With the company celebrating its 45th anniversary, Astec president Katsuhiro Sonoda explains the importance of the incubator product range, as it continues its cell culture research to benefit a wide range of fields including diagnosis, drug discovery, immunotherapy, regenerative medicine, and reproductive treatment.
Japanese companies are famous in the pharmaceutical sector for their research and development, both in new drugs and device manufacturing. When you look at companies such as Astellas Pharma they are creating new antibiotic-resistant drugs, which could be a big concern in years to come, and if we look at device makers such as Nipro, an Osaka-based firm they have a dominant market share for dialysis machines. As your company is involved in state-of-the-art lab equipment, could you give us your take on what distinguishes Japanese monozukuri when it comes to medical devices and drug development?
The companies you mentioned, both Nipro and Astellas Pharma are basically our customers, and we have worked with them on very fundamental research that we do. We work with companies such as the ones you mentioned to gather important fundamental data. The research is based on the idea of cell culture, and to give you a basic understanding of cell culture, it is the removal of cells from an animal or plant and their subsequent growth in a favorable artificial environment. Cell culture research is vitally important to a wide range of fields such as diagnosis, drug discovery, immunotherapy, regenerative medicine, and reproductive treatment.
Japan is now becoming famous worldwide for its aging population, 28% of Japanese people are already over the age of 65, and this is putting a lot of pressure on public finance systems. There is a growing need for the healthcare industry to make moves away from a treatment-based model towards a more preventative healthcare model. What business opportunities does this present for a company like yours in the years to come?
As a Japanese company, we are generally concerned about the fundamental issue of the aging population that our country has developed in the last several decades. However, from our business point of view, we don’t really see too much impact, especially from our overall scale. We are in the field of research for developments in cell culture and assisted reproductive technology (ART) as well as regenerative medicine, so from our point of view, our research doesn’t take us to actual operating hospitals. These changes in patient behavior and social issues, whilst worrying, haven’t really had a negative effect on the work we do at Astec.
COVID-19 had a big impact on the health care system worldwide and your company is creating products that cater to polymerase chain reaction (PCR) testing. One example is your GeneAtlas Thermal Cyclers, which can be used for PCR applications. Could you tell us more about these devices and the impact that your company is having in helping prevent the spread of COVID-19?
The current pandemic hasn’t caused any drastic effects on the company’s overall activities and sales performance. There was a small, temporary slowdown for a few months there when the pandemic first hit, but now we are seeing things settle back to normal and in fact, our activities are showing fantastic results. This isn’t only constrained to the domestic market too, as we see good results internationally as well. We do produce PCR testing equipment, as you mentioned our GeneAtlas Thermal Cyclers which are equipped with a large, easy-to-view 5.7-inch TFT LCD touch screen and we are proud to say they are the most precise, silent, and affordable thermal cyclers made in Japan. I would say that our devices are not nearly as complex as the real-time PCR testing devices, however, we feel we are filling a very valued niche in the PCR testing pyramid. Basically, we are creating the foundation on which those more complex devices can stand.
Another aspect is safety cabinets, and we are a manufacturer of safety cabinets, especially for PCR research test centers. Our advanced Biological Safety Cabinets have been designed with safety and efficiency in mind. User-friendly features and advanced control systems make these cabinets both versatile and reliable. We saw a good increase in the volume of safety cabinets we were selling during the pandemic.
If we look at the breakdown of your products, we can split them into your embryo culture products, bio-stations, timelapse incubation, and your life science equipment. Among all these different product divisions could you tell us which is your main focus and where you see the most growth potential in the future?
Our multi-medical device incubator has been and continues to be our main focus. It was introduced 23 years ago, and even to this day, it remains a very unique and one-of-a-kind product. We have created a multi-featured incubator enhanced to exceed all expectations with ease of use in mind. Our engineers have developed the EC6S-MD with new alterations including a zirconium dioxide ceramic O2 sensor, a long-life infra-red sensor, and the addition of lid heaters to create better temperature stability for the unit. Of course, throughout the 23-year history of this unit’s series, we have strived to constantly improve and iterate on the product in order to consistently introduce new and better features with each new model.
Through development, we have always tried to consider many aspects when designing a product that meets yet exceeds needs. The emphasis has been on cell culture itself, and we have studied long and hard the kind of cells our clients study, and the best way to preserve them. We want to take our customer’s points of view and try to think ahead of time.
