Before George Savvides took on the job of fixing an ailing health-care services technology company he diagnosed the patient’s chance of survival.
| Entrepreneur |
George Savvides, Managing Director |
| Company |
Healthpoint Technologies |
| Founded |
1991 |
| Contact details |
www.healthpointtech.com |
Key Learning Points |
|
George Savvides’ five steps to fixing a sick technology company - and then taking it global:
Test market
Before Savvides took over as the managing director of Healthpoint, he road-tested the technology, taking it to the US and the UK to see if it was unique and of interest to potential buyers. After satisfying himself that people liked the product, he took over as chief executive.
Management team
Savvides first step was to appoint a very experienced management team and a national sales team. He says his management team is capable of running a $100-million turnover company.
Product positioning
Next, he repositioned the product in the market, selling it to pharmacists not customers.
Product design
Then, Savvides redesigned the kiosks, improving their appearance and making them more cost-effective to export.
Expand
Savvides then increased revenues by expanding to new markets, using both acquisitions and licensing agreements.
|
The Healthpoint Story
In mid-2000, George Savvides had just turned 43 and was wondering about the next stage of his life. He had been managing director of the pharmaceutical drug manufacturer and wholesaler Sigma for five years since 1996, but was thinking of resigning. He says: “I joined Sigma when it was a co-operative and taken it to a listing in 1999.”
During Savvides time at Sigma, turnover increased from $600 million to $1.5 billion and earnings before interest and tax (EBIT) rose from $4 million to $12 million. Savvides says: “The board felt it was time to consolidate and I am not the guy to consolidate.”
Then, on a cold July morning in 2000, Savvides sat next to an ebullient entrepreneur, Philip Weinman, on a plane from Sydney. By the end of the flight, Savvides, had agreed to take a look at one of Weinman's investment companies, Sustainable Technologies Australia (STA).
Weinman was in trouble. In April 2000, just as the tech-wreck began, Weinman had enthusiastically bought a small stake in a technology company STA. Weinman says he was attracted by its main product: touch-screen kiosks located in chemist shops. Each kiosk was the size of a fridge and at a single touch, the screen provided information on health such as the side affects of drugs purchased by customers.
The software, content and kiosk design were the brain wave of a pharmacist in Brisbane, Max Croft, who wanted to develop an international business. However, in ten years, he had not been able to increase annual turnover beyond $1 million.
In January 2000, Croft did a back-door listing, backing his technology into a solar energy research and development company in Canberra called Sustainable Technologies. However, soon cashflow from his business was supporting Sustainable Technologies. By 2000, STA had a loss of $6.1 million on turnover of $900,000.
Weinman says: “There needed to be a single leader. And George was perfect to run a technology company in the health sector.” In August 2000, Savvides took the kiosk on a roadshow to New York and London to test its competitiveness. He says: “People told me it was fantastic - both the content and touch-point technology.”
By November 2000, Savvides was managing director. By January 2001, Weinman, Savvides and the board - which included a former managing partner of Ernst & Young, Tom O’Brien - had changed the name to Healthpoint Technologies, with headquarters in Melbourne. The kiosk’s founder, 68-year-old Max Croft, then became a director and major shareholder of Healthpoint and his son, also Max Croft, became the company’s chief technology officer.
Savvides moved quickly to appoint a highly experienced management team and a national sales team. He redesigned the kiosk, which looked like a clunky fridge, making it more aesthetically appealing by creating a structure that could cost-effectively be exported. He then repositioned the market for the kiosks, changing the content so that it would appeal to pharmacists, not their customers.
Savvides says: “We had to create a value proposition for the purchaser, which was the pharmacist.” Pharmacists pay $115 a week to use the kiosk for staff training, to improve their own knowledge and to be advised on complementary sales from both the dispensary and the front of the pharmacy.
About 1000 kiosks have been installed in the 5000 pharmacies in Australia. In February 2001, Healthpoint announced a $17.5-million contract with Vega Nutritionals in the United Kingdom to sell a minimum of 200 kiosks each year for five years in exchange for the right to exclusively co-market the product to the UK’s 7000 pharmacies.
Savvides has also set his sights on the US market, which has 65,000 pharmacies. In July this year, Healthpoint acquired the largest kiosk company in North America, Healthtouch, from a giant US health-services company, Cardinal Health. Healthpoint is now partnering with Cardinal to sell Healthpoint kiosks to Cardinal’s extensive pharmacy network. Savvides says 1000 kiosks have been sold so far.
In October 2001, Healthpoint also acquired Infoscreens, one of its few Australian competitors. Savvides says the acquisition will provide entry to the non-health-care information touch screen market along and a software product for remotely managing kiosks anywhere in the world. The owner of Infoscreens, the regional newspaper group, Elliot Newspapers, has taken a 10% stake in Healthpoint.
Healthpoint’s turnover for the 2000-2001 year rose to $3.5 million, up from $900,000 in the previous year, with a loss of $1.9 million, down from a loss of $6.5 million the previous year. Savvides says that loss was predominantly from abnormals associated with a restructure. This year, the company has a projected turnover of $10 million and expects to make a maiden profit.