Speaker 1: Curre and welcome to this episode of Shared Lunch, which
Speaker 1: we recorded at the headquarters of Fisher and pikell Healthcare
Speaker 1: and his Tamaki Auckland.
Speaker 2: Fish and Pike is probably.
Speaker 1: Best known for its design and manufacturer of systems and
Speaker 1: products to help with respiratory issues and obstructive sleep apnea.
Speaker 1: I'm Helen Madison and to talk about this milestone and
Speaker 1: Watson Storff for the next thirty years in all its
Speaker 1: plans and went on tour at the East Tomackie campus
Speaker 1: courtesy of Managing director Lewis Graydon.
Speaker 3: Investing involves risk. You might lose the money you start with.
Speaker 3: We recommend talking to a licensed financial advisor. We also
Speaker 3: recommend reading product disclosure documents before deciding to invest. Everything
Speaker 3: you're about to see and hear is current at the
Speaker 3: time of recording.
Speaker 1: So let us tell us about the site that we're
Speaker 1: on here in East Tommocke.
Speaker 4: Sure, So this is one hundred acres. We've been here
Speaker 4: since two thousand and one. We're currently in the Daniel Building,
Speaker 4: which is the fourth of four buildings. Right now we
Speaker 4: have about four thousand people on this site, about nine
Speaker 4: hundred those involved in R and D couple of thousand
Speaker 4: involved in manufacturing. The fifth building is being planned right now.
Speaker 4: That's a hole in the ground over there that'll complete
Speaker 4: this site. We expect that to occur in the five
Speaker 4: to six year timeframe and that will be six to
Speaker 4: seven thousand people on this site at that time.
Speaker 1: Lewis R and D has always been a big priority
Speaker 1: for Fisher and Pikel and it's been pretty impressive given
Speaker 1: the short term things that companies that are listed, you know,
Speaker 1: need to focus on. Why is it such a passion
Speaker 1: for Fish and Pikel.
Speaker 4: Well, our whole business is based on having a therapy,
Speaker 4: having products, having technology that other people haven't got. We're
Speaker 4: trying to improve outcomes. That's the core of our business.
Speaker 4: And to improve outcomes, to do better than what you
Speaker 4: get today, you have to do R and D. And
Speaker 4: in a medical device business that R and D is
Speaker 4: a five to ten year timeframe until it starts to
Speaker 4: turn into regular, reliable and come people wise. R and
Speaker 4: D be about nine hundred people for us, and I think,
Speaker 4: as you said, it's roughly ten percent of revenue that
Speaker 4: we spend on R and D. But it's absolutely fundamental
Speaker 4: to our business model.
Speaker 1: And in terms of where the company is going then,
Speaker 1: I mean to sustain that. You think of some of
Speaker 1: those UIs companies that have got very deep pockets. How
Speaker 1: does a company that's doing it's R and D from
Speaker 1: New Zealand, how do you keep going well?
Speaker 4: First of all, anything we're doing, we'll invest whatever we
Speaker 4: think we need to do so on a global basis,
Speaker 4: these are relatively small, relatively niche things, and our R
Speaker 4: and D spend will be competitive with anyone whatsoever. And
Speaker 4: it's because we've chosen. If we've chosen what we're going
Speaker 4: to spend it on. Medical devices actually kind of suit
Speaker 4: New Zealand. We do have the skill set here. We
Speaker 4: you know, we have good I think we have a
Speaker 4: good engineering and science education system. We have a good
Speaker 4: hospital system and those are the two things that you need,
Speaker 4: and we have a good environment here for doing I
Speaker 4: would say very early stage clinical research. I think New
Speaker 4: Zealand does well on all three of those elements.
Speaker 1: One thing that we have at the moment, though, is
Speaker 1: what they call a brain drain. Our best and our
Speaker 1: brightest once they've graduated from university, they tend to be
Speaker 1: going off shore. How are you guys finding the ability
Speaker 1: to get the right people.
