Small Business: NZ Innovators Awards - Quantec

Dr Rod Claycomb, co-founder and managing director of Quantec.

Small business editor Caitlin Sykes this week interviews a handful of small business owners involved in last year's NZ Innovators Awards about their innovations and bringing them to market.

Dr Rod Claycomb is the co-founder and managing director of Waikato-based biotechnology company Quantec, which was a finalist in the Innovation in Marketing and Communications category of last year's NZ Innovators Awards with its Epiology Skincare brand.

Can you tell me about your business and where Epiology Skincare fits in?

Our business is really in the game of capturing value from dairy, and we've got business activities in animal health and human health applications. The Epiology Skincare brand has come out of our discovery of an active ingredient in milk that we call IDP, which stands for immune defence proteins.

Basically it acts to selectively kill the bad bacteria on the skin and also reduces the redness and irritation caused by subsequent infection for those suffering from acne. And being a natural ingredient, it doesn't contain any of the harsh chemicals that are usually used on skin affected by conditions like acne, such as salicylic acid or benzoyl peroxide.

What stage are you at with that product in terms of commercialisation?

We've just passed our one year anniversary for launching it into New Zealand pharmacies, and we're now in over 70 per cent of pharmacies here. We think there are five key steps for successfully launching a product: the first is making sure it works in the lab and the second is getting the clinical studies done - that's where the technical challenges stop and the marketing challenges start.

The third is selling it into your channel, so in our case here that's pharmacies, the fourth is selling it out to the first customers, and the fifth is when you start getting repeat purchases in the channel. That's when you know you've made it, and that's the stage we're at now.

We also launched late last year in Mexico. We're doing a key opinion leader strategy there, promoting the product to dermatologists, and we're now seeing repeat purchases through that channel too, which is pretty exciting.

Why Mexico?

We had some existing business relationships in Mexico from when we were marketing IDP as an ingredient. But once we'd launched our finished Epiology product, they thought it would be better to source the finished product from New Zealand rather than just the ingredient. They liked the New Zealand story wrapped up in a finished product.

I think that's a good example of the value of keeping innovating from ingredient through to a product brand. New Zealand has a wealth of natural products, is a great marketer globally of high quality dairy products and New Zealand is well known for innovation, so it's been fantastic to tie that New Zealand story to this brand.

What have been some of the challenges of the innovation process?

It's hard sometimes to put a finger on innovation but to sum it up I'd say it's about being open minded. We have a team of good scientists that stay open minded when they're looking at what they're discovering, so they're not getting pigeonholed into a corner and thinking one dimensionally. With every hurdle we've come across we've had to think outside the box to find ways around it.

So for example, we've had technical hurdles like how to get a milk protein into a commercial formulation with none of the harsh chemicals typically found in skin creams, and in a way that was stable and functional for a couple of years on the shelf.

And from a marketing point of view there are so many skincare brands out there, so it's been a challenge to figure out how we get heard above all the noise and find our own place in the market.

But I have to say our biggest challenge through the years has been capital. Getting a product to market that's scientifically proven with good clinical data behind it isn't really cheap. As a small company starting up six years ago it was quite difficult figuring out how we were going to fund the whole thing so we got some investors on board to get us through the seed stages.

Now we've got some commercial success, our next step is launching a capital raising effort now we can see we can go global with the brand and that it will grow into other market opportunities.

As well as investment, what factors have helped you overcome some of those other challenges?

There are two organisations that have just been invaluable to us: Callaghan Innovation, which assisted in funding the technical challenges, and New Zealand Trade and Enterprise. We're a very small company with a team of four, and I think they're invaluable to small New Zealand companies who need to look substantial in offshore markets.