Canada has one of the largest life science industries in the world. It is in the top 10 countries based on revenues ($7 billion, 2011) and merchandise exports ($3 billion).
When John Cecil and Vince Leitão use today’s modern hospital facilities, they are surprised when healthcare staff and equipment “don’t talk to each other.”
Cecil and Leitão’s impatience is understandable, given their company Kallo Inc. develops products and technology that offer instant connectivity to patient information and images, along with mobile medical units.
Their impatience is symbolic of the expectations of worldwide healthcare providers and users. The dire need for greater productivity and cost-effectiveness to serve ageing populations, with increases in chronic diseases like diabetes, is a universal concern. Similarly, demand for new hospitals is mushrooming in fast-growing emerging markets.
Clearly the cutting-edge medical technology (medtech) is out there. Canada boasts some 1,500 firms producing everything from medicines to medical equipment, more than 100 research institutes and 30,000 scientists. Canada also has some 300 export-ready firms involved in electronic management and distribution of healthcare information or e-health, and in mobile units or m-health, which integrate medical devices and communications.
Many Canadian companies are at the top of their field, such as Advanced Cyclotron Systems, Inc. (ACSI), a global leader in the design and manufacture of cyc lotrons that produce isotopes for medical diagnosis and treatment.
In addition to medical diagnosis and imaging, Canadian companies are renowned for innovations in cardiovascular care, in-vitro diagnostics and rehabilitative or assistive devices. Research shows that the fastest growing emerging markets – in particular, China, India and many Latin American and Gulf Cooperation Council countries – import more than half of their medical devices.
In e-health technology and services, a report by Boston Consulting Group places the market value at US$96 billion, mainly in industrialized countries; some $4 billion of that total is starting to come from Brazil, Russia, India and China.
Room for more hospitals
In healthcare infrastructure, Canadian architects and engineering-consulting firms are becoming internationally recognized for their expertise in designing and building hospitals, and in project management. Over the last decade, Canadian firms have led some 50 hospital projects worth nearly $20 billion using public private partnerships. This P3 model can lead to construction and maintenance savings for a country, and allows for much of the risk to be transferred to the private sector.
“We’ve seen this approach attract a lot of interest by foreign countries wanting to leverage the expertise and financial resources from the private sector. The expertise acquired in Canada by our architects, engineering and construction firms, contractors and others, provide them with the qualifications to bid on projects abroad,” says EDC’s Marie-Claude Erian, sector advisor for infrastructure projects.
She divides the global opportunities into three categories: large projects in the $1 billion range, in markets such as Turkey and Australia; mid-sized ones, around $300 million, in places like Chile and Mexico; and those in the $5-to-25-million range, in Peru, India, China, and many parts of Africa, the Caribbean and Central America.
To help Canadian companies take advantage of such opportunities in all key healthcare sectors – medical devices, health information systems and infrastructure – EDC works closely with government, industry and market-specific associations to create business matches with promising foreign enterprises.
Key partners in these initiatives include Canada’s Department of Foreign Affairs and International Trade (DFAIT) and MEDEC, the Canadian medical technology industry association and its CMMA division, focused on small and medium-sized enterprises (SMEs).
Making a healthy trade match “By working with EDC and other partners to create networking opportunities with foreign and multinational companies,” says Mary Palmer, executive director of CMMA, “we can better support our nearly 200 members in improving their competitive positions and in exporting their products globally.”
This matches with EDC’s goal to create brand new trade, especially for promising Canadian SMEs, adds Joseph Rios, EDC sector advisor for life sciences. “Our global trade and finance expertise and in-market connections let us track the key emerging market needs, and put us in a unique position – to act as an integrator between those needs, Canadian capabilities, the best partners and the financial tools that can help make a deal happen.
“To identify promising markets, we check if there’s already a link between Canada and the country, such as a trade agreement or market access for other Canadian sectors. We also look for countries with similar standards and regulatory bodies, and those that are investing heavily in healthcare.”