Speaker 4: Well, I'd like to think we're a brain magnet. I'd
Speaker 4: like to think we're attracting them, and I think we do.
Speaker 4: You know, every year I forget the exact number now,
Speaker 4: but we might hire eighty to one hundred STEM subject graduates.
Speaker 4: We get over a thousand applicants in New Zealand for
Speaker 4: those jobs, and as our international profiles grow on, we
Speaker 4: are able to attract people from outside New Zealand who
Speaker 4: want to come to New Zealand because they want to
Speaker 4: work for FISHERM Pikel. So we are able these days
Speaker 4: to bring people to New Zealand.
Speaker 1: Well, R and D always be here or do you
Speaker 1: also thinking of offshore too?
Speaker 4: It's something we're always thinking about. I do think we've
Speaker 4: got two things going. New Zealand is actually quite hard
Speaker 4: to beat for R and D in medical devices, and
Speaker 4: we always want to have our R and D closely
Speaker 4: located with clinical, closely located with manufacturing. Sometimes the R
Speaker 4: and D is maybe not the product idea. Sometimes the
Speaker 4: R and D is how do I make it at all?
Speaker 4: Sometimes the R and D is how do I make
Speaker 4: it cost effectively? So we want that R and D
Speaker 4: totally linked to manufacturing, So when we're thinking about where
Speaker 4: we might locate, it's the whole package. It's not really
Speaker 4: just R and D by itself.
Speaker 1: Now, if we think back to the beginning, when you've
Speaker 1: done your Bachelor of Science, you made it in physics,
Speaker 1: and you obviously needed a job. But the company you
Speaker 1: sure did, the company that you actually started in healthcare
Speaker 1: wasn't the main.
Speaker 2: Focusing, was it. So talk me through that.
Speaker 4: We had an applied technology division, was what it was called.
Speaker 4: That's what I started in, and that had a couple
Speaker 4: of technical products, and one of them was the respiratory hemaphorer.
Speaker 4: So that's what I joined in nineteen eighty three.
Speaker 1: There will be a huge amount of things that have
Speaker 1: changed in that time.
Speaker 2: Given we're now twenty twenty four.
Speaker 1: Is there one thing that has remained constant in those
Speaker 1: forty one years, Oh my goodness.
Speaker 4: I think the desire to improve things has stayed the same.
Speaker 4: The desire to innovate and be different that was existing
Speaker 4: in nineteen eighty three. I think that goes way back
Speaker 4: to the company's foundation that if you're going to compete
Speaker 4: globally from New Zealand, you're going to have to do
Speaker 4: something different and it's going to have to be better.
Speaker 1: What was it like when Fisher and pie Call separated
Speaker 1: from Fisher and Pikeel Healthcare.
Speaker 2: Is that two thousand and one?
Speaker 4: Yeah, that was two thousand and one. The company split
Speaker 4: into two. Technically, Fisher and Pikele Healthcare was the we're
Speaker 4: the continuing company technically, So the way we think of
Speaker 4: it is we spun off appliances. It's not the common view,
Speaker 4: but that's how we think of it.
Speaker 1: What would you say if we think now to twenty
Speaker 1: twenty four, what would you say is the problem that
Speaker 1: you're trying to solve and what is the potential for
Speaker 1: patients you can reach?
Speaker 2: Worldwide?
Speaker 4: We have a number of, let's say, therapies that the
Speaker 4: business has involved in, and they're all a little bit different,
Speaker 4: but what they all have in common is the idea
Speaker 4: that you want to improve outcomes. And for our business
Speaker 4: that can be a little more complex because for medical products,
Speaker 4: there can be someone paying for it, someone prescribing it,
Speaker 4: someone using it, and then of course the patient. So
Speaker 4: there's four different groups that we're trying to improve outcomes for.
Speaker 4: So that's the consistent thing across all of the therapies.
Speaker 1: Lewis let's break down what business does. I think hospital
Speaker 1: and home care are the two sort of structures if
Speaker 1: you like that you have and in terms of revenue,
Speaker 1: I think it's around sixty two percent for hospital and
Speaker 1: then home would be what about thirty seven percent.
