Continuing with its Asian growth plans, Australia-based contract research organization (CRO) Novotech is expanding its operations to include four more Asian countries: Malaysia, Singapore, Thailand and Philippines.
Novotech has about 130 employees working in its offices in Australia, New Zealand, South Korea and India. Most of its staff work in Australia. The company plans to add 25 employees who will work in the four new countries by the end of 2010. “The way we decided to go forward was to set up a local management hub out of Kuala Lumpur, Malaysia, and from there to then manage the neighboring countries,” said Alek Safarian, CEO of Novotech.
The company expects to make its first hires to work in the Kuala Lumpur office this month and anticipates that most of the 25 new employees to be added in the next year will work in that office. The Kuala Lumpur office will house business services, information technology, finance functions and management. Initially, the offices in Singapore, Thailand and Philippines will have study monitors, and then project management and possibly data management staff will be added to the Singapore office.
Though most companies in the clinical research industry, as well as other industries, establish hubs in either Singapore or Hong Kong, Novotech chose Kuala Lumpur.
“For us, the reason we went with Malaysia was it’s a larger country in terms of population. It is very close to Singapore—the flight time is about 30 minutes between KL and Singapore, so it’s a lot closer than many Australian cities are to each other. Also, there is a good level of government support, as I believe there is in Singapore. The cost of doing business is definitely an advantage in Malaysia over Singapore. But all in all, the important thing for us was to have a local hub rather than manage all the day-to-day operations from Sydney, so we could have easily gone also with Singapore or with Bangkok, but in the end we thought KL had that little bit extra,” Safarian said.
Safarian is continuing with Novotech’s Asian expansion plans because of the noticeable shift in the number of trials he saw coming to Asia-Pacific. During the first nine months of Novotech’s last fiscal year, which ran from July 2008 to June 2009, the CRO was awarded 23 new phase II and III clinical trials to be conducted in the Asia-Pacific region.
“Basically, in the nine months to March, we had seen a massive uptick in the historical averages for business coming to Australia and into the region,” Safarian said. “There was this shift to Asia-Pacific…and, as we start to come out of the recession, our belief is that those companies that have made that shift will by and large stay, because once they see the quality and the benefits, etc. We think there will be a permanent shift.”
Novotech has about 70 active projects and 50 to 60 clients. The company plans to continue its focus on Asia for the next three to five years.
“The market is certainly looking favorably at the region, and we believe it’s going to grow, so it’s a logical direction to go. Our plan is to be fully and firmly focused on Asia-Pacific. We think we’ll have a lot of work ahead of us to do the business plan justice. In terms of any future plans, I see us being fully focused on these latest four countries as well as building on the ones we’re already in, at least to the end of 2010, early 2011. Then, at that time, we’ll obviously come to a fresh review of where we’re at and where we’re going. But, the likelihood is any further expansion will also be in Asia in additional countries,” Safarian said.
One Asian country where Novotech does not have any near term plans to expand is China.
“We couldn’t put China in amongst the countries we’ve just made an announcement about because of the amount of effort it would take and the amount of uniqueness it has and the resources it would take, etc. As for when we do anything in China, that would need to be a standalone project in its own right. Right now, we don’t think we’re ready. But, in a couple years’ time, that might change,” Safarian said.