AGM IinfoFYI: just posted on SEDAR today: TSO3 annual meeting will be held on May 9 at Quebec. Record date for votes is April 2, 2018.
Also want to share a few more thoughts on Getinge:
We all know they dropped the ball on the launch, due to:
- Organizational disarray and low morale from multiple restructurings. Proof: employee turnover, including top level US management
- Did not prioritize VP4 due to its lower margin profile vs. Getinge's in-house products. Proof: Getinge sales people do not receive any direct sales commissions tied to VP4 until late 2017 (Please don't tell me Getinge does not know how sales people work, but management probably just doesn't want to dent its P&L with a hefty commission as VP4 is a lower margin inlicensed product)
There seems to be a renewed Getinge interest/vigor towards VP4 recently, as highlighted by Echo's post.
- First EU installations
- Coordinated PR with TSO3's RBC presentation
- Complimentary tone of this PR on TSO3's performance, and highlight Getinge's commitment to VP4 and the low temp sterilizer market
My question is why? Is it just because TSO3 initiated the contract renegotiation? Maybe, but I think there is more.
Remember TSO3's analyst day? I bet many only remember the PR on the new Getinge deal, rather than all the other stuff that came out from the meeting. We have testimonials of 40-70% savings/instrument from two customers, who are putting money where their mouth is--they are ordering multiple new VP4s (12 in total). This (bolus mutliple unit orders) is a rare occurence in the CSSD market, as this market is mostly a mature, replacement market for end-of-life sterilizers (unless you think these two institutions have 12 well timed, end-of-life sterilizers by chance)
Now let's try to tie this back to Getinge. My assumptions are:
- CSSDs are relatively homogenous, even though their case mix might be different (robotic vs. OR vs. ER, etc.) So I would assume what these two customers saw are somewhat applicable to other customers (maybe to different degree). Even though others might be less aggressive in their purchasing decision, I bet there must be some repeat orders from exisiting customers besides these two
- We know how much disarray Getinge was in, and I doubt it was their excellent customer service that won over these two customers' re-orders. In fact, one of the most common customer compliants on Getinge is their long response time
So if I am running Getinge, I can make the following observations:
1) We dropped the ball on the launch of VP4 and provided inferior customer service. Yet, we are seeing these big reorders coming in, which is rare in the CSSD space. Just imagine what we can do if we actually provide good sales and customer support!! We now have TSO3 who has now beef up their sales/clinical infrastructure, so they can readily assist in our efforts. Furthermore, TSO3 will be detailing to hospitals we don't market to, which will also help industry awareness and make our own selling efforts easier.
2) Furthermore, I bet our relationship with these two customers improved significantly due to VP4. These two institutions now have a product they are really excited about, and our sales people would have a much easier time cross-selling to them now vs. pre-VP4 era.
3) Finally, I have invested time and $35mm into this TSO3 relationship, and they have a product that can do more and cost less than other competitors. I can see the GI market developing over the next five years, where VP4 is the only viable choice.
So, please tell me why I would walk away from TSO3 at this point?? I think Getinge is waking up to this--VP4 will provide them a leg up on the competition and allow them to play into the two fastest sterilization market over the next 10 years: low temp CSSD market and the emergence of a brand new GI sterilization market.
As always, any comments and rebuttals are welcomed, as I always want some "insanity check" on my thesis and assumptions...