Speaker 2: I see that home care if that's the right word, or.
Speaker 1: Just the home market if you like, is actually growing hugely.
Speaker 1: Is that because we're changing in what we need in
Speaker 1: our lives and what we can do at home, and
Speaker 1: it's taught me through the difference there.
Speaker 4: That's probably a trend and for us, it's probably in
Speaker 4: our future. But when we think of the business and
Speaker 4: we think of hospital and home care, they're kind of
Speaker 4: selling channels and global selling channels, and then within them
Speaker 4: we have different therapies. And within the home care channel,
Speaker 4: we've got obstructive sleep app near where we sell there
Speaker 4: we say masks. And then we've got a developing area
Speaker 4: which is in the early days, which is respiratory care
Speaker 4: in the home target at COPD chronic obstructive palm roy disease.
Speaker 4: And that's in the early days where we have a product,
Speaker 4: we have a therapy, we need to generate more and
Speaker 4: better clinical evidence. Well, you would expect more and more
Speaker 4: of healthcare wherever possible to be delivered in the home
Speaker 4: because it's more cost effective. So we think we're really
Speaker 4: well placed to take advantage of that in that we
Speaker 4: have the hospital business. Patients generally will move from a
Speaker 4: hospital to home or they're going to go hospital and
Speaker 4: back sooner or later. And then you know, combined with
Speaker 4: the home care global distribution, we think we're in a
Speaker 4: real good place and we think, you know, there's good
Speaker 4: promising signs for some of our therapies in the home
Speaker 4: for chronic disease.
Speaker 1: So you'd see the two still being parallel and you
Speaker 1: wouldn't see one overtaken the other like hospital obviously sort
Speaker 1: of dominates.
Speaker 4: Now, yeah, there's ebbs and flows. I mean there was
Speaker 4: a time when we say home care dominated, then there
Speaker 4: was a time when hospital dominated and so on. So
Speaker 4: I mean, I think that's one of the strengths of
Speaker 4: the business is you do have some ebbs and flows
Speaker 4: and some natural sets.
Speaker 1: Let's look at the home market too, because masks is
Speaker 1: one thing that you're quite well known for.
Speaker 2: But I understand this. You've launched a few new ones lately.
Speaker 1: I think this is solo and this is the micro
Speaker 1: nova I think number and is it even fuller one?
Speaker 1: I mean taught me through specialty there, because there's a
Speaker 1: real array now that you have.
Speaker 4: So the whole point of our Osay mask business is
Speaker 4: that we'd like to have a product where the customer
Speaker 4: could be the prescriber could be, the patient could be,
Speaker 4: the payer can see a difference between what our masks
Speaker 4: do and what the competitors' masks do. And Solo does
Speaker 4: that for us by being the first mask globally that
Speaker 4: just automatically adjusts. You can put it on and it
Speaker 4: automatically adjusts. And that's important because patients are using these
Speaker 4: masks all night, every night, or they should anyway. And
Speaker 4: that's all about, first of all, ease of use. You've
Speaker 4: got to be able to put it on properly, so
Speaker 4: it works properly and so it's comfortable. Solo does that
Speaker 4: and by adjusting automatically and then comfort and Solo does
Speaker 4: that again by adjusting automatically, and then the other masks
Speaker 4: you mentioned the Nova range, that's about some we're also
Speaker 4: kind of in a sort of a consumer market here
Speaker 4: now where people have preferences. Some people don't want something
Speaker 4: adjusting automatically. They want to do it themselves, and so
Speaker 4: that's what the Nova range are doing for us.
Speaker 1: In terms of hospital though, one of the areas I
Speaker 1: wanted to talk about was anesthesia. That seems to be
Speaker 1: a growing area. Can you talk me through where that's at.
