One of the South African government’s mantras in recent years has been to improve healthcare. As a consequence, the whole medical market has become hugely competitive, no less so than in the heart care sector. While there are big and small companies fighting for space in this specialised arena, the advantages of having a global parent company for support will always be obvious.
For Edwards Lifesciences, South Africa represents a small footprint for a multinational business that saves hundreds of thousands of lives each year. Headquartered in Santa Ana, California, USA, the company has over half a century of heart care expertise.
Indeed the business can be traced back to 1958, when Miles “Lowell” Edwards set out to build the first artificial heart. Edwards was a 60-year-old, recently retired engineer holding 63 patents in an array of industries, with an entrepreneurial spirit and a dream of helping patients with heart disease. His fascination with healing the heart was sparked in his teens, when he suffered through two bouts of rheumatic fever, which can scar heart valves and eventually cause the heart to fail.
With a background in hydraulics and fuel pump operations, Edwards believed the human heart could be mechanized. He presented the concept to Dr. Albert Starr, a young surgeon at the University of Oregon Medical School, who thought the idea was too complex. Instead, Starr encouraged Edwards to focus first on developing an artificial heart valve, for which there was an immediate need.
After only two years, the first Starr-Edwards mitral valve was designed, developed, tested, and successfully placed in a patient. Newspapers around the world reported on what they termed a “miraculous” heart surgery.
This innovation spawned a company, Edwards Laboratories, which set up shop in Santa Ana, California – not far from where Edwards Lifesciences’ corporate headquarters is located today.
By 1985, the business had been acquired by Baxter International Inc. and had already begun its global expansion, reaching South Africa over a decade ago. For the past ten months, the company’s South African operations have been overseen by Wessel Hattingh, Country Manager, who had himself worked for many years in the field of cardiology.
“Today our operations centre largely around heart valve equipment and hemodynamic monitoring; we provide both invasive and manually invasive technology as well as invasive vascular therapies,” he states.
“Our market share varies from business to business and within the domestic heart valve market we own between 18 per cent and 25 per cent, critical care is around 32 per cent and the vascular business is roughly 28 per cent market share.
“These markets are extremely competitive due partly to the lack of regulation – in South Africa there is no formal registration requirement for a product and there is no price transparency,” Hattingh continues.
“We were formerly a part of Baxter’s business but we now run an affiliate (of Edwards Lifesciences) and we are a fully fledged “pty” company here in South Africa,” he adds.
With appliances manufactured overseas, the South African business is largely concentrated around sales and distribution. Distribution is carefully planned as many of the products have to be carefully stored at specific temperatures – all of which adds cost to the operation, as Hattingh explains:
“In total we have around 3,000 different sku’s in the business and these are manufactured around the world. We import fully assembled items from Switzerland, Mexico and the USA as we use an electronic system for stock control, which includes predicting likely sales amounts and future demand.
“We have a centralised storage facility located at our headquarters in Irene, Tshwane – and we use specialised storage to keep the products in a temperature controlled room which is critical for products like the heart valves, which include tissue valves.
“There is a temperature monitor on every box and quality control has to be quite strict; our distributors go through stringent audits and due diligence before they are selected.”
As one would expect of a life science business, Hattingh puts an enormous purchase on quality control, which he suggests is one of the company’s biggest selling points, as it gives a demanding client base essential peace of mind:
“Our customers are primarily specialist medical professionals, like interventional cardiologists, anaesthetists, vascular surgeons and interventional radiologists. With so many products available, it is important to convey the right message in our marketing and we are very fortunate to have the weight of the Edwards Lifesciences name behind our marketing.
“There are three key issues that our marketing focuses on: the quality control systems in place – which follow our parent company’s international standards; the cost-effectiveness of our products – which may not be the cheapest on the market but cheap is not always best; and thirdly, the clinical outcome for the patient. If you are able to run clinical trials which can demonstrate the third aspect, this can prove enormously beneficial.
“Our quality control is a very stringent process which has been determined by our parent company. We have a series of processes which are monitored with tick boxes and they send quality control people over to South Africa to check our systems on a biannual basis.” In a constantly changing industry, where medical advances can result in an explosion of new products, the South African operation is able to call upon the expertise that lies elsewhere within Edwards Lifesciences’ myriad of global ventures, meaning that when a new product is launched locally, it is usually already tried and tested somewhere else in the world:
“Invention and new products tend to go through cycles,” Hattingh suggests, “just yesterday we were discussing five new products to bring to market, but often these are introduced in phases every six or seven months.
“Our advantage is that the R&D spectrum is wide open with our parent group and we can use the skills around the world. By the time a new product launches over here, we have already learnt of any issues.”
Hattingh says that one of the major drives within his operation currently is the need to be more efficient: “Our efforts start at the top of the company and involve everybody at every level. We have a very healthy mantra here in South Africa: “to seek to enhance our processes” and our aim is to be leaner and meaner.”
Part of the need for efficiency is to keep customer costs down – and the pressures of South Africa’s geography make distribution an expensive pastime:
“There are high costs for warehousing in every centre and managing cost has become a big issue,” Hattingh admits. “We are constantly looking at ways to drive efficiency into the system, like changing the way we distribute to once a day, rather than several times. Our distribution is now 100 per cent automated and this is something we are getting better at.
“We have seen other businesses outsourcing their distribution and this could potentially have a cost saving of 8-12 per cent and is something we are going to look at over the next twelve months.”
Another major challenge is the need to retain staff with a unique set of skills: people with outstanding sales ability, but from a medical background.
“Recruiting the right people can prove tough and we will often look to experienced sales reps who have worked with medical devices or we will hire people who have studied medical topics at university and understand the technologies involved.
“We provide staff with extensive training – in fact I would say this is probably our number one priority – and each individual has to go through rigorous courses with high pass marks. When necessary, we send our employees overseas to learn – or overseas training staff will travel here to teach.
“With the Consumer Protection Act now bedding in, there is a need for us to ensure that our people are well qualified and able to accurately convey messages on the effectiveness of our products in clinical outcomes for patients; this will give the healthcare professional peace of mind.”
Hattingh says that training can also involve the client, who needs to learn about the product – and that of course can build relationships and lead to some form of customer loyalty in this ultra-competitive environment.
If the past twelve months have been relatively quiet, Hattingh is looking forward to 2013 with some relish:
“We are very excited and optimistic for the year ahead and we see many people switching products. There is lots of opportunity for us not only in South Africa but cross border too (we operate as far north as the Democratic Republic of Congo), while our efficiency efforts will keep costs down and our marketing will reinforce the value of our products both to the professional and to the client.
“Our whole maxim these days has shifted from the number of products sold to the number of patients we serve and we would like to reach between 25,000 and 30,000 patients whose lives we are saving or enhancing.”