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Strategy and Business Model.

Our Business

At Inspiration Healthcare Group plc, we differentiate ourselves on our ability to supply outcome improving medical devices in the areas of neonatal intensive care and patient warming. Our products in the UK and Ireland are supported by 24/7 Clinical and Technical Support which differentiates us from our competitors.

The patient focussed ethos drives our business to not only supply these innovative medical devices to meet our customers’ needs but also to add value to our customers through life-saving customer service and Technical Support. Where geographically we do not have a direct sales operation, we choose distribution partners who have a similar ethos to us, bringing together their core values with ours.

Most of our staff are customer facing, in sales, marketing, customer service or Technical Support. By heavily focussing on our customers’ needs we are instantly aligned with not only the current best practice in the fields we operate in, but also their future needs. With manufacturing outsourced and largely self-sustaining, we can use our energies and resources to find the latest technologies to develop into new products that will become the norm of clinical practice in future years.

Click here to see our Business Model.

Our Products

The majority of our own branded products are used in the first few days of life. It has been part of our strategy to focus on this area of clinical need as we feel that it is here where the right technology can have the greatest effect on the patient outcome.

The clinical applications diagram (see page 10) shows a representation of where six of our own branded products can be used in the acute hospital setting and, depending on the progress of the baby, our products could have had a profoundly positive effect on the child’s outcome within the first few days of life. Coupled with this, in the UK and Ireland, we complement our products with Distributed products which can add to the patient’s care pathway and add value to our sales call.

In addition to the neonatal products, we have our own brand of patient warming system that can be used in other parts of the hospital, mainly in the operating theatre. There is a natural overlap in the operating theatres for maternity, where pregnant mothers can be kept warm prior to and during a caesarean section, on our Alpha system. The baby can then be delivered onto a LifeStart with a warm mattress from the same system.

The latest design of our patient warming system makes it ideal for the entire peri-operative period. Keeping patients normothermic whilst they undergo surgery is complex as well as vital. Patients suffering from hypothermia can have serious complications which will lead to lengthened hospital stays thus leading to increased costs to the care provider and a poorer outcome for the patient. We have a pipeline of future developments in this field where we feel we can add value in other areas of the acute setting to improve patient outcomes.

Our Domestic sales team, covering UK and Ireland, has some of the best technology in the world available to them that complement and supplement each other and our branded products. A broad product portfolio that allows the sales team to engage with customers on a regular basis, is a key advantage. Buying decisions can often take more than a year and relationships need to be built over time based on trust. Our team works closely with all clinical staff to ensure that the products we offer meet the needs of their patients.

Additionally, we distribute a range of infusion technology products and have been highly successful in the niche area of Parenteral feeding for homecare patients in our Domestic market. This highly specialised and growing area has allowed us to gain invaluable experience in a different environment and we are looking to leverage the other products in the range.

Our product strategy continues to build upon that of previous years; we will actively look for therapeutic solutions with an element of capital equipment which we can enhance with planned preventative maintenance contracts, along with complementary consumable medical devices.

In our product portfolio we have both own branded and distributed products:

Inspiration Branded Products

Inspiration Branded products demonstrate our sector expertise and allow us broader market access. Here we have a combination of:

Own Intellectual Property:

› Products where we control the intellectual property, know-how, manufacturing rights and the design. This gives us control of the product design, the costs and the route to market. In the year ended 31 January 2018 we invested 6.2% (2017: 4.4%) of our revenue in this area.

And

Shared Intellectual Property:

› Products for which we have exclusive worldwide licenses and are manufactured under our Inspiration brand. For these products the design, IP and regulatory status is owned by a 3rd party with whom we have a close partnership.

Distributed Products

These are products that do not carry the Inspiration brand and for which we have an agreed relationship with the manufacturer to sell their products in certain territories, mainly UK and Ireland. These products may earn lower gross margins than our branded products but need less capital and typically generate revenue more quickly. Distributed products complement our own branded product portfolio and add value to our customer proposition as we can offer a more comprehensive product range. We will continue to look opportunistically to add more Distributed products into our product portfolio where they can add value to the rest of the product range.

All of our products in the UK and Ireland are supplemented by our Technical Support team. Being able to offer a comprehensive Technical Support programme is essential to underpinning our value proposition of customer service and patient focus. The wide range of products ensure that our Technical Support team have all the skills required to support our customers. This also gives us the flexibility of adding new products into the portfolio quickly and efficiently.

Our Technology

Our investment in R&D has steadily grown over the past few years and we now have a stronger team in place to develop the technology that we can take to market worldwide. We have concentrated our developments in recent years on two key areas: patient warming with our new warming system that can warm up to five accessories at one time, and the first few moments of life with the Inspire rPAP and LifeStart. Over the forthcoming years we will continue to invest in our Neonatal range to improve outcomes of fragile babies and complement this with enhancing features of our patient warming offering.

Raising our profile within the research community has always been something we have done. It often follows that product ideas come from this extremely well-informed group of physicians.

New technology with novel features allows us to add to the value proposition of our products, helping differentiate from our competitors and potentially disrupt the market. We expect to see margin improvements through new products and increased growth.

Our Markets

We are privileged to work in markets that involve trying to save the lives of some of the most fragile patients. Over 15 million babies are born prematurely every year (1 in 10 live births) and globally this number is rising. Complications from preterm births are the leading cause of deaths in children under 5 and are estimated to cause over 1 million deaths in 2015 (Source: World Health Organisation). In the European Union and USA a combined 9 million babies are born, approximately 1 in 10 need help breathing at birth and 1 in 9 are premature. Not all babies who are premature need resuscitation and not all babies who are resuscitated are premature.

