Business Irish

Sunday 23 April 2017

Dental care growth gives boss a lot to smile about

The toothpaste and mouthwash manufacturer which employs 40 people has seized business opportunities with both hands and is looking at further expansion options. By John Mulligan

It's minty fresh in the reception of Europharma Concepts and the display case of toothpastes and mouthwash immediately gives the game away.

Declan Lenahan is seeing off a business contact at the door and then gives a quick introduction to the various brands made at Ireland's only such factory. Casual but focused, he leads a tour of the premises, laying bare the manufacturing process for products that consumers use every day, but think little about.

Large containers of peppermint flavouring and sacks of silica are just some of the ingredients that wait on shelves to be transformed into brands that Europharma manufactures for retailers such as Aldi, Asda and hundreds of pharmacies across Sweden.

Lenahan concedes that the locals in Clara, Co Offaly -- the heart of Brian Cowen country -- thought he was "mad" when he set up the business there just four years ago.

Investment

He stuffed €400,000 of his own money into the company, secured €250,000 from Enterprise Ireland and a similar amount from a business expansion scheme. Other private investors -- a neighbouring firm, Steripack, owns 12pc of the business -- brought the total to €1.4m. On a wing and a prayer (or, just one contract to be precise) Lenahan set about trying to make it work.

"Getting money at the time wasn't very difficult," he explains. "The skillset was harder. I'm not an engineer. At the start there were no processes in place -- we now have 20,000."

Lenahan wanted to be able to go to potential clients and show them the best quality systems he could, so he ensured he kitted out the factory to a standard that would even permit it to manufacture medical devices.

Being a stickler for those types of standards stretches back years for Lenahan. Born in Laois in 1963, he obtained a national diploma in fine chemicals and pharmaceuticals here before leaving the country in the early eighties to work in London and New York.

He returned to Ireland in 1985, stayed for a couple of months, realised there wasn't any work and he and his now wife, Angela, jetted off to Australia -- a destination prompted by the fact that his grandfather was an Australian.

"I thought I'd go to Australia and work in some sort of chemistry lab." He did, sort of, but it was part of a brewery.

"I got a job within two months and thought: 'I'm working in a brewery and I'm Irish'," he says with an infectious guffaw.

Working as an analytical scientist in the brewery's lab in Sydney, within a year he was running it. While there, he got his residency and now holds Australian citizenship and still owns a house in Sydney.

He had one week off a month due to the shift pattern of work at the lab, and was "so bored" he decided to spend it working "digging holes in roads" with friends who worked for a company replacing gas pipelines.

"It was fun and I enjoyed it so I gave up the job in the lab. I had the intention of setting up my own company to dig holes," he says, "but that didn't work out."

Instead, still in Sydney, Lenahan got involved in medical sales. His new employer was also involved in floor and carpet shampoos, so he got involved in developing products for it and was soon its international sales and marketing manager.

By 1998 he'd had enough and began work as a consultant. He then got an opportunity to set up a manufacturing process in the UK for a dry mouth treatment owned by an American firm. He and his family upped sticks from Australia and moved to Leeds. Soon after, Lenahan thought he could make the product in Ireland.

"I met the guy who owned the technology in Los Angeles and asked him if I set up a factory would he give me the contract to manufacture the product. He said he would."

With that, began Lenahan's Offaly big adventure.

Contract

But that initial contract ultimately only gave the entrepreneur about an 18-month window to find additional work. A new owner of the company that controlled the product got nervous that a small and new Irish firm had what it saw as a significant contract.

"We tried hard to hang on to it, but it was always their intention from then on to leave us," he recalls. He hired a research and development executive, a sales manager and then "started hunting" for work.

"I said to the team, look, we're up against the biggest players in the world. We have the equipment, we have the motivation and the enthusiasm -- we just don't have the business."

Hundreds of phonecalls formed the backbone of the sales effort -- and it paid off. The first win was a contract to manufacture the Beverly Hills Smile brand of toothpaste, and soon after, in 2008, Europharma managed to ink a deal to make toothpaste for government-controlled pharmacies in Sweden.

"They asked us to develop six products for them," says Lenahan, whose company also makes products for pharmacies in Switzerland, has 14 clients and 14 more in the pipeline.

Adding functionality is key, explains Lenahan, to give pastes and mouthwashes an edge over those of rivals. Europharma, which employs 40 people, has 60 unique formulations and 32 products currently being developed, he says.

Last year, Europharma's revenue was €4.3m, and it turned an operating profit of €323,000 and a profit after tax of €267,000. It will have spent €400,000 on R&D this year.

Most recently, German discount giant Aldi approached the company to develop its own branded toothpaste and mouthwash products for stores in Ireland. Sold under the Pearla name, Lenahan says they've been selling much better than anticipated. He says Aldi has been a surprisingly pleasurable retailer to work with.

"I had no knowledge of Aldi, but they approached us and asked if we could make a really good quality Irish product. It was great, because it was our first touch into the Irish market and it would reflect on us. I wanted the product I'd give them to be the best I could possibly give."

He says Aldi executives were heavily involved in the whole development process, while Europharma has undertaken not to make any own brand products for anyone else in the Irish market. In return, he wanted Aldi to give the products a generous push.

But it's the US market where Lenahan sees a bigger future for Europharma. Its population size, coupled with the scale of its dental care market, make it a prime target. But that's further down the line.

For now, the closest he's got is a major contract with UK retailer Asda, which is owned by US retail giant Walmart. In 2010 Europharma began working with Asda, and developed six products for it. In the first 12 months, Asda sold 1.5 million units of the pastes and mouthwashes.

Other major retailers are also in the frame for Europharma, and by this time next year its products could be sitting on many more shelves in the UK.

Lenahan is the first to admit that after just four years, things have gone far better than he could have hoped, and the company recently won the Ulster Bank Best Business Start-Up award. But he's also realistic, and points out that he's not wedded to the idea of remaining in control of the company if it means it can help its future expansion.

"I have a huge desire to create and develop. I'm very good at starting businesses, but I'm not necessarily very good at running them," he adds, pointing out that he doesn't get stuck into the day-to-day operations, and is probably more "sciency".

And despite the rain lashing down outside the office window, Lenahan says he has no real desire to return to live in Australia.

"But there's no way if I was 24 or 25 right now and my job was in any way iffy that I'd stay here now. I'd be gone. We have to take responsibility for ourselves and for what we do."

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