Speaker 4: So one of our therapies nasal high flowers of respiratory therapy,
Speaker 4: and that's been around for a good do you forget
Speaker 4: exactly now fifteen years or so, and it's always been
Speaker 4: available in anesthesia, and we didn't get as much uptake
Speaker 4: in a anesthesia as we might have liked. So we've
Speaker 4: done two things over the last three or four year
Speaker 4: time frame. And the first one is we've iterated the
Speaker 4: product offering with some consumbles that are specifically for anesthesia
Speaker 4: and targeted at the anesthesia opportunity. And the second thing
Speaker 4: we've done is in our global salesforce, rather than having
Speaker 4: one hospital salesforce, we've split it into a specialist anesthesia
Speaker 4: salesforce in a respiratory salesforce, and that's getting us a
Speaker 4: better result, better growth than the anesthesia component.
Speaker 2: You still see potential in that market.
Speaker 4: Though massive, and across everything we do, we still see
Speaker 4: massive potential. We tend to think about number of patients
Speaker 4: globally that would benefit from our therapy and how and
Speaker 4: how many patients were addressing. So in that anesthesia opportunity,
Speaker 4: we conservatively, conservatively say at least fifty million patients a
Speaker 4: year would benefit globally, and we don't get anywhere near that.
Speaker 4: In respiratory opti flow nasal high flow, we'd say that's
Speaker 4: at least fifty million. So combine that's one hundred million patients.
Speaker 4: Last year we treated about six million. So you know,
Speaker 4: we've got a long way to go.
Speaker 1: And what is it you have to do? Is it
Speaker 1: talking to clinicians? How do you know?
Speaker 2: Grow?
Speaker 4: Yeah, this is the core of our business and I
Speaker 4: think it's one of the strengths. It's about changing clinical practice.
Speaker 4: You used to treat patients like this. Now if you
Speaker 4: treat them like that, you can get better outcomes. And
Speaker 4: that no matter what you do is really it does
Speaker 4: boil down to prescriber by prescriber, hospital by hospital, physician
Speaker 4: by physician. It's helped with clinical evidence. Stronger clinical evidence
Speaker 4: makes it a more efficient process to change clinical help
Speaker 4: change clinical practice, clinical practice guidelines or another step. You know,
Speaker 4: when you have enough clinical evidence professional bodies or generate
Speaker 4: clinical practice guidelines. That helps, But it's just if you
Speaker 4: look at our penetration for nasal high flow, you know
Speaker 4: we're not even ten percent penetrated. It's fifteen years and
Speaker 4: clinical practice guidelines for respiratory applications first started coming out
Speaker 4: maybe three or four years ago. So it is a
Speaker 4: long process. But you know, the upside of that is
Speaker 4: you've got a long runway and you know it's sticky
Speaker 4: once you've changed it.
Speaker 1: Once you've done that. The other thing too, though, the
Speaker 1: people that are selling in your salesforce, that are selling
Speaker 1: in these therapies and products and systems and the like,
Speaker 1: they have to be pretty amazing if you like, I
Speaker 1: mean not just your average salesperson. If I can say
Speaker 1: to those tombs.
Speaker 4: I mean, it sounds like they've got.
Speaker 1: To you to you know, a clinician who may have restraints,
Speaker 1: absolutely right, actually politics, you name it.
Speaker 4: Yeah, our salespeople are engaging with physicians and at different levels,
Speaker 4: they're engaging with clinical data and they're having debates with physicians.
Speaker 4: And we think one of the key strengths of our
Speaker 4: business is that that's really hard to do. It's quite
Speaker 4: complex and one of the hard and complex parts is
Speaker 4: upskilling and training your salesforce, and we think that's a
Speaker 4: core strength so that they're able and capable of doing that.
Speaker 1: If we look at the worldwide markets that you're in,
Speaker 1: I think there's Asia Pacific, does Europe, There's North America.
Speaker 2: It probably would be the big ones.
Speaker 1: I mean, they're developing and developed country, so you've got
Speaker 1: quite a mix there. So how do you balance what
Speaker 1: is perhaps a quite solid cash cow with another market
Speaker 1: that's got potential and you're thinking about innovating products for it.
