the London Exchange with a £20 million institutional placing. The deal with Clonmel is conditional on this going ahead.

The deal will include the issue of two million Ethical ordinary shares which the owners of Clonmel have agreed to retain for a specified period. In addition £1.25 million will be in the form of non-interest bearing debentures which will be repayable in two instalments next year and in January 1999.

Mr Daniel Tierney, Clonmel's chairman whose company Cross Group is Clonmel's major shareholder will be joining the board of Ethical as a non-executive director.

Clonmel has two pharmaceutical manufacturing plants on its site in Clonmel, Co Tipperary. The main plant manufactures a wide range of products which are sold in the Republic and in Europe.

The second plant is a 24,000-square foot antibiotic plant. It produces antibiotics for the Irish and export markets including the US. It has approval from the US Food and Drug Administration.

In the year to December 1996, Clonmel's revenues were £12.2 million and it made pre-tax losses before tax of £78,000. Its net assets are £5.5 million.

Ethical's chief executive, Mr Geoffrey Guy said that in the first two months of 1997, Clonmel's revenues were back to 1995's profitable levels. He said Ethical was confident that the problems Clonmel had experienced in 1996 were specific, and would not recur.

"We have acquired Clonmel to introduce manufacturing of our own drug products, he said. We do not expect any job losses and we intend to increase output."

Clonmel manufactures a range of drugs for treating heart, ulcer and asthmatic problems. It has also been manufacturing some of Ethical's products on a contract basis since 1988.

Clonmel also sells a range of products in Northern Ireland through its subsidiary, Crosspharma, of which Mr Tierney is chairman and chief executive. In a statement, Mr Tierney said the staff at Clonmel and Ethical had worked closely together for many years.