In addition, we have an interesting market of patient warming during surgery. According to the Royal College of Surgeons there was a 27% rise in the number of surgical admissions in the UK over the 10 years to 2014 to 4.7 million and according to the Center for Disease Control and Prevention in the USA in 2010 there were around 51 million ‘in patient’ surgical procedures.

These two areas of neonatal intensive care and patient warming form our strategic focus for new product development. We believe that the markets remain strong and attractive to a Group our size with good growth potential and a customer base that is prepared to pay for products that will reduce hospital stays and improve patient outcomes, as well as the overall patient experience.

We sell directly into the UK and Ireland (“Domestic”) and partner with established independent distributors in the rest of the world. This model gives us the best of both worlds as we can develop and support the direct market, giving access to Key Opinion Leaders (“KOL”) and first-hand product feedback via a team of clinical sales people. In other markets we can use local knowledge and expertise of like-minded distributors who can sell our products alongside others in their portfolio adding value to their customers the way we do domestically.

In all international markets, regulations are becoming more onerous. It is important that we have an expert team to help work with distributors so that localisation of products, be that translations of instructions, and other labels, or any specific regulatory requirements are met. This is an important blend of skills and expertise between local distributors, to provide intimate market knowledge, and our own sales, marketing and regulatory team to ensure the products are fit for the market and ensure local compliance.

Market Sectors

 Inspiration Healthcare has always been able to identify products that will fulfil a customer need, improve patient outcomes and bring them to market. This has led us to be considered a leader in technology for many of our customers.

Over the last few years we have focussed our attention on products which improve medical outcomes around the first few days of life and which are able to help the most fragile of patients: premature and sick babies. We have also found technology that can cross into different clinical areas, such as the patient warming system that can be used with premature babies, keeping them warm when they cannot truly thermoregulate themselves; as well as in the Operating Theatre, where the same technology can be used to keep patients warm before, after and during surgery.

Inspiration Branded and Distributed products are sold in three market sectors as described below.

› Critical Care: our largest business area.

The main source of revenue comes from the Neonatal Intensive Care Units (NICU). Products for premature and sick babies include our Inspire range (non-invasive respiratory support), Tecotherm Neo (for thermo-regulation) and LifeStart (for optimal cord clamping). Additionally, in the UK we complement these with a range of Distributed products including ventilators, incubators and a range of consumable products. In adult intensive care we have helped pioneer extra-corporeal ventilation as well as making available other more novel ventilation products.

› Operating Theatre: We are currently in the process of re-developing the entire product range to bring it up to date and in line with the latest needs for surgical practices. We see this as an area with great potential. We complement these products in the UK and Ireland with jet ventilators, cardiac surgery perfusion products and pain management systems.

› Home Healthcare: This is an important area for our business and allows us to gain different expertise working alongside the companies that help support NHS patients in the community. Our mainstay in this area is products for parenteral feeding although we also supply products that are used in other non-critical care areas of the hospital. Last year the Inditherm Industrial business was included in the Home Healthcare sector (2017 revenue: £0.1 million). As mentioned previously the Industrial business was discontinued at the end of last year.

Revenue Streams

Our business model includes revenue streams from the sale of capital items and consumables as well as from Technical Support. Both consumable and Technical Support are recurring albeit not necessarily contractual. Each of our market sectors described above has an element of all three different revenue streams. 64% of our revenue in 2018 was recurring. Our business is less reliant on capital budgets in health systems around the world which come under increasing pressure during economic downturns or uncertain times. Our growth is enhanced by introducing new and innovative capital products which in turn generate further revenue from spares and after-market support. In particular, our product range includes:

› Capital Equipment: Typically, a piece of capital equipment will cost in excess of £1,000 and used in a hospital for more than 2 years. It would be used on many patients during that time with appropriate cleaning and disinfection between use, as well as planned preventative maintenance. Our capital range includes our own brand of the Tecotherm, Alpha Patient Warming Systems, Unique CFM and LifeStart. These products are complemented in the UK and Ireland by a range of Distributed products including ventilators and infusion pumps.

› Consumable Medical Devices: Consumable products are designed for single use by one patient. Sometimes they can stay with a patient for a few minutes, sometimes longer than a week, but are never used from patient to patient and are not reprocessed. Our own range of consumables is headlined by the Inspire range (both nCPAP and rPAP). We distribute a range of other neonatal consumables as well as disposables that link directly to our capital range. This is most obvious in the Micrel parenteral feeding range where a new consumable is needed every time the patient uses the pump.

› Technical Support: A range of service options from planned preventative maintenance, to ad hoc repairs along with the selling of spare parts and training courses.

Country of Incorporation

The Company (Company number 03587944) was incorporated on 25 June 1998 in England and Wales under the name of PJO Industrial (Inditherm) Limited.  It changed its name to PJO (Inditherm) Limited on 30 July 1998 and to Inditherm plc upon admission to AIM on 7 December 2001. 

Following a reverse takeover by Inspiration Healthcare Limited, completed on 24 June 2015, Inditherm plc changed its name to Inspiration Healthcare Group plc and was re-admitted  to AIM.

Main Country of Operations

Inspiration Healthcare Group plc’s main country of operation is the United Kingdom.

Other Exchanges

Inspiration Healthcare Group plc is traded on the AIM market and no securities are listed on any other Exchanges.

FOR MORE INFORMATION
CALL US NOW ON +44(0)1455 840 555
OR EMAIL INFO@INSPIRATION-HEALTHCARE.COM

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