This company’s high-value, small operations approach is a model for Canadian manufacturing

October 26, 2015 Financial Post

By Tony Wanless

In their early days, most companies are tiny, meaning they have to concentrate on sourcing business locally, or at least close by, to test their product or service. Going global is usually a dream way down the road.

Then there is Vancouver-based Vanrx Pharmasystems, which develops and produces advanced robotic manufacturing solutions for the global pharmaceutical industry. It aimed to be a global company right out of the gate.

Eight-year-old Vanrx provides pharmas in Europe, Asia and most recently North America with containers needed to store and transport today’s leading-edge, lifesaving medicines — biopharmaceuticals that are the result of global development of advanced treatments for diseases such as cancer.

Although it does not make the vials that hold the medicine, that’s mass production stuff, it uses ‘isolated robotics’ technology to ensure they are aseptic, or absolutely sterile, sealed, and able to be injected with vital medicines.

In that sense, Vanrx is the antithesis of the common perception of manufacturing operations — monstrous complexes with huge production lines staffed by armies of workers. Instead, it is nimble and dedicated to a single purpose, which is the sterilization of medicinal containers so they can be efficiently delivered to where they are needed.

This process is extremely high-value because the products it packages are very expensive, and are the result of years of biopharmaceutical research by large drug makers. And being a high-value service allows Vanrx to remain relatively small.

For its first six to seven years, the company had only a handful of employees. Today, with the addition of self-designed isolated robotics that have increased capacity, it still employs only a relatively small workforce of 50.

Vanrx’s business model could be the future for a battered Canadian manufacturing industry — small, strategic, and extremely focused on small-lot production of very high-value products or anything that requires careful building or handling and can command a high price. By way of illustration, a somewhat parallel sector would be the rise of craft operations such as craft breweries, which have sprouted up across Canada.

Vanrx CEO Chris Procyshyn, who has worked for pharmaceutical manufacturers in the U.S. and Canada, most recently with B.C. drugmaker QLT Inc., said Canadian companies can no longer depend on a rapidly fading traditional manufacturing base but have to be innovative to compete and survive.

“We concentrate on doing the difficult work — anyone can do the easy stuff, so we have to do the hard stuff,” Procyshyn said. “To establish advanced manufacturing, you have to look at the incumbents and see what they are scared of. When we started we aimed at combining the semiconductor and automotive principles into a different kind of system.”

Of course, creating the “hard stuff” didn’t come easy. Since 2007, Vanrx laboured to perfect its robotics systems while surviving on investor money and some jobbing for Asian manufacturers who recognized its operation efficiency and, hence, lower costs. While searching for big pharma clients, it also worked for producers of biosimilars, or generics, of blockbuster drugs coming off patent. Its main method of marketing was (and still is) Google ads.

But then one day it received a curious request from a South African environmental group that was trying to save rhinos from poaching by tranquilizing them and moving them to protected areas. The tough rhino hides were impervious to most tranquilization methods so the innovative group, which found Vanrx through a Google ad, wondered if the company could develop a better method of delivering the medicines. Vanrx did, and as a result had a client to showcase in marketing to other companies.

That was its inflection point, which led to its designing and creating robotic chambers that could inject pharmaceuticals into vials and set them up for shipping, all under extremely aseptic, or sterile, conditions. Today, its robotic cleaning, decontamination and sterilization chambers can handle cleaning, decontamination and sterilization of drugs, as well as freeze-drying them for shipment and storage.

“Last year was our breakout year” said Ross Gold, managing director of Vanrx. “Our standardization of sizes and materials requires fewer people and is less labour intensive, so our products cost less. The lower Canadian dollar also helps.”

Read the full article here: http://business.financialpost.com/entrepreneur/growth-strategies/this-companys-high-value-small-operations-approach-is-a-model-for-canadian-manufacturing?__lsa=dbe8-bbcc