Speaker 2: How do you strike that?
Speaker 4: Really good question, and that's an ongoing topic for us.
Speaker 4: We've got a couple of underlying rules. One is sustainable
Speaker 4: profitable growth, and the whole business is built on that concept.
Speaker 4: Everything we do we want it to be sustainable, we
Speaker 4: want to be able to do it for a very
Speaker 4: long time, and we want it to be profitable and
Speaker 4: we want it to go. So one of the ways
Speaker 4: we balance that is by adding people, adding salespeople, R
Speaker 4: and D to match our revenue growth. Because you can
Speaker 4: do that forever. It's when one gets ahead of the
Speaker 4: other you start to run into questions of sustainability. So
Speaker 4: we start off by matching our expense over the long term.
Speaker 4: We can't do it on every twelve months, but over
Speaker 4: several years we'll be trying to match our expense growth
Speaker 4: to our revenue growth. And then the debate is about
Speaker 4: where where to put it? Where to put it? Typically
Speaker 4: for the new businesses we will we will be adding
Speaker 4: expenses to match the revenue growth.
Speaker 1: Still, are there particular markets is more potential or that
Speaker 1: you're more.
Speaker 2: Interested in thom No, not really.
Speaker 4: It's kind of interesting if you take the world's if
Speaker 4: you rank the world's countries by GDP and you look
Speaker 4: at the top fifty, that pretty much reflects our business
Speaker 4: in those countries. Yeah, pretty much the same order.
Speaker 1: So it was with sleep at yea. Then what is
Speaker 1: the potential them? And how many people in the world
Speaker 1: suffer from that? I mean it's obviously something you've seen
Speaker 1: as a need, but what is the potential?
Speaker 4: I mean very hard one to say. You see numbers
Speaker 4: are banded around around the hundreds of millions, nine hundred
Speaker 4: million people a year. We're a little bit more conservative
Speaker 4: and we say potentially one hundred million a year maybe.
Speaker 2: And what about the respiratory aspects of the business. I mean,
Speaker 2: that's sort of a lot more broad well, it's.
Speaker 4: A bit of a moving target. At the moment, we'd
Speaker 4: say over one hundred million, but it's a little bit
Speaker 4: of a moving target in that as you get more
Speaker 4: clinical evidence, you can expand that possible market, as you
Speaker 4: iterate the therapies and the products and the technology, so
Speaker 4: again you can expand the reach of that product. So
Speaker 4: you know, our main job is to make sure we're
Speaker 4: nowhere near penetrated and that's about clinical research and product development.
Speaker 1: So we're looking at the manufacturing part of the site
Speaker 1: here it is Tamaki. Obviously this is the only place
Speaker 1: in the world you also manufacture in Mexico and China.
Speaker 2: What do we have here though, So what we're.
Speaker 4: Looking at right here is adult intensive consumables being assembled
Speaker 4: into kits.
Speaker 2: And here we are in New Zealand.
Speaker 1: But is this still somewhere which it's a real hub
Speaker 1: for manufacturer.
Speaker 4: So the plan is that we'll continue to grow manufacturing
Speaker 4: in New Zealand, but for geographical risk mitigation, we'll grow
Speaker 4: our manufacturing outside New Zealand at a higher rate. So
Speaker 4: we'll keep growing here, but we'll be growing Mexico, China
Speaker 4: probably other places over time.
Speaker 1: And how important is the aspect of the business of manufacturing.
Speaker 4: Well, we sell things, so we make the things to sell,
Speaker 4: So it's an absolutely fundamental part of it. And then
Speaker 4: for a lot of what we do, it's how you
Speaker 4: make it and how you make it cost effectively. That
Speaker 4: is the challenging.
Speaker 2: Part, especially from here in New Zealand.
Speaker 4: Well, we do have the tyranny of distance in New Zealand,
Speaker 4: and that's raw materials and product out. Yeah, it's not
Speaker 4: super helpful.
