Filling the distribution gap

Unexpected venture: Lee took up a business opportunity to ensure that there was adequate supply of medical instruments for the industry.

Unexpected venture: Lee took up a business opportunity to ensure that there was adequate supply of medical instruments for the industry.

An enterprising move to meet a market need has turned a business into a passion for Lee

THE ability and foresight to turn adversity into an opportunity is one of the hallmarks of a successful entrepreneur.

For Christine Lee, the idea of starting Medi-Life (M) Sdn Bhd, a medical equipment and product distributor, came not just from a passion for the business, but to fill in a gap left by a failed business venture.

Having been involved in the medical supply business since she started her working life, Lee was working her way up the corporate ladder in the early 2000s as a sales manager for a medical equipment distributor.

A failed corporate merger between her former company with a larger rival resulted in a liquidation process of what could have potentially been a big medical distribution business.

Instead of leaving the company for employment elsewhere, Lee, together with three of her former colleagues, took the initiative to talk with some of the medical product principals about taking over the distributorship. She sensed that there was a ready market for such products and services and she was already familiar with the clientele in the industry.

After all, by 2008, Lee had locked in a “solid eight years of experience” dealing with surgical supplies to hospitals all over the country.

Lee managed to convince a number of suppliers to give them the distributorship and started Medi-Life as the sole distributor for some of the equipment previously supplied by her former employer.

“Due to the good rapport we had built with many major principal manufacturers and suppliers of devices and equipment, we felt that it will be a waste if internal company issues caused the loss of distributors and suppliers of these products in the country.

“While we knew the opportunity was there for this business, the idea back then was also, partly, not to disrupt the operations of hospitals, as most of these equipment are an essential part of their operations, especially in critical areas such as operating theatres,” says Lee, who is the managing director of Medi-Life.

Recurring income: The future growth of the company will come from the equipment and machinery rental business.
Recurring income: The future growth of the company will come from the equipment and machinery rental business.

After 10 years, Medi-Lie has not only become the dominant supplier of medical equipment and machineries for operating rooms in government hospitals, it has also started to penetrate the private hospital segment. Public hospitals used to contribute around 60% of its total revenue, but the segment’s contribution to sales is closer to 50% now as the number of private hospitals in the country continues to grow, says Lee.

She is now looking at going regional, and is in talks to form a joint venture in Singapore as part of the company’s plan to expand its equipment distribution business in the region.

Other possible markets it is eyeing include Thailand and Vietnam.

Lee welcomes approaches from advisors or fellow medical equipment traders from this markets for joint ventures, as it needs a local partner in each of its target countries to provide local market knowledge.

Medi-Life, in turn, could offer expertise in product knowledge as well as links with established manufacturers, adds Lee.

The company has also received offers from medical equipment manufacturers for strategic alliances but Lee says the company has not decided if it will enter into the manufacturing fray. While it has experience in the industry, Medi-Life lacks expertise in the manufacturing area, Lee explains

“Most of the equipment manufacturers are keen to tap into the company’s distribution and marketing network.

“However, we will consider potential partnership with other medical equipment distributors locally which could offer synergistic value, such as expansion of our product range or those who hold exclusive distribution rights for related equipment or machineries,” she says.

Private medical

While there has been a reduction in government spending in the healthcare sector over the last two years, Lee notes that there is no cuts in allocation for certain essential supplies such as draper and surgical gowns – items that are indispensable for operating rooms.

Lee also says that there is a notable increase in the number of private specialist hospitals, and this provides a buffer for the company’s main revenue generating products.

Medi-Life specialises in medical equipment for operating theatres, including drapes and surgical kits, which make up a bulk of the company’s total sales. It also provides rental services and after-sales training for machineries such as electrotherapy and ultra-sound machines.

Some of the products it holds exclusive distribution rights to include ultra-sound scanners, dental chairs, x-rays and CAD/CAM, surgical instruments, diagnostic instruments and medical disposables from a total of 23 agents.

Medi-Life currently has a staff strength of around 60, based at its head office and branches throughout the country.

It recorded revenue of around RM40mil in 2017, and expects to maintain its performance for the coming year. The company has seen growth of around 10% annually.

According to Lee, Medi-Life is also looking at future growth coming from the equipment and machinery rental business as many smaller private medical centres prefer to rent equipment such as ultra-sound scanners, x-ray and other higher-end equipment rather than buy them outright.

Sole distributor: The company carries exclusive distribution rights for equipment and machinery from 23 agents.
Sole distributor: The company carries exclusive distribution rights for equipment and machinery from 23 agents.

This will provide additional recurring income for the company, besides allowing more medical centres to have access to modern machineries and equipment they otherwise can’t afford, she says.

The machines prices can range from RM300,000 to RM500,000 per unit. Other mainstay products such as scrappers, surgical blades and bedding range from “a few hundred ringgit per set to several thousands each”.

Europe and the US are the main source of its supply, particularly for higher-end equipment and machineries.

One of the biggest challenges for Medi-Life in the last few years was the depreciation of the ringgit against these major currencies. This has led to an erosion of its margins.

However, Lee notes that the company has remained profitable throughout this challenging period and she attributes this to the fact that the medical services is a recession-proof business.

Does Lee still have the passion for the business she jointly-owns with other partners from more than ten years ago?

Lee points to her workstation, which is filled with photos of her family, and the fact that she has spent time and effort in making the office environment as pleasant as possible for the long hours spent there as the strongest indications that Medi-Life and her family will remain her priority.

medical equipment , entrepreneur