Proteome Systems to cut staff, costs in bid to toughen up

Sydney's Proteome Systems (ASX:PXL) is slimming down and adopting a more muscular sales and marketing strategy for its proteomics technology suite in the northern hemisphere.

CEO Keith Williams said his company was looking to cut operating costs by 30 per cent, saving AUD$6 million a year, by shedding a number of staff through retrenchment and natural attrition, and will reduce space in both its Sydney and Boston establishments.

John Martin, Williams' longtime deputy, will step down from his role as Proteome's executive director, remaining with the company as a non-executive director and consultant until at least the end of fiscal 2005.

Williams said that while it did not want to neglect the US market, Proteome was looking at other markets. He said Japan's biotech industry was stirring as the country's economy emerged from the doldrums, prospects were similarly bright in South Korea, and both China and India are emerging as future markets for Proteome's products.

Most of the cutbacks will be in manufacturing. "We're being very careful to ensure we keep our skills base very high and ensure our capacity to deliver products," Williams said.

He said the company had tried hard over the past two years to complete all development, testing and approvals for the commercial release of its proteomics technology products. The challenge now was to differentiate Proteome's technology from others in the marketplace, he said.

Williams said Proteome's Japanese partner, Shimadzu, had an extensive marketing network in Japan, which provided an excellent base for selling Proteome's products.

"However, our technology is very problems-focused, not black-box technology. Everyone knows about HPLC -- you buy the box and use it. We're going into the market with instruments that can solve very hard biological problems. We can add value to solutions, but to sell our systems, we need to get closer to our customers to explain what they can do with them," Williams said.

Proteome's chief scientist, Andrew Gooley, is to move to Japan to work with Shimadzu and Proteome's other Japanese partner, Itochu, on building local markets.

Williams said Shimadzu had just recorded its best six months in sales, as the Japanese economy recovered, and was very interested itself in broadening out from its focus on analytical instruments in proteomics. Proteome recently negotiated an agreement with Shimadzu to jointly market Proteome's award-winning chemical inkjet printer system for chip-based proteomics in the US.

Waiting for delivery

"With genomics, the delivery has not matched the promise. People are now waiting for proteomics to deliver," Williams said. "Our own discovery operation has produced some remarkable finds. Customers are now less interested in the technology than in what it can do. It's a powerful thing to have the technology and discovery intertwined at this early stage of proteomics development.

"If our beta sites can get people excited about what they can do with our technology, it should bring in the customers."

Proteome has recently negotiated an agreement in Korea under which Shimadzu's part-owned Korean partner Dongil Shimadzu acquired the right to market Proteome's IsoelectrIQ and ElectrophoretIQ systems.

"We are paying attention to other markets, and have consultants who know particular markets very well advising us on who we should be partnering with, and where the opportunities are," Williams said.

The company has appointed two consultants with extensive networks of corporate and R&D institutions in Germany and Korea, to help with marketing in those countries, and will send one of its own expatriate Chinese staff to China to help develop the Chinese market.

"What's interesting about the Chinese market is that it's not yet very competitive, " Williams said. "We've concluded it's very ripe for our technology, and it will be well received."