Annual Report and Accounts 2006 - Optos

practitioner in maximising patient
Operational and Financial Review
15%
adoption rates of the optomap®
continued Retinal Exam. Developing a closer
working relationship with National
Health Service (“NHS”) bodies
continues to form part of our
approach to the UK market and,
during the year, development work
was undertaken within the Primary
Care Trust (“PCT”) network. Our aim
is to assist in establishing Primary Eye
Care Centres for triaging and patient
management.
The commercial and operational
teams have been strengthened to
provide us with an improved market
focus, and streamlined decisionmaking
for growing our installed
base and integrating the optomap®
Retinal Exam into both our existing
and prospective customer practices.
We reorganised the structure of our
US organisation into two separate
east and west geographic regions.
These are now led respectively by
a Vice-President and supported by
Regional Sales and Clinical Managers
tasked with maximising the sales and
clinical effectiveness throughout each
region. We opened a new Distribution
and Service Centre (“DSC”) close to our
Marlborough, Massachusetts office
during the year. This facility provides
the space, capability and capacity to
support the continued expansion of
our business in North America.
Europe
Revenues in Europe grew by 24%
to $3.0 million, with $2.3 million
generated by our UK business
and $0.7 million in Germany. The
European marketplace has very
different characteristics than its North
American counterpart. In the UK, the
vast majority of eye examinations
are carried out in a retail setting
by ophthalmic opticians who tend
to focus heavily on retail sales and
refraction rather than on preventative
care. Accordingly, we have estimated
that there is a smaller addressable
market of approximately 400 practices.
The market in Germany is comprised
entirely of ophthalmologists operating
in private practice, who carry out
primary as well as secondary care. We
estimate that the addressable market
in Germany stands at approximately
2,500 practices. Our total installed base
in Europe at the close of the financial
year was 118, up by 40% from 84 at the
same time last year, representing over
3% penetration of the addressable
market.
In the UK, our focus is on contracting
with and retaining top-tier optician
practices, and, during the year,
our activities were geared to this
defined customer segment. The
optomap® Retinal Exam is marketed
and recommended to all patients
as a health-screening examination
requiring patient payment at the
point of service. We improved our
penetration rate during the year, with
our installed base growing by 15% to
77, up from 67 at the same time last
year. We continued to participate in
continuing education conferences,
and during the year, developed and
offered a clinical conference series,
held in four locations throughout the
UK (London, Glasgow, Birmingham
and Manchester), with a focus on
acquiring new customers. In our
existing customer base, we provided
ongoing clinical, educational and
marketing resources, as well as
technical assistance to support the
“At the time of our initial public
offering, we identified France,
Spain and Japan as holding
favourable fundamentals for
geographic expansion. ”
Laser sources for the
P200 MA device
In Germany, we entered our second
full year of operation and we made
good progress in establishing Optos
as a known and credible provider
in the eye and health care market.
We installed 24 P200 devices during
the year, bringing the total installed
base to 41, an increase of 141% over
the previous year. A key operating
objective during the year was to
strengthen our infrastructure. To
this end, we opened an office in
Mannheim and recruited staff with
established contacts in the German
ophthalmic market. We now have in
place a resident Managing Director
who is responsible for the day-to-day
operation in Germany, and additional
sales and service-focused personnel
who have the know-how to deliver
on our aggressive objectives in this
market.
Our sales and marketing efforts also
grew in quantity and quality during
the year. We had an effective presence
at the three major national exhibitions:
Deutsche Ophthalmologische
Gesellschaft (“DOG”), Kongress der
Deutschen Ophthalmochirurgen
(“DOC”), and Augenärztliche
Akademie Deutschland (“AAD”). We
also participated in joint Optospharmaceutical
marketing events and
initiated a local doctor-led customer
awareness series, aimed at increasing
awareness of our P200 device and
the benefits of the optomap® Retinal
Exam. Satisfied customers are an
excellent source for referrals and new
customer leads. To ensure we continue
to be responsive to the needs of our
customers, we conducted our first
User Meeting and launched a quarterly
communications programme where
doctors receive a range of materials,
including German patient marketing
collateral, recent clinical research from
our German research site – Ludwig-
Maximilians-Universitätj (“LMU”) – and
a broad range of templates to assist in
their individual efforts to integrate the
optomap® Retinal Exam deeper into
their practice. Penetration in Germany
stood at 2% of the addressable market
at the close of the financial year, up
from less than 1% at the same time
last year.
Increase in installed bases in the UK.
A total of 77, up from 67 at the same
time last year.
141%
Increase in installed bases in Germany.
A total of 41, up from 17 at the same
time last year.
During the year, we designed,
commissioned and built our European
Service Centre to support our
expansion plans in Europe in both our
existing and targeted new markets.
This facility provides additional
manufacturing and distribution
capacity. We now manufacture
three modules of our P200 device
and provide distribution facilities to
mainland Europe and the UK. This has
enabled our manufacturing team to
make significant progress in improving
the quality of our output. We have
brought in-house the manufacture
of assemblies, which was previously
outsourced, resulting in reduced costs
and improved reliability.
We have also taken the opportunity
of training the Technical Operations
team in continuous improvement,
workplace organisation and lean
manufacturing techniques to support
the continuing development of our
capabilities. Our expanded materials
control team have established the
processes supporting expansion into
Europe. These new processes have
also driven up inventory accuracy
and have had a positive effect on
the quality of our planning and
schedule adherence in shipping to
our customers.
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Optos plc Annual Report & Accounts 2006