Speaker 1: Just lois thinking about the full year results, which the
Speaker 1: company released I think was the end of May, so
Speaker 1: only a couple of months ago. At the time, I
Speaker 1: think operating revenue was up ten percent, and then I
Speaker 1: think net profit after texts probably suffered a little bit.
Speaker 1: I think it was down forty seven percent. But there
Speaker 1: was some abnormals there. There was the Korreka site being revalued,
Speaker 1: There was some accounting I think which was about nineteen
Speaker 1: point three million, and then of course you had a
Speaker 1: recall which I think was going to be twelve million
Speaker 1: and that became about twenty million.
Speaker 4: So that we had a recall.
Speaker 1: Yeah, yeah, so that was probably you were trying to
Speaker 1: get back to having that lovely gross margin that you
Speaker 1: talked about before as sixty five percent, And just for listeners,
Speaker 1: the gross margin is when it's a proportion of revenue
Speaker 1: after you've stripped out all the costs and the like.
Speaker 1: You were hoping to get back to that, but was
Speaker 1: it because of the abnormals.
Speaker 2: Didn't quite.
Speaker 4: So the first thing for us is when we look
Speaker 4: at revenue, you still got co effects going on. So
Speaker 4: for FY twenty three, the year we just finished, we're
Speaker 4: lapping FY twenty four and you've got some COVID coming
Speaker 4: in and going andy twenty three, so it's hard to
Speaker 4: read much into FY twenty four's revenue growth. And then
Speaker 4: the next thing, when we get to gross margin, that's
Speaker 4: the difference between what it costs us to make something
Speaker 4: and what we sell it and a game, we've still
Speaker 4: got this long tail from COVID. Get sick of talking
Speaker 4: about it sometimes. Anyway, we've still got a long tail.
Speaker 4: We're during COVID. Our only priorities make as much as possible,
Speaker 4: as quickly as possible, and that's still hurting gross margin.
Speaker 4: But we think we just need to get back to
Speaker 4: our normal behavior and gross margin will get back to
Speaker 4: where it needs to be. So that's the lingering effect
Speaker 4: on gross margin. And then the next one down is
Speaker 4: when we take all of our operating expenses, that's the
Speaker 4: one that turns into the operating margin. And then the
Speaker 4: next step down is your net profit after tax. The
Speaker 4: net profit after tax is the one that was affected
Speaker 4: by land revaluation and recall and building depreciation, kind of
Speaker 4: all financial things and a little bit unusual for us,
Speaker 4: you know, to have all these one offs.
Speaker 2: Yeah, that's what I mean.
Speaker 4: So we're kind of fundamentally for the business looking through
Speaker 4: all all of those. Actually, on a twelve month basis,
Speaker 4: we're looking through those counting one offs, and then on
Speaker 4: a three to four year timeframe we're kind of looking
Speaker 4: through the gross margin impact as well. We just expect
Speaker 4: it to naturally improve over the next few years.
Speaker 1: And when you made the new announce the result you
Speaker 1: talked about, you did give a forecast at the time.
Speaker 1: I think it was between one point nine and two
Speaker 1: billion as an operating revenue, and that was quite impressive
Speaker 1: and also analysts seem to like that. One thing I
Speaker 1: did note though, that it doesn't take into account if
Speaker 1: we have another respiratory event.
Speaker 2: If you and I would have thought.
Speaker 1: Perhaps you're not going to say it publicly, but you'd
Speaker 1: be monitoring and you'd be predicting in the business you're in.
Speaker 2: What could be happening, what's next?
Speaker 4: We can't predict it, And you're absolutely right. In the
Speaker 4: guidance we said this doesn't include any respiratory events during
Speaker 4: the year this guidance, and that's because we can't predict it.
Speaker 4: You know, we absolutely can't. We could maybe see early signs,
Speaker 4: but then where it goes from there. I mean, the
Speaker 4: history over the last five years has been we can't
Speaker 4: predict where it's going. And as a business, you know,
Speaker 4: it's a case of you be ready for the worst
Speaker 4: and plan for the best.