When you consider what exactly a cell is, it is nature and life, and it is how we are all born. The results can change the future, and our vision is to shape a better future, one filled with joy and tranquility. We deeply rely on science to reach this goal. For the future, there are several devices that we are working on, however right now, as you know, there are quite a few issues with semiconductor production. For that reason, we wouldn’t want to comment too much on future devices in order to not fail on any promises made.
Our focus has always been on life sciences, and the SCA/SMA 30 DRS direct heat incubators have been designed to cater to all cultures. They were in fact developed based on the ideas and the feedback that customers have given us. We have implemented their hopes and needs into the production of our products, and we have made things that our customers could only dream of being possible. Customers have such a huge importance in our business, and we feel that it is vital to make meaningful connections with those customers in order to fully understand their needs. Sometimes they may ask for a product that a competitor has, or perhaps to take that product and make it better, and this is something that we can do because despite being a small company, we have over 45 years of proven experience making and developing things. Being small gives us the speed and reaction time necessary and combined with our willingness to listen and our 45 years of experience, I think we have a very sharp competitive edge and a unique characteristic in the industry.
It's clear that you try to provide user-friendly experiences and compact design equipment, this is evident in your complimentary software used on your devices. Of course, Japan is very famous for its process automation, however, when it comes to digital tools, Japan is 28th in the world in terms of digital competitiveness. Your software can capture images of embryo culture, thus providing real-time data and quality control. Can you tell us more about these tools and how they are helping create a more user-friendly and safer experience?
The realization process in Japan can be taken at quite a slow pace and most companies are very late to adopting new technological programs. Digitalization is very time-consuming for many Japanese companies. We understand that we need to implement digital transformation (DX) activities, but the two pieces of software you mentioned are not really DX for our own company.
ASTEC TrueChrome is used in autonomous incubators and is a high-speed focusing camera that provides sharp and clear images on your monitor without complexity. This built-in software offers both continuous and single-shot autofocus modes, and it also supports mouse wheel control fine-tuning. Data transfers up to 60 frames per second enables you to get clear images with ease. Moreover, this software offers various image parameter adjustments, and users can easily match the monitor image to the eyepiece view. All this enables our customers to see how the embryo actually develops over a period of 3-5 days, and the software helps them with movie-making functions that function like a timelapse, allowing careful monitoring of an embryo throughout development. The best way to put it is that this technology isn’t DX in terms of transforming an entire operation, but rather it has a very specific application for incubation systems. It is quite unique in that the monitoring system will check for problems, and should such a problem arise TrueChrome will notify you right away.
TrueChrome is unique in that we don’t actually make the shell and the camera itself, rather we have a company that makes all of that for us and they are based in Sweden. Our focus and our expertise on this product are on the software side. Lab Keeper is the accompanying software and LabKeeper automatically monitors the most important equipment in your laboratory. Again, this is a development that has evolved from the requests of the customers, and they wanted a way to monitor their equipment 24/7.
You mentioned you are working with a Swedish company and we know that your CCM-iBIS incubators and dry incubators have all been co-designed with other firms. You also have a sales agreement with NewRE in the United States. Could you tell us more about the role of co-creation in your BCP when it comes to product development and sales strategy?
There are several examples that you mentioned like the CCM-iBIS incubator, but there are so many more examples of co-research and co-development with other like-minded companies. We are currently working with one of Japan’s biggest printing companies and also Nipro, which you mentioned earlier, who are one of the biggest dialysis companies in Japan. The company used to be quite closed and seclusive, but I would say that nowadays we are open to the idea of co-creation and co-development. I think that these days we think more positively about these kinds of initiatives and see them as a way to best preserve our ideas and techniques on cell culture. We are now trying to take the initiative more, and try to go and approach companies that we feel we can do something meaningful with. Co-existence and co-research are really the way to go now to make significant discoveries.
The co-research with Nipro itself is very interesting, and we are conducting research and development to realize the practical use of patients' own bone marrow stem cells in the manufacture of cell function-affecting drugs.
What in particular are some of the unique aspects of your technology?
First, we can talk about our airflow system, which is used in humidity recovery in our incubators. Within all our incubators there are multiple chambers, and they require a set amount of airflow to enhance the humidity recovery within the chamber and thus avoid condensation which can be fatal to cell culture. Internal fans drive the airflow throughout the chamber very swiftly. It may lose some points on user-friendliness due to the complex nature of this technology. From the customer's point of view, they may see it as being easier to pull out a basic try of embryos but it is not, and our method is required to sustain the functional and preciseness of the cell culture.
