VERIFY MARKETS INTERVIEWS DAVID HORAN OF BIOTECTOR

Mr. Horan has been instrumental in positioning BioTector as an international leader in the field of online liquid analysis. He continues to grow the company with a strong commitment to international sales, ongoing R&D and stringent quality standards. 2012 also saw the successful launch of the BioTector System-C Analyzer for Clean Water Applications. Mr. Horan has seen continued growth throughout his tenure as CEO, with 45% for 2013.

Could you please provide some insight about BioTector’s history and product offerings in the water and wastewater sector?

The company was started in 1995 by my father, Martin Horan. He spotted a gap in the market for a reliable total organic carbon (TOC) analyzer. He used to supply and service a German TOC analyzer in Ireland but found that whenever he sold one of them, the service support was huge because the analyzer wasn’t doing what it should for the client. He also realized that the measurement was really important to the clients. However, the analyzer wasn’t capable of giving a reliable measurement so he started to look for a different technology to be able to make that measurement in process water and wastewater and eventually developed and patented BioTector technology. That was really the beginning and BioTector has been growing since then.

The core product that we make is an online liquid analyzer, mostly used in industrial process environments. The measurements that we make include TOC and we can add a module to measure Total Nitrogen (TN) and a module to measure Total Phosphorus (TP). So we can actually measure TN, TP and TOC in one analyzer, which is quite unique. We can also correlate those results to Chemical Oxygen Demand (COD) and Biological Oxygen Demand (BOD).

We have just launched BioTector Network Control Units, which allow our clients to remotely access all their BioTector analyzers and control them remotely. Mainly looking at the measurement results, changing the setup, changing the configuration, doing some remote trouble shooting and things like that. That’s quite a nice add on to BioTector analyzers and it is already getting a lot of interest.

Would you say BioTector is a global company? Which countries is BioTector present in?

BioTector Analyzers are installed in 46 countries around the world so I would definitely consider us to be a global company. Our key markets are U.S., Saudi Arabia, Europe and Korea. These are our best performing regions/countries. We have distributor partners throughout the world so BioTector is represented in many countries/regions, for example U.S., Europe, Indonesia, Malaysia, Thailand, and Japan. More than 90% of what we build here in Ireland is exported; in fact, we were delighted to recently win the Irish Manufacturing Exporter of the Year 2013.

So are all of Biotector’s products manufactured in Ireland?

Yes. All of the manufacturing, assembling, design, and development are done in-house. We have a team of experts that really know each section of the analyzer. The analyzer itself is like a small factory with lots of different components inside it and various members of our team have expertise on each of those components. We are quite specialized in what we do here in Ireland.

Does manufacturing products in Ireland increase the costs of the products?

We are slightly more expensive than our competitors but that is due to our focus on quality engineering and ongoing reliability rather than due to our location. We look at the clients’ applications and take the value of their measurement as being the key driver. What that means is we don’t ever sacrifice reliability. If a client is trying to use these analyzers to increase production efficiency in a factory, or reduce product losses, or reduce energy and water consumption, then they are really relying on the analyzer to do a very important and commercially valuable job for them. We don’t let price rule what we are trying to do: to provide the most reliable analyzer in the world. The technology that we have developed to do this is a patented technology called Two-Stage Advanced Oxidation (TSAO). It is quite an aggressive oxidation process and the end result is a high performing analyzer with unparalleled accuracy and reliability combined, allowing the analyzer to be used as a management tool.

What would you say are some of the key differentiating factors that make BioTector a leader in the TOC market and ahead of competition?

BioTector has a certified uptime of 99.86% and that is unprecedented in our field. When somebody installs a Biotector, they know that they are getting that reliability and will trust the analytical information to support them in making management decisions. Our clients are now using our analyzers in even more industrial situations; instead of using BioTector solely for regulatory compliance, clients now use it for things like product loss reduction or increasing the overall performance of the factory in terms of optimizing energy efficiency or managing water consumption. We have clients who have reported increased plant yield due to processing efficiencies brought about by BioTector. Because BioTector is reliable, it is being used in many more applications than TOC was ever used before.

Have you been seeing any particular client trends in various industries that you operate in? If yes what would those be?

From a trend point of view when you look at the Dairy and the overall Food and Drinks industry, they are always looking for a competitive advantage. What’s happening now is that they have realized that TOC analysis is one way that their industries can achieve operational savings, plant efficiencies and sustainability and, therefore, we see a lot more of those types of industries really using their analytical information. Petrochemical industries have always used TOC analyzers, whereas the other industries are moving more to this equipment in recent years. That’s a big trend, the way the equipment is being used and what it’s being used for.

What kind of growth/ accomplishments do you expect to see for BioTector in the coming years?

BioTector is the Number 1 analyzer in the U.S. and we are working towards replicating that leadership position throughout the world. Within the next 3 years, we want to establish market leadership in some of the other markets that we are active in also.

From a growth point of view, also over the next three years, we are expecting to grow by 95%, which is quite an ambitious figure. However, if we actually look at what we have achieved in the last four years, we have grown by 168 % and we know this next target is attainable.

What would you say are some of BioTector’s strengths?

My initial response is that our technology is one of our top strengths, it’s been tried and tested for 2 decades now and our industry reputation is very positive. However, it can take a long time to grow organically and we have seen in recent years that our network of global distributors is another key strength. Now we are working with key players in our field such as Hach (the Danaher Group) and Yokagawa. These distribution partners have really gotten our analyzers in front of blue-chip clients that we would have found difficult to reach beforehand, so that’s a big boost for us.

What has the company done to stay ahead of competition in the economic recession?