In Mexico, for example, similar healthcare standards allow Canadian companies to go through an accelerated process when exporting or investing there. Since 2011, EDC and DFAIT have organized inbound and outbound matchmaking events with Mexican buyers from more than eight private hospital groups. The result: Canadian firms are pursuing some 25 leads and one signed a contract with a Cancun hospital. Planning is in the works for another inbound mission this spring, with hospital buyers from Mexico City and the Guadalajara region.
Other interested buyers for Canadian supply, Rios says, are in Peru, Brazil, United Arab Emirates, Saudi Arabia, India and Chile.
First visit for Peru consortium
Peru’s Grupo AUNA, a major private healthcare consortium, is a case in point. Key procurement managers of the group met with some 30 Canadian companies for the first time this past fall on an inbound trade mission organized by EDC, DFAIT and Ontario’s Ministry of Economic Development and Innovation.
Given its goal of becoming the largest health services provider in Peru, Grupo AUNA has 19 different projects underway or under consideration. Each involves an investment of US$10-to-$100-million – whether for new hospitals or clinics, specialized equipment, file management or even hospital wastewater control.
“EDC has introduced us to several of these matchmaking events,” says Cecil, Kallo’s chairman and CEO, “and we have had exciting responses from Peru (Grupo AUNA) and Brazil. Now, we are moving forward to do business in these countries.”
Fast forward three to five years, and EDC’s Rios sees Canadian players becoming leaders in providing a full suite of healthcare offerings abroad, including hospital design and construction, facility management, and medical equipment and technologies.
Moving Medtech to New Markets
Boasting some 1,100 medtech companies, Southern Ontario forms the third largest medical research cluster in North America. Recognizing this, MEDEC, CMMA, FedDev Ontario, and HTX (Health Technology Exchange) recently launched a new export-creation program New Horizons for MedTech (NHM). It provides $900,000 in total funding – a $30,000 maximum for each eligible firm – to support up to 30 SME medical device and health technology companies in Southern Ontario that are expanding into new global markets.
Canadian companies interested in matchmaking events can register at: edc.ca
Kallo’s Mobile Care: Bringing the Hospital to the Patient
When Kallo executives talk about their proprietary Mobile Care, they are not referring to a type of first-aid clinic erected hastily to fill a temporary gap. They envision nothing short of a revolution in patient care around the world – involving integrated technology, diagnostic equipment and medical specialists, delivered by trailer-truck to the most remote locations. “It’s really a hospital on wheels with the latest in medical diagnostics, safety standards and IT that connects doctors and other healthcare professionals across borders – instantly,” says Kallo’s chairman and CEO John Cecil.
“Our mobile clinics include an aseptic room to do surgery and a command centre that can be linked to a teaching hospital via satellite, so that an on-site specialist can consult with hospital-based specialists. They can both access the same medical images and reports, while the patient can be viewed live for directing mobile staff to perform complex procedures. Rather than bringing the patient to the hospital, we are essentially bringing the hospital to the patient – even in the jungle.”
Toronto-based Kallo, whose founders have been perfecting innovative healthcare products and technology over the past decade, started to generate revenues for their new company this year – for example, they recently launched the official electronic medical records system (EMR) for the Ontario Medical Association’s Pediatric Section.
But its most exciting new prospects lie in the commercialization of its Mobile Care clinics. “We are working on critical negotiations with 26 countries that have shown keen interest in our products and technology for their national healthcare delivery. We also have a purchase order commitment from Ghana,” adds Cecil.
Other key markets for the company are India and Malaysia, along with several in the Middle East and South America. Today, Kallo has eight employees in Canada and the United States and is ramping up to grow this to about 40 in 2013. Kallo is also planning to recruit 30 healthcare and IT professionals internationally, especially in Ghana and the Caribbean. “All our technical development is done in Canada,” adds Cecil.
Two trade tips
Having state-of-the-art technology is not the only selling point. “You have to do in-depth research in each market to understand its cultural sensitivities and address its particular healthcare problems or delivery issues,” says Vince Leitão, Kallo’s president and chief operating officer. “For instance, Ghana is aiming to provide improved healthcare to its rural populations. One has to know what this terrain is like. Our team recently visited remote villages in Ghana, and spoke to healthcare providers there to understand their challenges and needs.
