Ego Pharmaceuticals turns to direct model for ASEAN success
With more than 50 years' experience exporting into ASEAN markets, Ego Pharmaceuticals has a deep understanding of how to succeed in the region. Founded in 1953, Ego Pharmaceuticals develops, manufactures and markets skin and healthcare products in Australia and worldwide.
In ASEAN, the business started exporting into Singapore in the 1960s and into Malaysia in the 1970s. Having delivered $6.7 million in revenue in 2016-17 up 15 per cent over the previous year Singapore is Ego Pharmaceuticals' second largest international market. Malaysia grew 18 per cent to $5 million over the same period to rank as the business's fifth-largest market.
Ego Pharmaceuticals Managing Director, Alan Oppenheim, says the more recent success in those markets is driven in part by moving from a distributor to a direct presence in Singapore 13 years ago and Malaysia nine years ago. 'We worked very hard and closely with distributors, but they were not moving as fast as we were,' Oppenheim says. 'That prompted us to put our own teams into those countries.'
Ego Pharmaceuticals recently extended this model in Malaysia by putting on its own team members in Sabah and Sarawak.
While this direct model has increased the complexity of the business, Ego Pharmaceuticals can now apply lessons learned in one or more markets to other markets. 'It also means we're on top of new rules and regulations, more markets and more products,' Oppenheim says. 'We also have more experts who can advise other people within the business about different cultures and skillsets. That strengthens the organisation.'
Oppenheim predicts that in Indonesia, where revenue grew 21 per cent to $166,000 in 2016-17, the business will soon move away from a distributor to a direct model so it can exploit the full potential of the market.
Other success factors for Ego Pharmaceuticals in Singapore and Malaysia include new product launches; marketing plans that better communicate the value of the business to consumers; forging closer relationships with trade partners such as dermatologists and pharmacists; and ensuring the right mix of products is supplied to each country.
Another key to successfully serving ASEAN markets is by building on a robust business in the home market. 'In our case we aim for quality and control over as much of the process from an idea to the product being applied to the customer's skin as we can,' Oppenheim says.
Ego Pharmaceuticals has received generalised support from Austrade when entering new countries the business has little expertise in. 'We will have a one-off conversation with Austrade representatives covering general topics such as 'where do you buy your skin products,' and 'what is your experience with pharmacies there',' Oppenheim says. 'It is our job then to become specialists and understand how skin products move from pharmacists and dermatologists to the consumer.'
ASEAN is key to Ego Pharmaceuticals' plans to increase the share of its business that comes from export. During the 2016-17 financial year, 43 per cent of the company's business came from export and Oppenheim is targeting growth to 47 per cent. By 2020, Ego Pharmaceuticals plans to grow its export share beyond 50 per cent.