Hart eyes Southeast Asia for next phase of expansion

Hart Biologicals

Knowledge: Hartlepool’s Hart Biologicals, which manufactures reagents used to investigate the blood clotting function, has hit an annual turnover of about £3m, largely on the back of word of mouth. Mark Lane finds out how its innovation-focused founder, Alby Pattison, achieved it

Hart Biologicals and Hart Innovations founder Alby Pattison sits on the boards of Tees Valley LEP and the Tees Valley Combined Authority and has the development of business in the North East very much at his heart.
Not surprisingly, he sees innovation as being of crucial importance to the future of the region.

He says: “We have a lot of businesses around here that are very interesting, very niche and relatively small, but they are all sitting in isolation and it’s time to find some sort of way of bringing them together and allowing a cross fertilisation of the resources, and that work is ongoing.’’

The very engaging Alby (pictured right), and his businesses, are standout examples in our region of how innovation can drive a business and lead to export success, fuelling further growth. They have become a model for many start-up businesses in the North East and further afield, and the story of how he did it is one worthy of serious attention.

Hartlepool-based Hart Biologicals, which manufactures reagents used to investigate the blood clotting function, employs 38 staff and has an annual turnover of about £3m, of which some 80 per cent is made up of export sales.

In the 2017 North-East Business Awards, the company, and its sister business Hart Innovations, won both the Export Award and Innovation Award and last summer Alby was named an MBE in the Queen’s Birthday Honours List. His MBE was awarded for his services to international trade, as well as the work both he and Hart Biologicals do for communities, charities and the economy in the region.

Alby founded the company. Hartlepool born and bred, he read biochemistry at Manchester University and, after graduating
in 1980, worked in haematology in Manchester. From there he moved to Sunderland hospitals, before going on to work in Alnwick, in the private sector doing pharmaceutical research.

“In 1989 I was recruited by a company on Team Valley to set up an R&D organisation for them and that was my first venture into the diagnostics manufacturing business,’’ he says. “I was with that company for 14 years and went up through the ranks. I left in 2002 having really gone as far as I could and there were no more challenges for me there.’’

Then he set up Hart Biologicals in his native Hartlepool.

“The plan at the start was to stick to what I knew best, which was the haematology and blood coagulation field and we set off with one product. Our first order was April 1 2003, which was for a UK hospital. We were very much a UK business at that time. There were three of us; me, my sister-in-law and my older brother, who are both now retired out of the business.’’

They soon introduced more products and, in 2003, were approached by a German company looking for a reagent manufacturer. Hart started making reagents, its first venture into manufacturing and export.

He recalls: “From there, it was quite bizarre, in that we suddenly had two lines of products that Hart Biologicals was involved with: one was our own labelled Hart Biologicals materials, that we sold to UK hospitals and sold abroad through a distributor network that we were building.

“Then this second channel came in where people wanted help with their own products by using our scientific expertise, so we contract developed reagents for them and then manufactured those reagents for them. That, over the years – until recently – has been solely an export activity.’’

Contract development and manufacture accelerated the growth of the business and now the company has expanded the Hart Biologicals own range of products, for which it is now trying to grow sales and distribution channels.

“It’s not an area that I’m comfortable with,’’ says Alby. “I’m a scientist. So we’re looking at what our planned growth sales and marketing activities will be for the future. Interestingly, all the business that has come our way has come from word-of-mouth recommendation.

“We haven’t actually been out pitching for business with many people. It’s a bit of a surprise when somebody rings you and says they were given your name by so-and-so, do you think you can help us, which is always quite nice actually. The business has expanded through that.’’

Another important stage in the growth of the business was the establishment of Hart Innovations.

Alby takes up the story: “Hart Biologicals always did R&D for itself and we did development – in a very simple sense – of these reagents for other people. Usually the development meant changing the format. We already had the technology, we simply put in a different volume, a simple change to make it unique for that particular customer.

“The Hart Innovations side came when some of our clients were asking us to actually design tests from the bottom up. They didn’t know how they wanted to deliver it, they didn’t know exactly how they wanted to format it. They’d say: `We need a test that will do that. We don’t know how to do it, can you help us? This is how our machine will work and this is what we think the blood reagent issue will be’, and things like that. So we were doing a full-on research and development function.

 

“We set up Hart Innovations as a separate entity to keep it distinct from the Hart Biologicals core business and the reason for that was that there was an interest from small pharmaceutical companies in doing that and very often pharmaceutical companies like that would say: to protect that technology we will simply buy you.

“So we kept innovations outside of the Hart Biologicals business so that if somebody did come in and say that, then it was a separate entity and it was easy to let it go. It’s an out-and- out R&D facility.’’

Now, Hart Biologicals has started to contract out some of its own R&D work to Hart Innovations.