Speaker 1: Would you have any idea or you must have thought
Speaker 1: about what kind of things can happen to the world.
Speaker 1: I mean, you've got amazing scientists, innovation, lots of experience.
Speaker 4: No, we can't. We cannot predict that. Look when you're
Speaker 4: trying to give guides for this business, are you're trying
Speaker 4: to predict hospital admissions? You're trying to predict seasonal respiratory
Speaker 4: hospitalizations all around the world, the normal variations in a business.
Speaker 4: That's you know, now, we can't do.
Speaker 1: You see any other challenges or risks that we haven't
Speaker 1: probably covered. I mean, inflation has obviously been a big
Speaker 1: thing for many global businesses.
Speaker 4: I don't think inflation is fundamental for us. I mean,
Speaker 4: we do have the ability to raise pricing, but there's
Speaker 4: always a lag. So I think inflation is actually fairly normal.
Speaker 4: It comes and it goes. We've just been through a
Speaker 4: fairly docile period, so we think of that as fairly normal,
Speaker 4: and it's not something that would really change our behavior
Speaker 4: so much in any way. Exchange rate can impact us,
Speaker 4: but that's in the same camp. You know. Again, you've
Speaker 4: got to think over the long term. We're not going
Speaker 4: to modify our behavior over one years or two years
Speaker 4: or three years because of inflation or exchange rates or
Speaker 4: anything like that.
Speaker 1: What excites you about the next phase for First and
Speaker 1: Pike or healthcare?
Speaker 4: Oh, great question. It's kind of like picking your face child,
Speaker 4: so I can't go there. I think the exciting thing
Speaker 4: is we've got a track record. Every year it looks
Speaker 4: more and more challenging to maintain that track record, And
Speaker 4: I think the exciting thing is over the long term. Yeah,
Speaker 4: I definitely think we can.
Speaker 2: You've got some ambitious targets.
Speaker 1: I mean, doubling your growth every five years, that's something
Speaker 1: you're going to continue with. It's just a little bit there, yeah, okay,
Speaker 1: but that is something that the business still will that's what.
Speaker 4: We aim at over and over and over and to
Speaker 4: do that, we've just talked about some of the time
Speaker 4: frames involved. You know, you've got to be twenty or
Speaker 4: thirty years ahead.
Speaker 2: Lewis, we're here.
Speaker 1: It is Tummocky and it's an incredibly impressive site. It's
Speaker 1: nearly near completion, but I know there's a next phase
Speaker 1: for Fisher and Pikeal Healthcare and you've actually got a
Speaker 1: very big site at Kraka, which is south of Auckland.
Speaker 1: Tell us about why you're doing that.
Speaker 4: Well, we expect the site to be full in five
Speaker 4: or six years time. And the fundamental is if you're
Speaker 4: hoping to double your business in size every five or
Speaker 4: six years, we need to start thinking now about what
Speaker 4: happens after this site. So hence the Karraker site that's
Speaker 4: about two and a half times the size of the site.
Speaker 4: Once again, it comes back to that fundamental. If you're
Speaker 4: trying to double in size every five or six years,
Speaker 4: this is one hundred acres. You're looking at pretty substantial size,
Speaker 4: which is kraker to continue that growth trajectory, and we
Speaker 4: much prefer the idea of being on the same site
Speaker 4: then scattered in little bits all over it, all out
Speaker 4: of the place.
Speaker 1: So with that new site, then that will take some
Speaker 1: time to develop. I think it's three stages as the plan.
Speaker 4: Well that I'd call that an early stage plan. But
Speaker 4: you know, one of the challenges there is how much
Speaker 4: to do at once and how much to do and
Speaker 4: how to stage. I think that's one of the bridges
Speaker 4: we're yet to.
Speaker 1: Cross because thirty years out, how does anyone in this
Speaker 1: day age plan for that given how quick?
