Gergely Domonkos Horváth, Chief Executive Officer
The products of the company, which manufactures medical instruments, including haematology analysers, can provide comprehensive haemogram data from a single drop of blood. A common feature of Norma’s machines is that they are 70% smaller, lighter and consume less chemicals than most machines in their category, says Domonkos Gergely Horváth, CEO of Norma Instruments Zrt. The Icon range offers devices weighing between 8 and 9 kilograms, compared to an average of 30 kilograms offered by competitors.
The machines are developed, manufactured and distributed by Norma. On the production side, this mainly means the assembly of the parts after they have been manufactured according to Norma’s designs and the software has been installed on the machines, as well as the “tuning” and quality control of the machines. In addition to its own network of distributors in nearly 70 countries, Norma sells its products through four PLM (Private Label Manufacturer) companies that market the Icon range under their own name and logo.
The company was founded in 2012 by Gábor Kollányi, Gábor Lengyel and Tamás Ladoméry, who had already built up a company producing haematology analysers and, five years after its sale, decided to repeat their earlier success. They saw that the financial investor that bought their former company was focused on selling its existing products to maximise profits, and saw an opportunity to create an innovative, small haematology instrument that was new to the market and used microfluidic solutions.
In building the company, they relied mainly on their former colleagues, and launched their first product quite soon, in the second year after the company was founded. Development continued unabated, and the company launched a new product almost every year. At that time, the company focused exclusively on development, with less attention and resources devoted to technology and manufacturing. This contributed to both an increase in the number of complaints and the loss of some customers, but by 2020 the situation had been stabilised and the year ended with a profit.
The success of their development activities is proved by the fact that they have won Hungarian, German and Austrian innovation awards over the years, including the Red Dot Design Award, which is considered the Oscar of design.
The continuous losses also brought changes in the ownership structure of the company: first DBH, then Árpád Gyetvai, Chief Quality Officer, and Gergely Domonkos Horváth, the current CEO, were among the financing owners, and later Csaba Lantos joined through Futurmed. In the meantime, Gábor Lengyel, the former Chief Sales Officer, and Tamás Ladoméry, who was CEO until 2018, left. The company raised around HUF 3 billion in capital from its owners in the first seven years of its operation, and 2020 was its first profitable year (HUF 36 billion). It is important to note that advanced regulation (ISO 13485) and registration requirements in this industry mean that bringing products to market is a longer process. After two to three years of development, the first revenues from sales could only come another two to three years afterwards.
As they say, every crisis is an opportunity, and the pandemic was no exception. Norma’s strategy during the pandemic was to flee ahead: they accelerated their development and even increased their workforce. During the most dangerous periods, they organised car pooling for their employees and tested them regularly to reduce the risk of getting sick.
Despite significantly lower than expected sales, several new projects, mostly research and development projects, were launched, partly with grant money. As such, the CEO envisages that external human resources may need to be introduced in the future to increase capacity, in addition to the fact that almost a third of their staff (21) are involved in this.
As Norma produces almost exclusively for export, it was particularly exposed to the effects of the pandemic, with important markets such as Peru, India and Brazil completely closed and European trade set back by the ban on medical visits. They have to bear the export risk themselves, as their distributors sell most of their machines through personal networks.
Competition on the world market is fierce, and the pandemic has led to a build-up of large stocks on the market, which has pushed prices down following the downturn. Chinese competition is particularly strong, partly due to suppressed domestic settlement prices and state export subsidies. Many customers who previously paid in advance now ask for deferred payment or longer payment terms, while suppliers do not always offer this discount.
Norma expects significant growth from its ongoing developments and the market introduction of new devices for human and veterinary use, in particular for reticulocyte counting. It is a realistic goal to increase current production three or four-fold in five years with a contract with a major PLM partner in the veterinary market.
According to Domonkos Gergely Horváth, who has been CEO of the company for three years, the most difficult period was the first year and a half, when there was over 50% employee turnover in the course of building the current dynamic team. “If you don’t remove those who are doing badly then sooner or later those who are doing well will leave because they’ll lose motivation”, he says.
As for the future, the CEO does not rule out the possibility of raising capital in a few years to finance new developments or to reduce their exposure to the founders, but collaboration with other players in the global market is also a possibility.