Here’s one way to send your company’s revenue through the roof: Push your product into 70 countries around the world.
That’s easier said than done, of course. But it’s exactly the path Polymer Technology Systems Inc. took to help quadruple sales of its cholesterol-checking device in the last three years.
How Indianapolis-based PTS pulled off the feat shows how even small companies in Middle America can become global enterprises in today’s economy.
In fact, the possibility of worldwide expansion is now leading investors in small companies to insist on a global strategy even in a company’s infancy.
“As the world is flattening out, small companies are being pushed to look globally, especially if they have outside investors,” said Steve Beck, managing director of IVC Equity Partners, an Indianapolis-based venture capital fund.
PTS’ recipe for global success started with a good product, a good strategy and good timing. It mixed in smart international hires, cheaper communications and the help offered by government programs and larger businesses.
PTS’ international business took off after it hired Hans Fredman as its international sales director in January 2003. Fredman, based in London, immediately called on distributors he knew from a 24-year career connecting medical-device makers with worldwide distributors. Getting local distributors in each of its markets has been vital to PTS’ success.
“In today’s day and age, it’s a lot easier for distributors in various countries to find products and it’s easier for people like me to find distributors,” Fredman said.
PTS makes CardioChek, a handheld meter that quickly and accurately measures levels of cholesterol, glucose, triglycerides and other key health indicators from a drop of a patient’s blood.
With heart disease afflicting millions around the world, controlling and checking cholesterol has been a burgeoning market. PTS punched out sales of $15 million last year, with international sales rising more than 50 percent.
A consumer version of CardioChek sells for $120; a professional model costs more than $450.
PTS has sold the device to doctors to use in their offices instead of sending off a patient’s blood to a laboratory and waiting for results. Overseas pharmacies, where foreign patients often go for basic care, have also become a big customer. More recently, PTS has expanded into retail sales.
One of PTS’ fastest routes to success has been selling its CardioChek meters to companies that want to use the devices for a promotional health screening. For example, PTS is providing meters to the Indy Racing League this year for cholesterol screenings at its various races.
CardioChek has proven popular at screenings because it produces an accurate reading in two minutes-three times faster than its closest competitor.
“Our product is new, and we’re changing behavior,” said Bob Huffstodt, CEO of PTS, which assembles its devices at 7736 Zionsville Road, in the Park 100 industrial park.
It took PTS eight years to develop CardioChek, after the company was founded in 1992 by a former Roche Diagnostics employee.
PTS got its big break in Europe when Boots, the largest pharmacy chain in the United Kingdom, asked it to provide CardioChek meters for a massive cholesterol screening in 2004.
Boots wanted to promote a generic version of Zocor, a powerful cholesterolreducing drug, which became available in Britain in 2004. But Boots wasn’t allowed to advertise the drug in mass media.
So it used CardioChek meters to conduct cholesterol screenings at 1,400 of its stores. When a patron’s tests showed high cholesterol levels, Boots store employees would suggest the generic Zocor.
PTS then began using screenings as a major growth vehicle in its various foreign markets.
It has partnered with European pharmaceutical companies that want to test patients’ cholesterol and then promote their cholesterol-reducing drugs. Two years ago, AstraZeneca sent CardioChek meters to doctors to promote its new cholesterol-lowering drug Crestor.
Also, food companies, such as Danone and Unilever, bought CardioChek devices to conduct screenings and promote “heart-healthy” yogurt and margarine.
Screenings have brought PTS huge success at home, too. In December 2003, Wal-Mart Stores Inc. said it needed 5,500 CardioChek meters for screenings at 4,000 of its U.S. stores. And it needed them in one month.
PTS’ small Indianapolis staff scrambled to fill the order. They canceled their Christmas plans and pulled it off.
The meters were such a hit with consumers at Wal-Mart’s screenings that the retail giant invited PTS to sell its meters as a retail product. Eventually it did, and now CardioChek is available at Target, CVS and other major retailers.
Until that time, PTS’ business had been evenly split between domestic and international sales. But the U.S. retail expansion boosted domestic sales to 65 percent of PTS’ total.
Now, PTS is set to begin selling CardioChek at retailers in the U.K. and Germany in September.
Finding distributors is key
PTS’ international business comprises just four full-time workers: Fredman, a sales manager for Central and South America and another for the Far East, and one customer service professional.
Most of their work consists of finding, supporting and keeping good distributors. Because each country has different rules, regulations and customs, having a local distributor represent PTS’ product has been crucial.
PTS also sought out small distributors, even though they are far harder to find than massive distribution companies. But Huffstodt insisted on distributors for whom CardioChek would be a significant part of their business-so they would push hard to sell it to doctors, pharmacies and other health care providers.
“The big ones are easier to find,” Huffstodt said. “But you don’t want somebody with 5,000, 10,000 items in their catalog.”
PTS relied on the contacts of Fredman and his two sales managers in the Americas and Asia. It also used a U.S. Department of Commerce program that searches for and matches up distributors in South America with U.S. companies.
Another vital government program was the Export-Import Bank of the United States, which guarantees bank loans to help U.S. companies through the elongated cash cycle that comes with international sales. PTS would pay its distributors promptly, but typically would wait 90 to 120 days-or more-to get paid itself.
PTS found Export-Import financing through the Chase Bank office in Indianapolis. Because Chase writes many loans backed by the Export-Import Bank, it has a high level of delegated authority, meaning it can approve loans faster for fast-growing companies.
“Because it was international, it was hard to get financing,” said Mandy Parris, assistant vice president of commercial banking for Chase in Indianapolis. “Typically, banks don’t lend on international receivables.”
Chase took a chance on PTS, extending the company a $1 million line of credit to start, Huffstodt said. The account is now many times that amount.
PTS’ accomplishments are impressive. But it is much easier to get in to international markets these days than even a decade ago, said Dennis Kelley, president of Pacific World Trade, an international business consultant in Indianapolis.
Kelley said there is a dying breed of middlemen that used to be necessary to do business internationally. Middlemen charged fees to provide basic information about a foreign market, to set up a meeting with a potential distributor or customer, or just to handle communications.
Now, market intelligence can be ferreted out on the Internet. Big industry-specific trade shows are a great place to make contacts. E-mail, mobile phones and the further establishment of English as the international language of business make communications far easier now. In addition, the end of the Cold War and freetrade agreements opened markets not accessible 20 years ago.
“We began to feel it in the mid-to-late ’90s. What people used to refer to as middlemen, a lot of those types of companies began to disappear,” Kelley said.
PTS has taken advantage of all these changes.
Huffstodt travels annually to the massive Medica trade show in Germany. In addition, Fredman and his sales managers fly to smaller shows in their regions.
Fredman uses the Internet to check out potential distributors before calling them. And instead of having international offices to handle return calls, now Fredman and his staff have cell phones that work in whatever country they’re in.
And greater air travel means it’s not such a hurdle to meet face-to-face with distributors or customers.
“Telecommunications, Internet and air travel have made international business a lot easier today,” Fredman said.