This blog post is based on an article published by Biostock in Swedish on May 13th, 2022.
After last year’s growth, the medical technology company, Pharmacolog, has begun its journey towards profitability. The company recently introduced its first web-based tool for analyzing performed quality controls, another important step on the way to profitability. BioStock contacted CEO Mats Högberg to find out more about the company’s business model.
Uppsala-based Pharmacolog has developed a series of products and services for quality control of pharmaceutical preparations in healthcare, with the aim of preventing medication errors. The company’s offerings have included DrugLog, WasteLog and PrepLog, and now it has added Pharmacolog Dashboard, its first web-based quality-control tool.
Faster path to market through partnerships
In recent years, Pharmacolog’s operations have primarily focused on market establishment and communicating how the company’s solutions meet customer needs. 2021 was a breakthrough year for the First North-listed company as sales increased by 364 percent compared to 2020. An important success factor was the strategic collaborations with Codonics and B.Braun, and especially the progress of the WasteLog system in the US market, which you can read more about here.
Pharmacolog has taken great strides in the market with its products and at the same time, several initiatives are underway to develop the business further. At the turn of the year, medical device veteran Lars Gusch joined as the new Chief Operating Officer, partly to scale up the production capacity of the products, but also to develop the company’s service offerings.
I believe that Pharmacolog's service offerings will contribute significantly to the company's profitability in the future. As our customer base increases, we are building up tremendous knowledge of drug preparation and quality control.
Great interest in new software product
Another important news item is the introduction of Pharmacolog Dashboard, a web-based tool for monitoring and analyzing performed quality control checks of compounded drugs. The introduction of this new software attracted great interest at the annual EAHP Congress in Vienna, where pharmacists from all over the world gathered to discuss the latest findings in the industry. You can read more about Pharmacolog Dashboardhere.
BioStock contacted the company’s CEO Mats Högberg to learn more about Pharmacolog’s business model.
First of all, what does Pharmacolog’s business model look like?
– Since its introduction, our customer offering consists mainly of three parts and basically follows the model of classic sales to healthcare: The first—and thus far dominant—branch is capital equipment in the form of instruments. The second is consumables, and the third is service and maintenance contracts.
In addition to the products, you have also developed your service offering. What is your goal in terms of Pharmacolog’s revenue mix of product sales and service revenue?
– With the launch of the Pharmacolog Dashboard, we gain another revenue stream. In the early years, revenues from the sales of systems have been completely dominant, but we are starting to see steady growth in terms of revenue from consumables and service agreements. My assessment is that these will also account for an increasing percentage of the company’s revenues over time. To that end, we can now add additional income opportunities in the form of sales revenue from our web-based tools.
You have managed to establish yourself in a number of major hospitals. What is the need for your products in a normal-sized hospital?
– Our products, DrugLog, PrepLog and WasteLog, can solve a number of challenges related to quality control of compounded pharmaceuticals. This means that a normal-sized hospital may need a number of our systems to cover all those needs for fast and smooth quality control where medication is prepared. The most obvious candidate is the hospital pharmacy that prepares toxic medication. In addition to what is prepared at the hospital pharmacy, many more preparations are taking place in the individual wards. We focus first and foremost on departments that handle critical drugs where an incorrect dosage can have devastating consequences, such as in the pediatric intensive care unit, the neonatal ward and the pediatric oncology ward.
What potential for upsell do you see once you get into a hospital?
– The initial deal includes the measuring instrument itself and, in many cases, a smaller number of consumables. After some time when the customers’ number of measurements increase, we see more and more regular orders for consumables. After the warranty has expired, the majority of our customers also sign an ongoing service and maintenance agreement. We have also noted that there is great need for expert help. We are already assisting customers with professional services in the form of support for optimizing preparations and analysis of the test results. This is another business area that we intend to develop further as our customer base increases.
You recently introduced Pharmacolog Dashboard, which will be your first web-based product. How will that affect your offer?
– The ability to easily and clearly review test results has been requested by our customers. The launch of Pharmacolog Dashboard will take the benefits of our existing instruments to a new level. Our offer becomes more complete as hospital pharmacies can be given the opportunity to quickly get an overview of numerous measurements to see which drugs show concentration variations. With that information, they can adjust the preparation routines to reduce deviations. This is becoming more and more important as medication becomes increasingly patient-specific.
Looking ahead, what are your plans for additional products and services?
– I believe that Pharmacolog’s service offerings will contribute significantly to the company’s profitability in the future. As our customer base increases, we are building up tremendous knowledge of drug preparation and quality control. This knowledge is very valuable for wards and hospital pharmacies that intend to develop quality work in drug preparation. Already today we have seen a great interest in Pharmacolog Dashboard and its functions. We have also received several requests to assist our customers with expert analyses and support to find optimal routines when preparing critical medication.
To learn more about our solutions, please contact us here.