Addtech, Addlife, & Nordic Value-added Distribution | In Practise

Addtech, Addlife, & Nordic Value-added Distribution

Former CEO at Addtech Life Sciences

Why is this interview interesting?

  • History of Addtech and Addlife
  • Benefits of scale as a Nordic distributor
  • Potential consolidation between suppliers and buying groups in labtech
  • Why NI / WC is an important metric
  • M&A growth opportunities
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Executive Bio

Artur Aira

Former CEO at Addtech Life Sciences

The executive has over 25 years experience in the healthcare industry with 8 years within Addtech and Addlife. He is the Former CEO of Addtech’s Life Sciences business unit which was spun out in 2016 and became the labtech division of Addlife. Prior to Addtech, he ran bioMerieux in the Nordics and led the lab business globally. He enjoyed 2 years as Executive VP at Addlife and has conducted over 25 acquisitions within the Addtech ecosystem.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Artur, can you explain a little bit about Addtech’s history?

I used to work for Addtech and it is a very interesting company that originally came from a group called Bergman & Beving, in 1906. Over the years, the two gentlemen, Bergman and Beving, developed a good way of acquiring companies but, instead of centralizing, they kept the companies decentralized. By doing that, they saw that it was much easier to integrate companies as well as keeping the entrepreneurial spirit, so it was a very good business model.

In 1976, the company went on the Stock Exchange in Stockholm and it grew very rapidly. By the year 2000, the group was too big and they decided to split it up and they formed three different companies. One was Addtech, the other one was Lagercrantz and the third one was B&B Tools.

Addtech’s journey started at that time and, by the year 2016, the decision was made to split it again and take out the life science part of Addtech and that became a new company called AddLife, that was also listed in April 2016.

Are there really any synergies between those different business units within Addtech, like components, energy and life sciences?

The key business idea of having a decentralized business model is to have a business toolbox, with tools that the different companies in the group can use. For example, you could have access to ERP or CRM systems or CSRs for sustainability. You could have ISO certification regulations. There are a lot of things that could be shared and you don’t need to invent them twice. That is a very good synergy and a very good way of sharing those kind of resources which means that the companies can focus more on the commercial operations.

Other ways of getting synergies are, of course, to have a geographic setup, in the same way. That also means that you could, potentially, utilize the different companies or offices that you have, in different countries, without the need to set up your own offices.

You can also get synergies from technical services. You can get synergies from using the same kind of banks or consultants. Additionally, you can get synergies with training, such as sales or leadership training. There are a number of synergies that you can get from a setup, even though the different business areas may not really have a direct synergy with each other because you are working with different customer segments.

But, for example, labtech and medtech seem to have different customers and even suppliers, a lot of the time?

Maybe that’s a little bit different because labtech and medtech are within the life sciences, where you can share, for example, technical services. Instead of having four different service organizations, you could have one. You could also utilize the portfolio that you have in the different companies, in order to differentiate yourself in the tender process, because you could then maybe offer some products as a bundle, for example. There are some synergies that you can utilize, especially with public tenders.

Who are the two families that have most of the voting and control in Addtech? Is it the original founders and their families?

It’s a public company. For these groups, when it’s time to do some acquisitions, of course, you can create new shares and this is actually something that has been done in the past.

I think it’s Tom Hedelius and Anders Börjesson that own 30% of the total voting control, as a pair; 15% each. Is that part of the original founding family?

Actually, no, but they have been there from a very early stage. I think, probably, since the company was listed in 1976, so they have been in the company for many years. There is a very long legacy because their families are also part of the board in some of the companies. But they are not related to Bergman and Beving.

So they set the culture and influence how the businesses are run?

Yes; they have a very broad industrial experience. Tom Hedelius was the general manager of one of the biggest banks in Sweden, Handelsbanken. They have a long trajectory of expertise, when it comes to business and industrial development.

How do you compare the life sciences division at Addtech, which is now Addlife, to competitors in the Nordics?

First of all, if you take the Nordics, you take Scandinavia and you add Finland, and suddenly it becomes the Nordics. In Norway, Sweden and Denmark, we speak Scandinavian and Finnish is a very different language; that’s why we called it Nordics, when we include Finnish. There is also a tendency to also include the Baltic countries because, historically, they seem to belong more to the Nordic culture, when it comes to values. Very often, they care more about the references that you have in the Nordics. For example, when you are speaking with key opinion leaders or when you are talking about having references in the hospitals, they care more about the Nordics than, for example, look at what they have in Poland or Russia and so on. It’s very natural that when we say the Nordics, we also include the Baltics, so three more countries. Of course, Iceland as well, but it was always quite given that it is also included in the Nordics.

You therefore have 26 to 28 million people. You have different languages so for companies coming from outside, if they are going to be able to establish themselves in a region like that, I think it’s very complex. You need to have a critical mass; you need to have the countries if you are going to be successful, because you also need to translate, for example, the manuals and so on. In some cases, you need to answer in the local languages. It is quite complicated to establish that business if you do not already have a Nordic setup or a Nordic organization.

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Addtech, Addlife, & Nordic Value-added Distribution

June 19, 2021

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