Posted: 2015-03-18 in Press Releases
A fast-growing Adelaide company taking on GE in the portable ultrasound market is pleading for more tax breaks to help drive high-tech manufacturing, illustrating the challenge for a Coalition government that wants to grow business and cut business assistance.
Signostics has a five-year contract with Japanese conglomerate Konica Minolta as part of a global distribution deal. It says the federal government needs to do more to encourage a more entrepreneurial culture in Australia and the best way to do it is through upfront tax breaks for investors.
Chief operating officer and co-founder Stewart Bartlett said upfront tax breaks would attract more investors into riskier projects as Australia tries to expand to more hi-tech, specialist manufacturing as the resources boom fades.
Mr Bartlett criticised the government for shutting down the Commercialisation Australia funding program which was administered by AusIndustry and which helped Signostics get on its way. Signostics launched the first version of its hand-held device in 2009.
"We wouldn't be where we are today without them," he said.
The government scrapped eight industry assistance bodies and organisations in last year's budget to save $846 million over five years and replaced them with a smaller Entrepreneurs' Infrastructure Program, which will cost $484 million over the same period. It has limited tax breaks for big companies that spend over $100 million on research and development.
Signostics is an unlisted public company with 88 shareholders and employs about 15 people in the southern Adelaide suburb of Tonsley Park. It also uses other subcontractors in Melbourne and Adelaide to make the devices.
AIMING FOR MASS ADOPTION
Mr Bartlett said the company last year sold about 1000 of the portable ultrasound devices and exports to 10 countries including the United States, Canada, Japan and Singapore. The devices are used at Sydney's Royal North Shore Hospital and are increasingly popular in rural areas where doctors don't have access to immediate specialist help and equipment.
"Our No. 1 market would be rural health," Mr Bartlett says.
Mr Bartlett's brother Neil is a doctor and one of the co-founders. The company is chaired by David Keogh, a former director at stockbrokers Bell Potter, and prior to that a partner at Southern Cross Equities. Mr Bartlett says Signostics may look at a listing on the Australian Securities Exchange in 12 to 18 months because some of the investors will be looking for "a liquidity event".
The main competitor to Signostics is the United States giant GE. The devices usually sell for between $8000 to $9000 and Mr Bartlett concedes the price will need to come down across the industry to precipitate a mass adoption by the market. Some of the market surveys being done by the company indicate that if the price halved, the technology would become more widespread.
"Mass adoption hasn't occurred yet," he said. This is a similar pattern to other industries, in which economics comes into early buying decisions after new technological advances.
But there is an acceptance in the medical fraternity that the hand-held, portable ultrasound device is a plus for health professionals as an important tool to help with accurate, on-the-spot diagnoses.
Around 80 per cent of the company's sales are generated through the Konica Minolta distribution arrangement, and the rest from direct orders to doctors and hospitals.
Signostics expects to sell around 1500 of the devices in 2014-15 and is heading for annual revenues of $5 million.
The sharp fall in the Australia dollar since late 2014 has been a big plus for the company because of its export focus.
"The Australian dollar change has been really useful for us," Mr Bartlett says.