From the vantage point of the famous Galway racetrack, it is easy to see how this west of Ireland city is now described as one of Europe’s leading industrial clusters.
“Over there, we’ve got the world’s biggest maker of cardiovascular stents,” says Ian Quinn, who runs a family-owned business supplying the big multinationals with specialist parts. “And on that side, we’ve got the second biggest.” Boston Scientific and Medtronic have Galway factories making stents, the tiny metal device which, when it was invented in the 1980s, revolutionised the treatment of coronary heart disease.
Galway boasts three of the top four companies in this field, with Abbott the latest arrival, inheriting a stent plant as part of its 1995 takeover of Bio-Compatibles, a UK company. There are now 28 medical devices companies in Galway, employing more than 5,000 people – 350 in leading-edge research and development.
Cluster theory, which was first described by Michael Porter in his book The Competitive Advantage of Nations, holds that when similar companies locate in the same place, they can achieve economies of scale without losing the flexibilities enjoyed by smaller organisations.
Fifteen years ago, Digital, the US computer company, was Galway’s biggest employer. It closed in 1993, moving to Scotland. “Everyone said that when Digital closed, Galway was finished,” says Bernard Collins, a well-known figure in Galway’s medical devices industry. “Quite the opposite was the case.” Many of the Digital engineers are now working for US medical device companies. In the 1990s they were expanding abroad, overcoming concerns about quality control and lack of protection for inventions. “What was happening was that many of the new medical device products were coming from Europe.
Maybe it was the lower risk of litigation. Maybe doctors here are more adventurous. But US companies felt they had to capture that,” says Mr Collins, who set up Boston Scientific’s Galway operation in 1994, in a factory vacated by Digital, which a decade earlier had made tennis rackets for Wilson, the US sports company. Creganna, Mr Quinn’s company, was originally set up to supply the local electronics industry. In 1997, it was persuaded by Boston Scientific to start making catheters.
Now the world’s largest catheter manufacturer (sales of €26m), employs 270 people in Galway and has a new design/development centre in Boston. In the early days, one of the missing ingredients was the lack of R&D facilities. But in March 2004, Boston Scientific’s Galway facility launched the company’s latest innovation – a drug-coated stent that reduces unwanted patient reactions and inhibits the return of plaque to the arteries.
Galway University works closely with the companies in areas such as materials testing. Last year, it was given a €19m government grant to set up a regenerative medicine institute, which is part funded by Medtronic and is looking to develop a new generation of devices that can deliver stem cells to rebuild damaged organs inside the body.
Roy Green, the university’s dean of commerce, who is studying the Galway medical devices cluster, suggests that the Galway phenomenon is likely to continue. This is because the R&D operations of multinational companies need to be closer to their customers than to their corporate headquarters.
“The days when you had one centre for R&D are over,” he says. “With the life cycles of medical devices products so short, it is vital to be close to your customers to keep ahead of competitors.”
Financial Times (John Murray Brown), 10 February 2005
