@ Narvis - thanks for the initiativ in translating the interview.
As you mentioned there are maybe some details in the first translation that may be a little difficult to understand. So as this interview with Anders is very interesting (at least that is my impression) I spent some time trying to make some slight adjustments from the first translation. Hopefully some of the details are a little bit clearer now, some statements a little bit easier to grasp, in this updated version of the translation.
It is not that easy to make a 100% correct translation from Swedish to English, there are always some phrases and subtleties that will be somewhat subjective in how to translate. But my attempt have been to be fully objective in trying to translate the essence in what Anders is telling. With that said, I am of course not a professional translator.
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2022-10-28, Interview with Anders Hultman, CEO, AroCell
Speaker 1 = Oscar Bergman, RedEye
Speaker 2 = Anders Hultman, CEO, AroCell
Speaker 1
Hello, and welcome to RedEye! Today we have with us Anders Hultman, CEO of AroCell, to interview him about the company’s Q3-report. Welcome Anders!
Speaker 2
Thank you Oscar!
Speaker 1
Can you start by summing up your third quarter?
Speaker 2
It has been a very good quarter with a lot of advancement! In particular, we’ve seen a substantial sales growth, actually in both of our product ranges - in both bacteriology and oncology. Right now there is an emphasis on the bacteriological side, which has got an almost explosive growth! On the positive side, when things are going this fast, it’s important to have an organization that can follow along and deliver, and we’ve actually managed to do that.
So we have managed to meet this increased growth, and there is a very good atmosphere in the company and everything is running smoothly. And at the same time as we meet the increased sales, we continue to move forward with our existing projects, product development, etc. So there is a lot going on!
It is also very positive now that we can reach out and travel and visit our partners in different parts of the world, we now get a much better view on the development. Most recently we went to meet our partner in Indonesia - a very good visit, a very good partner. Indonesia is a market of 270 million inhabitants where we see potential for further growth. Very, very interesting.
Speaker 1
You are expanding globally, can you tell us a little more about this? Partnerships in China and in India?
Speaker 2
Yes, in China, in addition to selling our manual ELISA kits, we also focus strongly on automation - and here our main partners are Zecen and Fosun. We have started with automating our TPS ELISA in China, and now we plan to set up our other products in the Chinese market as well.
China is interesting because they are very much into automated platforms, and they are also very keen on diagnostic testing. So entering the Chinese market and having a good coverage in the hospitals we think is very, very important for the future, and a very good way to get our markers out.
Speaker 1
The sales in the quarter did increase to 10,6 million, from about 6 million in the previous period, and the bacteriology segment represent about half of the sales. How do you see these two segments, bacteriology and oncology, going forward?
Speaker 2
Well, both segments show stable growth, so both are very important. The strong growth in the bacteriology segment is largely thanks to the fact that we have worked so actively with that segment for a long time. Also during the Corona pandemic we have actively cooperated with our distributors.
So both segments are important. Right now we are seeing particularly strong growth in the bacteriology segment and, as the report shows, bacteriology now accounts for around 53% of sales. As was also mentioned in the report, order intake looks good in both oncology and bacteriology going forward. So both segments are equally important, but right now we are seeing particularly large growth in bacteriology.
It can also be added that we work actively with both oncology and bacteriology in different markets. In bacteriology, we have a focus on emerging markets - Indonesia, as I mentioned, but we also have a strong focus on Africa, where we purposefully work and register the product in different countries. The work in Africa has been going on for a long time, and we will be seeing growth there going forward, I would guess.
Speaker 1
The company had a cash balance of SEK 67 million at the end of Q3, and a low but negative cash flow. How do you see the cash flow for next year - can there possibly be a positive cash flow?
Speaker 2
Well, all companies aim to make a profit. We never make any forecasts, but of course we are actively working on both the revenue side and the cost side. Something that has happened this year is that we have started to see the effects of the synergies coming from the merger of AroCell and IDL.
So we work actively to make the organization as efficient as possible and try to take advantage of the competence we have, in all areas. The organization is very complete and includes sales, research, development, production and regulatory expertise - so we have a very broad competence which we have used in the best possible way, while at the same time we have made sure to avoid double costs, and the like. So we work on the cost side, and at the same time we also see that our work on the revenue side yields results. Of course the goal of any company is to make profit.
Speaker 1
Can you tell us a little more about these cost savings resulting from the merger with IDL Biotech?
Speaker 2
Yes, obvious effects are of course that we only need one CEO and one board. And then within the organization… you only need one regional manager, only one quality manager, and so on. So we have been able to address all these dual functions. At the same time, in many cases we have been able to develop our current staff and deploy them in other functions - to be able to meet the growing demand we see, and to be able to enter new markets.
Speaker 1
In this new organization - how does the TK 210 ELISA fit in? Will there rather be a main focus on the UBC Rapid and Tubex?
Speaker 2
The TK 210 ELISA fits very well into the organization! At the moment we are talking a lot about UBC Rapid and Tubex as these two products are generating the highest sales right now. That is the near term income. And going forward we carry out a development project where we combine the TK product together with these cytokeratin products, into an even more sensitive test!
At the same time, we put the TK product on automated platforms - for instance in China, but also in other regions. We also aim to get the TK 210 product out into various markets through our existing distribution networks. And of course we are also working on our registration process for TK 210 in the USA.
The difference now compared to before is that we are now a company with several various products - and advancing in one direction does not preclude progress within other areas. So we move in several directions simultaneously. The goal is to get as good a product portfolio as possible, and which generates as much revenue as possible - that’s what we’re working on right now.
We also focus on capitalizing on our strengths. We are strong in some markets - in some very important markets. As mentioned, right now the best sales are in Indonesia and Germany - which are two very, very interesting markets. At the same time, we are systematically targeting the African continent - which will also become a very important market in the longer term. And then, as for the oncology segment, we are looking more at mature ”western oriented” markets, so to speak.
So everything is connected, and that is the strength behind the merger with IDL Biotech - to bring together resources and products that are connected, thereby creating a good offer and a good company!
Speaker 1
Thank you Anders, and good luck in the coming quarter!
Speaker 2
Thank you Oscar!