“There are two sides to what we’re trying to do here,’’ says Alby. “We have a technical lab that used to be termed R&D, but in fact what it does is improve existing tests, or it will improve the way we manufacture existing tests, so it’s really developing on what we already have.

“There was perhaps a bit of a mix-up between developing new tests and improving existing tests, so it made sense to put the new test development into Hart Innovations which then simply send it back to us for manufacture.’’

But, Hart Biologicals also looks to the wider world for innovation and R&D and for this has forged important links with the world of academia.

“I have a good relationship with Manchester University through being an alumnus and once a year we host their third-year biomedical science students who come here for an afternoon. We feed them, show them round and then we have a question and answer session around career opportunities,’’ Alby says.

Closer to home, Hart Biologicals has also developed a relationship with Teesside University, which is expanding, and biological sciences is a particular area of growth. Hart is involved directly in the biomedical science course and Alby himself has done some lecturing on coagulation. The company has also recently signed up for a PhD project for a student who graduated this year from Sunderland University. It also has a knowledge transfer partnership, KTP, with Manchester University.

“That came through Innovate UK,’’ he says. “What we are trying to do is replace a raw material that is very expensive for us from one supplier and we’re looking to make it ourselves. It’s a very technically demanding thing. Manchester University has the skills on the science side, we have the skills on the manufacturing side and production side and that’s the whole idea of the KTP – to cross-pollinate those skills.

“At the end of the day, the expectation is that we will have a product to sell. We will be selling it to ourselves, but we also know that there are other customers out there who use this at a very high price, and we can go and compete in that market.’’

Apart from innovation, a key driver of the business has been its exporting activity.

Alby says that working in exports has been a real boon for the business. “This is one of the reasons why I was involved with UK Trade and Investment from the outset and on the North East worldwide board as well – because of the recognition of how exporting activities can benefit business, which I’ve really seen from our own experience. Certainly, getting into those export markets has really driven a lot of Hart Biologicals’ growth

I asked him what his greatest exporting challenges have been. “Regulatory challenges,” he quickly fires back. “Our business
is very highly regulated from a quality point of view. A lot of countries want the same information about the registration process, but they all want it in a different format and in a different order and in different words.

“So we have a team of five people whose sole job is around quality and regulatory activities. Dealing with individual countries from a regulatory point of view for a small business is very onerous.’’

And Brexit? “Being a member of the EU has simplified things and I don’t know what Brexit is going to bring to it.’’

He adds: “We have been planning for what it might mean in terms of a document control aspect. In terms of the financial side, it’s really difficult to call at the moment because like here, a lot
of the countries’ health provision is financially constrained and there aren’t many countries where the cost of what we do isn’t important to the sort of business we get.

“So if tariffs come in on raw materials – and an awful lot of them are very specialist raw materials that come from abroad – we’ll have no option other than to look at our pricing and that might actually price us out of the markets. We already have customers emailing us and saying how is our relationship going to work after Brexit and unfortunately, we can’t tell them.

“We’ve talked about finding a hub in Switzerland we can use as a distribution outpost, but for a lot of our products you have to put country of origin as the manufacturing base.’’

But, despite Brexit uncertainty, the business is forging ahead with its growth plans.

“We’ve reached a new sort of plateau in our growth over the years and at the beginning of the year I gave all the staff a five-year growth projection plan,’’ Alby says.

“A key part of that plan is around our contract manufacturing. It’s going very well and we’re going to look to build on that, but where we really want to focus our growth for the future is in our own label products. We have a reputation out there and we need to take advantage of that reputation and to grow that.

“We don’t have any salespeople, we only work in the UK through word-of- mouth and we have the distribution network in Europe we’ve known for a number of years. The next phase of 41growth for this company with those
Hart Biological labelled products is the sales and marketing operation and that’s something we need to bolt onto the company.

“It’s a cash intensive side of the business which, while we were building the business on the science side, it hasn’t had the focus that it perhaps needed. Now, to take the business to the next level, that’s where we need to go, to
get moving in Southeast Asia or South America or Africa and we’ll need feet on the ground to do that.’’

Alby has first-hand experience of the Southeast Asian markets, selling one of the products Hart makes reagents for, and he has identified other opportunities out there.

“I’ve had first-hand experience of seeing how their labs are equipped and how we can benefit those,” he says. “A lot of labs out in Southeast Asia are using technology that was obsolete here back in the 1990s and there is a real opportunity to improve things out there at not high cost. Southeast Asia is a big target for us.”

Hart Biologicals
www.hartbio.co.uk

@HartBio

“We have a lot of businesses around here that are very interesting, very niche and relatively small, but they are all sitting in isolation and it’s time to find some sort of way of bringing them together and allowing a cross fertilisation of the resources, and that work is ongoing.”