FORTITUDE BUDGET

Diversifying operations and talent pool helps medtech firm find new income streams amid Covid-19

Singapore

EAGER to tap Singapore's growing reputation for healthcare innovation and to spread out risks amidst uncertainty elsewhere in the world, homegrown medtech firm Forefront Medical Technologies (FMT) made a concerted effort two years ago to diversify its product and service offerings.

This involved pumping in S$1.5 million to refurbish and expand its cleanrooms, building up automation capabilities, and diversifying its talent pool.

Today, the firm - which started its Singapore plant in 2000 and was originally focused on making just one specific product for anesthesia and surgery - finds itself pivoting into the diagnostics space, in line with demand amidst the Covid-19 pandemic.

FMT, which was highlighted by Deputy Prime Minister Heng Swee Keat as a firm that has benefited from early transformation, has snagged four projects centred on Covid-19-related products.

One of them involves producing 3D-printed nasal swabs, its president Walter Tarca told The Business Times.

"In this time of Covid-19, everybody wants things done yesterday. In this regard, we have been able to make use of readily available space and our engineering people to fulfil customers' orders promptly," he said.

Mr Tarca said his team saw the opportunity to widen the range of products manufactured in its Singapore plant after much of its low-cost operations were relocated to China. The firm set up two plants in China, in 2007 and 2013.

"Singapore is seen by our customers, many of them multinational firms, as a very safe place. Customers value its integrity and reputation for innovation.

And with the growing uncertainty between China and the United States, many preferred to have their operations based in Singapore," he said.

In preparing to take up new projects here, FMT invested in cleaning room capacity, upskilled its engineers, and also hired employees who could perform functions in other phases of its value chain.

It also acquired product design and development firm XentiQ, which enhanced its vertical integration.

A year ago, FMT also set up a technical centre, which houses five employees tasked to develop and enhance the firm's capabilities in serving new market segments.

"Diversification is important to de-risk a company. Good companies do not put all their eggs in the same basket," Mr Tarca said.

And its investment seems to have paid off. According to Mr Tarca, the company raked in S$45 million in sales revenue at the end of its financial year in July 2019, compared to S$31.9 million in July 2018.

Its six-month sales revenue in January this year stood at S$29.8 million, compared to S$17.8 million in January 2019.

Because FMT is involved in manufacturing products that help in the fight against the ongoing pandemic, it has been able to continue operations during Singapore's partial lockdown.

In the coming years, FMT plans to expand its presence in Singapore's medtech scene, eyeing in particular the production of in vitro diagnostics, which Mr Tarca said is a sub-segment that has not yet seen many players here.

The firm is also looking at widening its use of 3D printing and automation, he added.

"Singapore is very highly regarded as a centre of excellence in technology. It makes sense for us to explore innovations here that can help us offer products at a better price and value for customers," he said.