“You also need to project your commitment to provide long-term support to a region. We always start by building long-term relationships in our identified countries. Potential customers can easily see through a company’s approach – whether it is just short-term profit-oriented, or if it is really focused on benefitting the developing country in a sustainable way. Kallo’s commitment is to effectively improve healthcare delivery to those who need it the most.”
Kallo’s senior management has a network of contacts globally from long careers that spanned biomedical engineering and healthcare marketing. As such, they have been able to bring together foreign government ministers and key private sector players to work with them. “We started to talk to EDC to see how they can support our international projects, directly or by orchestrating financing from other international banks. We also find it valuable that they have brought us into their matchmaking events.”
Advanced Cyclotron Systems: Accelerating Global Trade
ACSI’s particle accelerators could convert platinum molecules into gold, but the medical isotopes they make are much more valuable than either of those precious metals, at least to human life. These isotopes, when converted to tracer drugs, can be injected in the body so that medical scanners can detect diseases, such as cancer and Alzheimer’s. They are also increasingly used to target and destroy cancer cells.
The Richmond, B.C. company’s newest cyclotron (TR-24) produces technetium isotopes (Tc99m). What’s unique is that they were previously only made by a few ageing nuclear reactors, primarily the one in Chalk River (Ontario), which will be phased out by 2016.
“Our TR-24 cyclotron is the best-positioned technology in the world to make commercial quantities of Tc99m outside of nuclear reactors,” says Markus Pauli, ACSI’s chief operating officer. In the five years since its development, the company has sold 13 of these multi-million-dollar behemoths – including 3 to the EU, 2 to Saudi Arabia and 2 to Russia.
Rise in global market share
ACSI’s proprietary technology has taken the company from being a specialty niche player until three years ago, selling about two cyclotrons a year, to one with sales in excess of 10 units – a 15 per cent global market share, and growing quickly.
“Another three years from now, our business will probably look completely different in its international sales,” says John Taylor-Wilson, vice-president of Sales and Marketing. The company is now actively seeking new markets, with good prospects in South America, India and Asia-Pacific.
Although some transactions have seemingly fallen into its lap – with foreign firms approaching ACSI directly – this is a highly complex business. “Our sales cycles are often three to five years, from first contact with a client to a purchase order,” says Taylor-Wilson. “As well, shipping costs can run around $100,000 for such machines, which weigh between 20 and 60 tons. Customs regulations and getting export permits are another big challenge, especially in emerging markets.”
“We are after all a mid-sized tech company, not a multinational conglomerate with its own financing division, so it’s tougher for us to offer credit on our own.”
Some markets require performance bonds, he adds, which are easier to obtain when EDC provides a guarantee to its bank, in case a customer demands payment on the bond.
“We are also working with EDC to possibly set up a credit facility that would help finance some of our foreign purchase orders in the future. We are after all a mid-sized tech company, not a multinational conglomerate with its own financing division, so it’s tougher for us to offer credit on our own,” adds Pauli.
As the company becomes larger and more sophisticated, it is looking at opportunities not only to sell its equipment, but also to become a turnkey provider for all the equipment and systems found in a radiopharmacy. This means getting involved in site planning, development of the production process and end-user training.
While many manufacturers source components from Asian countries, Pauli sees a big advantage in having all its design, parts and fabrication done in Canada. “It gives our company a high degree of control over the quality of our systems and allows us to be more reactive to innovation and flexible to our customers’ special needs.”
ASCI is backed by EBCO Industries, one of Canada’s largest manufacturing facilities, which was contracted some 40 years ago to build the first particle accelerator developed by TRIUMF (TRI-University Meson Facility, Canada’s National Laboratory for Particle and Nuclear Physics). ACSI was then formed when this technology was commercialized in 1989 to sell cyclotrons to the medical community.