A significant investment in research and development (R&D) has fuelled Hamilton company Simcro’s reputation as the global benchmark for designing and manufacturing animal health delivery systems.
The company began in 1993, but in the last three years, Simcro’s development and innovation capability has become its focal point.
Simcro Chief Executive, Will Rouse, says investing in new product development has been the way to create a sustainable competitive advantage.
“When we bought Simcro three years ago, it quickly became evident that investing in our R&D capability was essential in order to distance ourselves from our competition in the area of agriculture and animal health delivery systems. We also needed to focus on our partnerships with pharmaceutical companies, where we identified a pressing need for tailored solutions for specific formulations,” he says.
“We’re only just starting to reap the benefits of our R&D investment, but it is our pipeline where we will see the real future benefits for our shareholders.”
In shifting its focus from product manufacturer to innovator, Simcro has developed strong partnerships with global pharmaceutical companies, with 90 percent of its sales to international clients in 65 countries.
“The great thing is that it creates this huge annuity stream. Once you have developed the device and partnered with the company, you don’t do a lot of selling – the orders roll in each month,” Mr Rouse says.
Products include injectors, applicators and containers, and a wide range of accessories. Last year, after comprehensive R&D work, Simcro launched the Optiline drencher for Novartis Animal Health, and the Sekurus safety injector for Pfizer.
Simcro continues to build its R&D capacity, with 14 R&D specialists now among its 80 staff.
“We are continuing to build our R&D; so much so, that we are already running out of physical space in our Hamilton HQ to house them. We spend in excess of 12 percent of sales on R&D – it’s a big drag on existing cashflow, but there’s no way we will realise our goals otherwise.
“Pitching our development and innovation capability is now our marketing point of difference.”
The company no longer develops products in a vacuum, and has been overwhelmed with inquiries from pharmaceutical multinationals looking for new products. Where four years ago, Simcro would have two or three products under development, it now has around 70.
“Resourcing those is the challenge, and we’re advertising continuously for product development engineers,” Mr Rouse says.
Historically, the company has designed products for livestock, to administer pharmaceuticals to cattle, sheep and pigs.
“Now word has got around, and we’ve been invited into the companion animal and human health areas. It wasn’t a deliberate strategy, but it has come out of our emphasis on R&D in the livestock space.”
“We’re involved with an exciting new product launch in the United States and Europe for companion animals and we’ve got three or four projects underway that relate purely to cats and dogs, which is a rapidly growing sector.
“Working closely with a company like Novartis means we know what their forward forecasts are, what the product cycle is, and how long it will last, so we can tailor something knowing exactly what the market size will be.
“The hard work isn’t over yet. On average, products like these can take seven years to market from discovery. We are still living off the cashflow we make off the historic product line, but the new products are beginning to come through now.”
Simcro outsources all of its component manufacturing, and almost all of that is made in New Zealand: “The upstream effect is significant – we are the biggest customer to a number of businesses around Hamilton.”
Assistance from New Zealand Trade and Enterprise has helped Simcro penetrate international markets and it has been working on aspects of its branding and marketing through its Better by Design programme.
Entering the New Zealand International Business Awards has helped to give Simcro a bigger profile in New Zealand, which should benefit the company when it is trying to attract “new talent”.
“When people have heard about us, it might give them the confidence to apply for a job here,” Mr Rouse says. “And when we are presenting our credentials offshore, we can say we’ve won a prize for the best R&D in New Zealand which adds to our credibility with customers.”
Judges’ commendation
“The key to Simcro’s successful use of R&D is customer involvement. They have 11 engineers that are all customer-facing and view the R&D process as a key part of the sales cycle. The company listens to its customers and customises its products to meet their needs. As a result it has built impressive relationships with the big multinational pharmaceutical companies.”
For more information contact:
Anna McIntyre, phone +64 4 816 8317, email anna.mcintyre@nzte.govt.nz
