EU market provides healthy returns for Galway based Chanelle
Building up a strong presence in European markets required vision and tenacity for Co Galway based Chanelle Group, one of the many successful Irish companies supported by Enterprise Ireland.
“I made the strategic decision to concentrate on the EU in 1996 as I felt there were better opportunities there in the long term and it was a higher price market”
Chanelle Group in Loughrea, Co Galway epitomises what can be achieved in eurozone markets by an Irish company when its leader takes a long-term view and recognises the importance of investment in research and development (R&D).
Currently employing 395 people and exporting to 80 countries worldwide, Chanelle specialises in the development, production, marketing and distribution of generic animal and human pharmaceutical products.
Chanelle’s turnover has doubled over the past five years to reach over €100m in 2016. The EU accounts for about 83% of overall sales.
Chanelle has over 1,700 animal health licences registered in the EU and 500 in the rest of the world – the largest number of registered veterinary licences of any company in Europe. In its human division, it has over 1,100 licences registered throughout the world.
In 1996, founder and managing director of Chanelle Michael Burke saw the potential for generic animal health products in the EU. He was undeterred by how difficult it was to penetrate the main markets such as France and Germany at the time.
“When we started out in the mid 1980s we concentrated on exporting to South America and the Far East as it was easier to get products registered in those markets,” says Burke.
“I made the strategic decision to pull out of South America and concentrate on the EU in 1996 as I felt there were better opportunities there in the long term and it was a higher price market.
“Getting products registered in the main European markets was exceptionally difficult in the first few years as they were quite protectionist. But we persevered. Once we got product licences it was easy then to get distributors to sell our products. Things have gotten a lot easier in Europe in terms of registration since 2004.”
Tom Kelly, Head of Industrial, Lifesciences and Consumer Division at Enterprise Ireland, says Chanelle’s success in the EU should be attributed first and foremost to Burke’s leadership.
“He was very focused and relentless in the pursuit of success in EU markets. It takes courage to recognise when to take risks and Michael Burke has shown repeatedly that he is prepared to invest and take that challenge on in order to succeed.”
Kelly points out that Burke was coming at Chanelle’s European growth strategy from a position of deep knowledge, not just of the marketplace, but of the products he was bringing to market. Having qualified as a vet in 1970, Burke ran his own practice in Loughrea up until 1985 by which time he was getting products manufactured under contract in the Netherlands, France, Germany and Belgium.
“I spotted an opportunity for generic animal health products for export long before I started the business. It was a small beginning with only two staff in a 40,000 sq ft warehouse but we have grown organically every year since,” says Burke.
Chanelle is in the process of completing a 30,000 sq ft expansion of its 300,000 sq ft facility in Loughrea as part of a €70m investment programme supported by Enterprise Ireland. This will double production capacity at the site and lead to the creation of 175 new jobs over the next five years.
Kelly says Chanelle’s focus on generic pharmaceuticals has been critical in driving its growth and expansion, in particular the expertise it has built up in terms of developing the product pipeline.
“Chanelle has been really good at identifying which products to work on before they come off patent. How much better you are than competitors in generic pharmaceuticals is dependent on being able to bring drug development through ahead of everyone else. Getting a product registered and being first in the market with it is crucial.”
Burke notes that bringing a generic pharmaceutical product to market is a long process requiring a significant investment in R&D. Seventy people work in R&D at Chanelle Group, including 40 based at its laboratory in Amman in Jordan.
Aside from the research around which products to focus on, there are various clinical and environmental trials required to ensure formulations work as effectively as the original patented products and conform to certain standards.
“We have to work on human health products seven years in advance of them coming off patent and it can take three years or more to bring an animal health product to market,” says Burke.
“Each year, Chanelle Group invests over €8m in R&D and this investment will continue as we launch 75 new products over the next five years in both human and veterinary pharmaceuticals.”
Ireland is recognised as being one of the four major locations worldwide for pharmaceutical manufacturing, the others being Singapore, Puerto Rico and the US. Irish biopharmaceutical, pharmaceutical and chemical exports of €64bn (in 2015) are dominated by multinational companies.
However, Chanelle is part of a small cohort of indigenous Irish pharmaceutical manufacturing companies which are making inroads in international markets including mainland Europe, according to Kelly. These include Bimeda in Dublin, Univet in Cavan and CF Pharma in Kilkenny.
Other companies are achieving success in the related areas of clinical trials (Icon Clinical Resarch, Dublin), packaging of tablets (Millmount Healthcare, Meath) and the provision of software systems (Zenith Technologies, Cork).
“There is considerable opportunity for Irish companies which supply or support the pharmaceutical sector to take their offering globally,” says Kelly.
“It is important for companies in this space to be selective in their focus, for example, Chanelle’s emphasis on products to treat small animals. Then they must further define their niche in terms of how products or services are delivered. In Chanelle’s case, ‘spot-on’ products have done well. These are products which are placed on the animal rather than injected.”
Tips for eurozone success
Michael Burke, founder and managing director of Chanelle Group, shares his top three tips for companies looking at entering eurozone markets
• The number one lesson I have learned in relation to exporting into the EU is never to give up. You have to keep trying and submitting the dossiers – no matter what business you’re in. Perseverance and persistence have been a huge help to us as a company.
• The key to our success in the EU has been having a clear strategy. You need to know what you’re about and what your goals are. I am a great believer in keeping things simple. We have a simple way of operating and it gets us places. In the past five years we have doubled turnover and it has all been organic growth. The foundations are in place to achieve this again in the coming five years.
• Investment in innovation, both on the product development side and in operations, is vital. If you don’t invest in R&D as a company like ours you won’t have any success. Sales depend on continued innovation. On the process side, we have put huge resources and effort into introducing lean practices to drive efficiency. We are currently working on achieving Shingo accreditation to highlight our operational excellence.
This article is part of a series being published as part of Enterprise Ireland’s Global Ambition campaign. To read more about Chanelle Group’s exporting strategy and other case study companies go to https://ambition.enterprise-ireland.com/