Break-In Specialist

The Med-Chem Story

Transferring a business in to a competitive market in a new country is never easy - even when one of your best customers asks you to do it. It takes time and effort to create awareness, trust and relationships. Just ask Andrew Sullivan, general manager of Med-Chem Australia. He had to make more than 50 phone calls over two years before a key prospect would agree to see him.

Med-Chem Australia imports and distributes ingredients for the food and pharmaceutical industries - you probably have a Med-Chem product in your pantry or medicine cabinet. It is the Australian subsidiary of a successful New Zealand parent company, which was started in 1988 by Rufus Carey and Geoff Walker. In 2000, Med-Chem’s biggest ingredients supplier, the French company Roquette Freres, asked the New Zealanders to handle its distribution in Australia.

Roquette Freres’ invitation showed the trust that Med-Chem could inspire in its business partners - but no one knew that in Australia. Carey and Walker approached Sullivan, an Australian who they knew by reputation, to head the new business. Sullivan says: "Australia was always the next logical move for Med-Chem but there was no existing business. When we opened in August 2000, we knew we had the Roquette account from January 2001."

The Challenge

To set up a new business, find clients and get the right staff.

The Solution

Sullivan began at the beginning: he rented a serviced office in Melbourne and drafted a detailed five-year business plan and a one-year marketing plan. The plan projected a $10-million turnover after five years, with a loss in year one and break even in year two.

Writing a business plan is one thing; making it happen is another. Sullivan had identified key manufacturers in Australia that used products Med-Chem could supply. But they already had suppliers. Getting their business took raw persistence.

For example, Sullivan called one large food manufacturer every fortnight for two years before getting an appointment to see them (it was the right call at the right time - the manufacturer was looking for a new supplier of one product). That manufacturer is now Med-Chem Australia’s biggest customer. How did Sullivan keep going in the face of such rejection? The business plan demanded it. He says: “The size of the opportunity kept me motivated - I wasn’t going to let it go. You have to remember this is business, it’s not personal.”

Getting new customers is important; maintaining existing customers is vital. Relationships have to be nurtured, which means more than just filling orders. Sullivan spends about 35% of his time interstate or overseas, visiting clients and suppliers to ensure that all parties are happy. He says: “Most of our suppliers have an exclusive contract with Med-Chem and that’s the way we prefer it. When a supplier is exclusive to us we can become more targeted. We plan exactly where we are going, in every market, in every state.”

Good service can only be delivered by good staff. Med-Chem Australia has a lean operation with just six employees. “In a larger company, if someone’s not pulling their weight, sometimes that can be absorbed. In a small company, there’s no room for it.”

But finding good staff can be as hard as getting new clients. Sullivan spent 12 months interviewing and rejecting candidates proposed by a specialist food-technology employment agency to fill a business development manager role at Med-Chem. Eventually, he found the right person. He says: “I was looking for someone who was as hungry for the sale as I am. I’d rather wait for the right person than be stuck with the wrong one.”

The Result

Med-Chem Australia had a turnover of $1.8 million in its first full year, 2001-02. In 2004-05, sales increased by 10% over the previous year to more than $10 million. Sullivan forecasts another 10% increase in the current financial year. He says: “It gets harder the bigger you get. Your competition starts to take more notice of you and almost hold you at a certain level.”

Med-Chem Australia now represents ten different ingredients suppliers and services over 150 clients. Sullivan has written his next five-year plan. It projects a turnover of $25-30 million in five years.

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