Speaker 4: Yeah, so the way we think it is we try
Speaker 4: and keep our options open. We want to have the option.
Speaker 1: Okay, so that's the reason for getting the site now
Speaker 1: and thinking ahead.
Speaker 4: That's right, that's right. And you know we're building time
Speaker 4: frames in New Zealand, are building like this. When we
Speaker 4: start building, it's about a four year timeframe, so you've
Speaker 4: got to be thinking ahead five or six years because
Speaker 4: the last thing we want is for our growth to
Speaker 4: be compromised because we haven't got anywhere to put people.
Speaker 1: Any idea what sort of how many people a site
Speaker 1: like that would house, or how many.
Speaker 4: Buildings even it'd be twelve buildings this size ultimately, so
Speaker 4: we will start with a full site plan and then
Speaker 4: we just have to work out how to execute on
Speaker 4: that full site plan in the most sensible way. So
Speaker 4: it would be twelve buildings. This is five if you
Speaker 4: think this is let's say this fall would be seven
Speaker 4: thousand people two and a half times out.
Speaker 1: Lewis as a listed company, and I suppose you could
Speaker 1: say the tech sector to something, there can be lots
Speaker 1: of distractions. It can be very short term because you're listed.
Speaker 1: Investors want returns, et cetera, et cetera. You've got the
Speaker 1: likes of the US markets within video and the light
Speaker 1: going gangbusters. But I mean a company like yours always
Speaker 1: has to think about the longer term and the R
Speaker 1: and D that's implicated there. But how do you not
Speaker 1: get distracted when there's all this noise around you?
Speaker 4: Really good question, because you're right, you know it's called
Speaker 4: a daily news cycle and you and your reports and
Speaker 4: all that kind of thing. And we've talked about the
Speaker 4: nature for our business. You can have five to ten
Speaker 4: year R and D programs. You can have five to
Speaker 4: ten year clinical programs. You can be training clinical sales teams,
Speaker 4: and then you're calling on hospitals around the world. It's
Speaker 4: quite a long cycle, so you have to think ahead.
Speaker 4: We do think and plan long term. We do have
Speaker 4: a long term plan that runs out thirty years, and
Speaker 4: part of our discipline is to stick to that long
Speaker 4: term plan. We've got all the opportunity, we know how
Speaker 4: to execute on them, and part of the discipline is
Speaker 4: not being distracted by all those things. Also, sometimes, as
Speaker 4: you pointed out from the financial market, and you know,
Speaker 4: we've talked about our gross margin is not where we
Speaker 4: want it to be. We could divert all sorts of
Speaker 4: resources and improve that. We could have all of our
Speaker 4: salespeople working on pricing to get our gross margin where
Speaker 4: we want it to be and one year's time or
Speaker 4: two years time, but we're not sticking to the long
Speaker 4: term plan. We're not diverting resources into that, and we're
Speaker 4: just going to revert to our normal behavior and gross
Speaker 4: margins should do what it's normally done, which is steadily
Speaker 4: improve very yet rather than I think the whole point
Speaker 4: of that is not diverting resources, but staying on the
Speaker 4: long term plan and it does take discipline. We do
Speaker 4: cop flat for it from time to time, but we
Speaker 4: think in the long run it's better to stick to
Speaker 4: you know where the opportunities are.
Speaker 2: Is we anything that keeps you awake at night?
Speaker 3: Well?
Speaker 4: I never know how to answer that one either, because
Speaker 4: on the one hand, I do worry about everything, absolutely everything.
Speaker 4: On the other hand, I sleep well. You have to
Speaker 4: or you can't come to work the next day if
Speaker 4: you're not sleeping.
Speaker 2: So Lewis, thanks for today.
Speaker 1: It's been great to actually come on to the East
Speaker 1: Tummocky site and see some of the team, understand a
Speaker 1: bit more about the product suite and the like, and
Speaker 1: it does all sound very exciting.
Speaker 2: So thanks for having us today.
Speaker 4: Thank you for making the effort. I do appreciate it.