RE:TOS doing marketing@ eunice:
I don't think anyone is trying to sugar coat this marketing situation.
Best case scenario is obviously: TSO3 outsource the entire distribution/servicing aspects to Getinge, and Getinge does a great job that results in rapid adoption of VP4s. This was the hope for many TSO3 investors when the Getinge deal was first signed two years ago.
Unfortunately, we all know that is not the case, at least in the last 12-18 months. Getinge is in disarray with corporate restructurings and significant personnel turnover. Just look at the Vanouver General example: it took months from when the order was announced to the acutal installation--this is for a key reference account, which make this totally unacceptable.
So, put yourself in the shoes of RR--your company has a differentiated, potentially revolutionary sterilization technology, and you are seeing various industry tailwinds (e.g.: AAMI) aiding your cause. But your distribution partner is dropping the ball (not intentionally, but this is happening nonetheless) that is causing a slower than expected adoption of your technology.
What is your best course of action then?
1) Do you continue to rely on Getinge alone and hope they get their act together? This could work, but we can all agree it will be hard to convince TSO3 shareholders that this is the best course of action given Getinge's track record.
2) Ditch Getinge and sign up JNJ or Steris as your marketing partner. This might be the lowest risk method, but it depends on the willingness of these counterparties to sign on a deal structure that RR wants (remember TSO3 was burnt by the 3M contract, so RR is quite particular in what he wants in a distribution agreement). Also, you will be starting everything from scratch again, which means valuable time will be lost. As the only sterilizer approved for various scopes, you want to use your first mover advantage quickly to secure a large % of market share.
3) Ditch Getinge and go alone in the US--this will require hiring a lot of sales reps and technicians, which will certainly entails an equity issue. Given where the stock is currently, this will cause significant dilution to existing shareholders. In addition, TSO3 will remain a small cap Canadian company that is competing directly with other large corporations, and there could be issues with trustworthiness and company longevity for potential hospital customers.
4) Do what RR is doing now: hire 8-10 of your own people to beef up sales and installation functions, while keeping Getinge's support (servicing, brand awareness, sales). As these new hires will be mainly compensated via commissions, it will not hurt your cashflow much (them getting paid means you are selling VP4s). This will give TSO3 much more control over account management and marketing strategy.
Like I said, the TSO3 story is a higher risk/higher reward vs. the best case scenario we envisioned when the Getinge deal was signed two years ago. However, versus what we know happened in the last 18months, I do feel this is a better setup for success in terms of getting VP4s adpted by hospitals and GI suites.
I am sure this higher risk hands-on approach will upset some analysts and shareholders who just want a low risk business model or a quick takeout. But if you truly believe VP4 is indeed a revolutionary type product, today's development is your best bet for a fast adoption of that technology. All eyes will be on RR's execution over the next 9-12 months, and everyone will be keeping track on the sales/orders momentum, especially after the duodensocope approval.