Our chambers have this sort of thick wall, and it is really required because the chamber itself is kept at a constant level of around 98% humidity. The air is circulated continuously and that is how we prevent it from condensation. Take a product from Panasonic of a similar nature, they have bumps around the inside of the chamber, which while making the removal of the tray much easier and cleaning quicker, does not prevent condensation as ours does. Since there is no wall around the chamber, there is no circulation of air and it just doesn’t work as well as our system. While customers may feel a bit of inconvenience when using our product, I’m sure they will be much happier with the results of their cell cultures.
Your company has been overseas since 1995 when you established your global sales division, and since then you’ve gone on to establish locations in Korea, Shanghai, and the US. Moving forward do you foresee any new locations to expand your business internationally?
The company doesn’t have a particular strategy to go and penetrate one particular area because honestly speaking there are so many markets. We don’t have a specific target location at this current time.
There are many different reasons for us to have an overseas office or subsidiaries. In Korea we had a distributor there, but the distributor didn’t really work out well, and their business was in decline, so we stepped in to help them out and established that office under our name because we already had some customers in the area. We had to support them and in order to reach our customers in the area, we had to be there too.
We have some good customers in Japan, Shinjuku in particular, that were trying to open a hospital in China, I believe it was an ART hospital. It ended up not really working out well because there was a lot of difficulty with Chinese regulations. Despite not working out well we helped them to establish their hospital in Shanghai, and fortunately, we discovered some good distributors that we worked with in China. This distributor worked really well and we had a lot of customers, but this distributor in Shanghai was also selling some consumables like vitrification embryo freezing devices, which was a very good business for them. They wanted to focus on that aspect of their business so they actually gave our incubators away to many customers with the condition of using their own vitrification system as a package. They made money on this, however, the value of our incubators decreased, and we didn’t really make any money there. In the end, we had to let that distributor go.
I want to reiterate though that we really had some very good customers in China, and we had Chinese students on a program with Fukuoka University work with us for three years. We trained them and we sent them over to China and they started a company from scratch.
99% of all of our global business is based on the ART and IVF market. Even though we are trying to penetrate other markets such as life science, there are many big and major players all around the world, so it is very difficult for us to get into this segment. Those big companies are very price-oriented too and they have a lot of inventory established already. For Astec, we have only one factory which is here in Japan, and therefore it is very difficult to compete with companies that have locations across the world and established logistics networks. Price and lead time make this endeavor very hard but working in our favor is the nature of the IVF market itself. It’s considered a kind of premier market, and users are very conservative with what they use and change is something that they don’t particularly like, especially if they are already achieving good success rates.
When you think about those big players, like Panasonic for example, the market might actually be too small for them. They only really make sort of big box incubators, and the trend is to not use those kinds of products anymore, especially in IVF treatment. The culture is getting smaller and of course, more personalized, and I think that is how we’ve adjusted ourselves and differentiated from more conventional offerings. Our strategy has been to become smaller in scale, more niche, more customizable, and more specialized. This is how we have been able to remain flexible and ready to cater to the ever-changing needs of our customers.
Big companies as I mentioned are so difficult to take down in the life sciences markets, and I think that is because that market plays to their strengths. The same can be said about the IVF market for us, it plays to our ability to really cater to the needs of our users. Japan has always been known for its exceptional techniques and a lot of people from all across the world come here to learn and gain experience. Those students and professionals see our equipment in Japanese labs and when they return to their countries they ask who made that equipment, and of course, that is us. This is how we have spread around the world, and through the power of word of mouth, others contact us because they want to use our incubators. Local distributors help us to support those customers and get products out to them.
Your company is celebrating its 45th anniversary this year, so I would like you to imagine that we come back again in five years for your 50th anniversary and have this interview all over again. What are your dreams and goals for your company that you will hope to have achieved by then?
We recently established a new mid-term strategy for the next five years of the company, and of course, that includes sales projections and estimated targets. What is more important however is our goal of delivering peace of mind to all of our customers. We are referring to it as the Astec Potential Mid-Term Strategy Plan. Another goal is to be more transparent even within the company and to be more open toward each and every employee, every affiliate, and all those related to the company. We want the free flow of information inside and out so that we can all create a better sustainable company business for the future.
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