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The German firm B. Braun has new production plant for manufacturing surgical sutures in the country and plans to buy a pharmaceutical company to consolidate its operations in the region. These are their plans.
Multinational B. Braun specializes in the development, production and marketing of pharmaceuticals and medical products, and wants to consolidate its operations in Latin America. It chose Colombia to do it.
The company, which has operated in the local market for 51 years, has started up its new plant for production of surgical sutures in the Western Free Trade Zone, located in the municipality of Mosquera, Cundinamarca.
The project began in 2013 and ended last year after working together with Invest in Bogota, all of which allowed the company to make the relevant assessments about why the capital was the ideal place for investment and drive a business that has been here since 1973, when it set up its first production plant in Bogota.
Manuel Hernández, COO of the German group in the country, explains that apart from the fact that Bogota represents 35% of the company’s sales, the location and characteristics of the city and its area of influence were key when it came to taking the decision.
The goal now is to strengthen markets in the region, starting with the local one and expanding to other product ranges and new materials in the development and processing of sutures for surgical applications.
The new manufacturing facilities will allow the firm to boost production from 5.5 million sutures per year to 30 million units by the end of 2018, the installed capacity of the factory. In the initial phase the multinational invested 6 million euros, but the projection is to double this figure in the coming years.
The sutures produced in the country are intended only for human consumption and, although at present they are made from traditional materials such as silk and polyester, from now on they will be manufactured with synthetic raw materials that are absorbed by the body tissues, through a phenomenon called hydrolysis.
The plant will initially create 30 direct jobs and the projection is to reach 120 people in the course of the next three years. This year the plant will produce around 1.5 million sutures and the goal is to finish 2018 at full capacity, once it has all the necessary sanitary registries of the countries to which it will export the product, which are currently being processed.
The focus of the organization is to export 80% of its production, which will be sold to the multinational’s subsidiaries in countries such as Chile, Argentina, Brazil, Paraguay and Mexico, among others. In markets where it has no direct presence this will be done through distributors.
Hernández explains that to start operating the Mosquera plant, a new company was created called B. Braun Surgical S.A.S., which will absorb the production of B. Braun Medical, a firm that so far has been in charge of manufacturing the sutures, as well as the marketing of all the medical equipment offered today by the organization.
Last year sales of B. Braun Medical, the name with which this company has been operating in the country to date, amounted to COP 109.26 billion and its profit were COP 4.88 billion, according to data reported to the Superintendency of Companies.
But this is not the only recent business of the European multinational. To expand its product portfolio and services in the country, in 2014 B. Braun acquired 51% of Dialy-Ser, a company dedicated to providing renal therapy services. Last year it purchased the remaining shares and took over the entire family business which operates renal or dialysis units at seven clinics in the country.
Nikolai Engel, director of B.Braun Dialy-Ser, notes that the company’s investments are for the long haul and therefore it is present with this subsidiary in Bogota at Clínica Las Americas and the León XIII Hospital in Medellin. It is also in Popayan, Bello, Armenia, Pereira and Cucuta. It now has a 7% market share in this business, caring for 1,600 patients throughout the country.
Colombia is the first country in the region where the company has operations in renal clinics; in other countries it only sells its products to end customers through distributors.
The plans do not stop here. The group’s project now is to have a pharmaceutical laboratory in order to expand the portfolio of products and services represented in four business through three companies: B. Braun Medical, which sells products of the Hospital Care, Aesculap (orthopedics) and OPM (out-patient care) divisions; B. Braun Surgical S.A.S., which is responsible for the production of surgical sutures and B. Braun Dialy-Ser. The three legal entities of the group employ about 600 people.
"The goal is to enter the pharmaceutical industry with an alliance or by purchasing a local laboratory that offers a product line that fits the offerings of is B. Braun in the hospital market.
The company markets everything from the simplest products needed in an infirmary, to equipment such as pacemakers, orthopedics, etc.," says Hernández. This year the group will be working on this goal so that in 2018 its business plans can become a reality.
B. Braun competes in a market supplied mainly by multinationals, but local production has competitive advantages when marketing products both in Colombia and in the region.
The presence of the German firm is focused on the institutional market through Health Providers (EPS), a niche in which it sells about 65% of the products, while the remaining percentage goes to the distributors.
Recent businesses of the multinational make it clear that is here to stay and that the country is a strategic hub for its growth plans in the region. A healthy investment.
The operation of the B. Braun group is no stranger to the situation of the difficulties in collecting its portfolio, which affects the health sector in general. Slow portfolio turnover is one of the drawbacks for the company because payments can take several months and affect the normal development of the organization. Yet its directors are clear that the country offers great potential and do not want to waste it because it is a constantly growing market and enjoys economic and legal stability.
*Some inputs were given by Invest in Bogota. Published in: http://www.dinero.com/edicion-impresa/negocios/articulo/b-braun-llega-a-colombia-multinacional-farmaceutica/246833