The establishment of a subsidiary in London in 2004 heralded the presence on the international market of Konstanz-based GATC, which now has subsidiaries in England, France and Sweden comprising a total of 22 sales offices and laboratories. Twenty-five of the company’s 150 or so employees work in production and sales outside Germany. Peter Pohl, CEO of Europe’s leading provider of DNA services, explains in the following interview what he considers to be the key issues when entering international markets.
Going international is an important building block in the growth strategy we've been pursuing ever since the establishment of GATC Biotech. A broad base of regular customers and partners has developed in different locations in Europe over time to whom we wished to be closer than we had been before, and I believe that this was the major contributory factor in our decision to expand our business activities to other European locations. We therefore decided to establish a subsidiary in England, for example, which was one of our business activities hotspots where we had many project partners. When we started to think about setting up a subsidiary in England, we analysed our market opportunities and carried out studies on the price structures for our services. In addition, our presence at global trade fairs is an important tool that we use to look for attractive markets and new locations. As things stand today, we have a presence at around 80 life sciences and biotechnology congresses, symposia and trade fairs.
Yes we did as a matter of fact. The conditions in the different countries and markets differed considerably. But we were nevertheless able to come to a decision quite quickly to set up a subsidiary in London. And this was mainly because we knew the market potential from our experience in day-to-day business with English partners and customers. The decision to establish our Swedish subsidiary took more time. Initially, we evaluated and assessed which of the Scandinavian countries offered us the best possible infrastructure. The legal conditions in the countries where we wanted to set up subsidiaries were of minor importance as the conditions relating to our major business area, i.e. the sequencing of DNA, are very similar all over Europe.
When setting up a subsidiary abroad it is indeed important to know if we are likely to find an attractive environment that suits our business activities. Our market is in exactly the same place where research is being carried out. For this reason, we concentrate on markets with an excellent research infrastructure. And such markets can be found in metropolitan centres such as London or Paris. We focus on these markets and continue expanding from there.
Our most modern tools and cutting-edge technologies such as next-generation sequencing are currently only used in our Konstanz laboratories. Our London and Düsseldorf laboratories use devices that are based on the classical Sanger sequencing technology which we use for our overnight sequencing services. We will also apply the next-generation sequencing technologies in our subsidiaries once we are able to use them to reduce the time it takes to create sequences. We expect that this will happen within the next two years or so. However, I'd like to add that our laboratories in London and elsewhere work according to the same quality and automation standards as our central laboratory in Konstanz.
We always take into account suggestions from our clients from all over Europe for our product developments. We develop our products for all our branches and therefore also offer them to all our clients.
We always work closely with recruitment agencies, and we also advertise available positions ourselves. We exclusively recruit people from the countries where we have set up subsidiaries as we consider it extremely important to have people who know the local culture. Of course, GATC's presence abroad also affects our staff at our Konstanz headquarters. Let me give you an example: when we were establishing our French subsidiary we had to reorganise certain company processes. This also involved setting up French as an official company language. In order to facilitate this, we offered all employees who expressed an interest the possibility to attend free language courses. This was a special case where it took two or three years before we had individual business areas (e.g., invoice collection services) and departments that were fully adapted to the new situation.
The reason why we have concentrated on Europe is that there is a great demand and huge potential for sequencing services. Our expansion strategy is focused on expanding our presence in the European market. Of course, we can also imagine establishing a presence in America or Asia. The Chinese government recently published its five-year strategic plan giving top priority to biotechnology. Asia is already very competitive as far as production is concerned, something that is associated with risks as well as opportunities for companies like us. As competition increases around the world, GATC will have to concentrate on being active in our clients' local markets and focusing on individual support for the technologies that are used by our clients.
Companies that have decided to establish a presence in international markets would be well advised to focus on bringing their team together. What I mean by this is that they need to recruit highly qualified employees who can help the company develop its branches abroad. In order to succeed, companies need to have a thorough knowledge of human nature. They also need to analyse their target markets, comprehensively analyse the potential revenue that can be generated as well as the market opportunities and find out the price-performance ratio for particular products. And third, companies need to choose the right strategy based either on rapidly gaining market share and on a willingness to accept initial losses, or on moving forward more slowly, which might ensure greater profitability. As far as the chronology is concerned, I would recommend starting with the analysis of the target market, then developing a strategy that suits the particular market and finally acquiring the team to implement the chosen strategy.
Peter Pohl studied administrative sciences at the University of Konstanz. He is co-founder (1990) and CEO of GATC Biotech AG. He also co-founded the GATC subsidiary LifeCodexx AG and served as its CEO between 2008 and 2009. He has been chairman of the LifeCodexx supervisory board since 2010. Peter Pohl has been a member of the BioDeutschland e.V. board of directors since 2005 and a board member of BioLAGO e.V. since 2007.