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Divisional
Review –
HOSPITAL PRODUCTS |
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| Objectives
achieved 2006 |
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Consolidated
acquisition of The Scientific
Group |
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Operating
income showed solid growth in
deflationary environment |
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Renal business
showed strong organic growth |
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| Strategic
objectives |
| Key strategies to
maintain revenue growth include product
innovation to anticipate and meet
customers’ needs, expansion
into new sectors through acquisitions
and cost containment. |
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| Hospital Products |
Adcock Ingram Critical Care provides a comprehensive range of life-saving and life-sustaining products used in hospitals, clinics, blood transfusion centres, kidney dialysis units, laboratories and by patients at home.
The overall business achieved good revenue growth and successfully consolidated the acquisition of The Scientific Group. Operating income showed solid growth in a deflationary environment and in the face of intense competition from lower-priced imports, particularly in the Medical Disposables markets. |
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| Contribution to group |
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Prices of registered products
have been limited to 2003 levels following the
imposition of single exit price controls, and
this has constrained growth. Aggressive cost control
and Continuous Improvement initiatives contributed
significantly to operating income.
The Renal business continued its strong organic
growth and maintained market share against global
competition. No price increases were taken on
peritoneal dialysis solutions. There has been
no significant increase in blood donations this
year, despite efforts to expand the pool of donors
and optimise the safety profile of blood collected,
which affects the sales of transfusion products. |
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| Medicine delivery |
Adcock Ingram’s entrenched
relationship with Baxter International of the
USA – a world leader in hospital products
– is a key contributor to the drive for
products and systems that improve efficiencies,
safety and cost-effectiveness for hospitals and
health professionals.
The Infusion Pump business again increased market
share on the back of new technologies and accessories.
In the Wound Care and Ostomy market, new products
in the ConvaTec range were launched, marketed
and distributed under licence from BMS.
Good growth was recorded from our comprehensive
range of nebulising solutions prescribed to treat
respiratory diseases such as bronchial asthma,
chronic bronchitis and emphysema. |
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| Product
innovation |
Blood-collection
packs have been redesigned
specifically for SANBS
to enable every unit of donated
blood to be tested for HIV and
other pathogens
to help the SANBS improve the
safety of collected blood. |
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| “Adcock Ingram Critical
Care again increased market share in the competitive
private and public sector Haemodialysis markets
with Baxter machines and disposables.” |
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| Kidney dialysis and transplantation
therapies |
Adcock Ingram Critical Care
again increased market share in the competitive
private and public sector Haemodialysis markets
with Baxter machines and disposables, and the
acquisition of new product lines from new principals.
The division’s successful franchise in the
Peritoneal Dialysis market offers new formulations
for improved patient outcomes and technology for
treatment while patients are sleeping, enhancing
the quality of life of those with kidney disease.
The home delivery service for dialysis patients
has been expanded nationally, with both drivers
and assistants of delivery vehicles playing an
important role in informing hospital staff about
any accumulation of disposable stocks, which indicates
non-compliance and may affect the patient’s
health.
Given the increasing numbers of foreign patients
being treated locally, the potential for peritoneal
dialysis in export markets is under evaluation. |
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| Transfusion therapies |
Ongoing awareness and customer
support programmes continue to increase the use
of safer, filtered blood components in the private
sector and are being extended to the public sector.
The SANBS is evaluating new technology from Baxter
to improve the efficiency of blood donation, and
staff training is under way.
Blood-collection packs have been redesigned specifically
for SANBS to enable every unit of donated blood
to be tested for HIV and other pathogens to help
the SANBS improve the safety of collected blood.
All SANBS blood banks have been converted to the
new packs. |
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At The
Scientific Group, growth in turnover and
profitability was very strong, with a substantially
improved contribution from the growing Medical
division. |
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| The Scientific Group |
The Scientific Group, Adcock
Ingram’s new empowered subsidiary specialising
in the supply of laboratory and medical equipment
and consumables, performed extremely well. The
company has a partnership with Brimstone Investment
Corporation, one of South Africa ’s leading
listed empowerment companies. Growth in turnover
and profitability was very strong with a substantially
improved contribution from the growing Medical
division which was restructured early in the new
financial year.
In the Clinical Diagnostics division, historically
the core of the company, strategic focus on the
government’s peripheral laboratories paid
off with The Scientific Group gaining market share
in the placement of chemistry analysers. Supply
of automated systems to blood banks and pathology
laboratories is progressing well and will continue
to be a key growth area in the new financial year.
The Scientific Group’s Biosciences division
continues to show stable growth, particularly
within the Flow-cytometry Product range. The Molecular
Diagnostic market remains a strong growth opportunity.
The Imaging division’s niche focus on women’s
wellness in the form of mammography and bone densometry
paid off with The Scientific Group selling the
first full-field digital mammography instrument
in Africa to the Pretoria Academic Hospital. This
order was followed shortly by four other units
to three prominent government hospitals. Creating
partnerships to ensure adequate screening programmes
in the fight against breast cancer and osteoporosis
will continue to be a key strategic initiative
for The Scientific Group.
The Hospital division’s focus on critical
care equipment and consumables in the form of
cardiac perfusion and ventilation instruments
falls within the high-growth areas of intensive
care and high-care units. The Scientific Group’s
range of infection control instruments also positions
it well to offer solutions to current healthcare
challenges.
The Service division has set the platform for
strong growth in the new financial year by enhancing
its core service capability with appropriate accreditation
to carry out servicing work on electromechanical
devices as well as vaporisers. |
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| Growth |
Product innovation to anticipate
and meet customer needs, expansion into new sectors
in the Hospital market through acquisitions, and
cost containment are key strategies to maintain
revenue growth under competitive market conditions.
Negotiations for the acquisition of new renal
products from new principals have proved successful,
and the coming year should see the Renal business
significantly increase its Haemodialysis market
share. Strong renal organic growth is expected
to continue.
The intravenous solutions manufacturing facility
at Aeroton is being upgraded and will enable Adcock
Ingram to qualify for donor-funded business in
sub-Saharan Africa in 2007.
The launch of several advanced products in late
2006 will contribute to growth in the year ahead,
particularly Aquacel® hydrofiber wound dressing
from ConvaTec, Extraneal® peritoneal dialysis
solutions and a new range of micro- processor-controlled
blood warmers. |
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