When you look at the growth that we have achieved in the last 4 years or so, we have still been able to grow despite the economic pressures that exist. Our discussions with clients revolve around the value of the measurement to them. Before the recession, we would tend to talk about superior technology, or why our analyzer is better than the competitors or comparative oxidation processes. Since the recession, we have changed our approach and we talk a lot more about the proposition for the client and the value that they will get from the analyzer and we work with them to estimate the monetary value of product loss reduction, energy reduction etc. in their plant. We’ve kept our position in the regulatory and wastewater treatment and control applications but we’ve also decided to spend our marketing budget in these new processing applications where there is a quick payback and healthy ROI for the client. Due to the rugged nature of our technology, we are able to survive those types of applications better than the alternatives. Once you start going into the process side of a plant, the water that you are measuring is much more contaminated and dirty and this is where BioTector has a stand-alone performance. We have opened up a whole new market for our technology and given our clients greater competitive advantage in their industries. This has allowed us to grow our company and our markets during a recession.

Several Western companies are now trying to penetrate the Asia Pacific market. Do you see any particular growth opportunities for BioTector in Asia Pacific?

We are active in a lot of these markets, for example, Hach is our distributor in China and Japan and Forbes Marshall in India. They aren’t a major focus for us at the moment because, even though there are a lot of TOC analyzers being sold in those markets and there is a lot of opportunity, it is a very price sensitive area and it is quite a new market to analysis. Our technology tends to do better in more established markets, markets that have used TOC analysis for a long time. If you take the U.S. market, the industry has used TOC analysis for many years and, therefore, they have had the time to experience issues with competitor technologies and realize the unique reliability of BioTector. The clients there understand the value of what we bring with our patented technology. The Middle East is quite experienced with TOC analyzers and so clients realize what we can offer. That isn’t quite the same for us in India and China. Those countries have clients that are looking at buying TOC analyzers for the first time. They don’t have as much experience so price often becomes one of the main factors. Our analyzer is more expensive but we have the specialism, the industry experience and the market longevity to justify it.

How do you typically enter different regions? Do you partner with companies/distributors?

BioTector operates through a global network of distributors, our sales and service partners. Finding a partner with complementary products and a strong client focus is the key. We have a total of 11 distribution partners around the world. What they have in common is that each organization has a great reputation in industry, good technical people, and solid after sales service support.

How was BioTector’s performance in 2013?

We had a 45% growth in 2013. While we were busy in general we also had a focus on the Dairy Sector and were able to establish ourselves in some of the biggest Dairy Processors around the world. One of our main objectives for 2013 was to build on the long-term success that we have had in Ireland within the dairy industry. And try to replicate that in other countries. This has been a great success with some high-profile sales in 2013 and a very strong sales pipeline to start 2014.

From the technology side, we released the BioTector Network Control Unit that I mentioned. This gives the user remote access and has been well received by the market with a number of early sales already. Clients like the fact that they can access the analyzer from the comfort of their office and troubleshoot or make changes to the analyzer while they are sitting at their desk or travelling. Launching this has been quite an achievement for our team.

What would you say are some of the challenges you face in the TOC market? Both regionally and globally.

The legacy of TOC analyzers can be a challenge. As I said earlier, in some countries, clients have tried other TOC analyzers and had problems, and then they installed the Biotector solution. Our job is to explain to companies that to overcome traditional TOC analyzer issues: clogging, downtime, excessive maintenance requires a completely different technology. Getting over the negative legacy of other TOC technologies is a challenge for us but it’s getting easier as our profile raises due to the market activity of our distributors.

What about trends? What are some key trends that you are seeing in the TOC market? Any technology innovation?

TOC is a very niche area. When companies launch a new analyzer, it tends to be enhancements of the same technology. From a trends perspective, I would say, it’s more about the communication of the analyzer, how the analyzer looks, how you interact with the analyzer through touch screens and web access etc. These are probably the biggest changes I’ve seen.

Who would you say are some of BioTector’s largest clients?

Our biggest clients in terms of analyzer ownership are in the Petrochemical industry. Dow Chemicals, BASF, Shell, Exxon Mobil, these are some of the companies that we have always dealt with for a long time. In recent years, we are working with electronic companies such as Samsung, and are making great traction in the Food & Beverage Industry, for example Arla, DMK, Glanbia and Parmalat. Having said that, our client base is very diverse and we have high profile reference sites in most industries, basically any sizeable processing plant with process waste water will have a need for a BioTector analyzer.

What would you like your clients to know about BioTector’s product offerings?

The primary advantage of using BioTector is the reliability that you get. Whatever the application is, it will give accurate and reliable results. If it’s clean water or dirty water that might have fats, oils, grease, there is a TOC technology that can measure continuously in that environment and require a routine service only every 6 months. We are also communicating strongly that BioTector technology can be used in a lot more places other than just the Wastewater Treatment Plant.

Can you please tell us a little about the kind of client service BioTector offers?

Our distribution partners are fully trained and skilled to provide after-sales service. We pride ourselves in having direct contact with a lot of these key companies and with the individual team members. Some clients like to directly contact us and we are perfectly happy to have them do that and if they need local support we provide that to them through our distribution partners. Our job in BioTector is to make sure that our distributors understand our analyzer and are in a position to look after our mutual clients.

How has BioTector been able to achieve success in the U.S market being a European company?

Our early market success was actually in Texas and Louisiana where there are a lot of Petrochemical and Chemical industries. These industries were early adapters of TOC analyzers, in general. The clients became experts in understanding how TOC analyzers work and they saw the advantages of Biotector from the outset. The type of industry in Louisiana and Texas suited our product, we could then prove ourselves and we grew through word of mouth. That growth and good reputation allowed us to attract better distributors who were, in turn, able to find more clients to show what we could do. It was a snowball effect, I suppose.

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