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Any Chinese who desire high-quality infant for- mula and complementary products should be delighted by the increasing presence of Sphere Healthcare Pty Ltd （Sphere） in China. Even if you are not quite familiar with this Australian company， just look at the descriptions below， and you might believe what we are saying.
As a company fully licensed by Australia’s Therapeutic Goods Administration （TGA）， Sphere is ONE of the only THREE top-tier Complementary Healthcare manufacturers in Australia， ONE of the only TWO top-tier contract manufacturers in Australia， and the ONLY manufacturer to be exporting milk powder and infant formula manufactured in a TGA licensed facility.
But of course Sphere is more than these numbers. The list of its products covers soft gel capsules， hard capsules， tablets， powders， liquids and creams， infant formula and so on. In the FY 2013 （July 2012-June 2013）， Sphere’s annual turnover was Aus$60 million， up 27% compared with the previous financial year – when the Australian and global economy had not yet recovered from the financial crisis， such an amazing increase is definitely worthy of applause and praise.
Then， what has made Sphere’s business increase so dramatically？ As its managing director Paul Riley revealed， while the Australian domestic market presents strong growth opportunities， Sphere is well positioned in terms of both supply agreements， new relationships and production capacity to sup- ply TGA licensed complementary healthcare products and infant formula to the growing Chinese and other Asian markets.
Yes， the overseas market， especially the Chinese market， has played an important role in the development of Sphere. The company is also deeply attracted to this grand market， trying to capture the dramatic growth driven by the increasing demand of China’s booming demand for complementary products and infant formula.
The more attention Chinese people pay to their own wellbeing， the better understanding of complementary products in China， the gradual relaxation of the “one child” policy after the third plenum of China’s CPC Congress， and the Chinese consumers’ distrust of domestic-made milk powder due to the “melamine” scandal and other crises all mean great opportunities for Sphere.
Actually， Sphere has already seen the benefits from China. The story between Sphere and China started in August 2012 when the company began to export the infant formula to China. Now China can contribute 10% of its total turnover， as Mr. Riley told China Business Focus （CBF）. The development was fast， but Sphere has a bigger ambition. “We are going to increase the proportion of turnover in China from 10% to 25% in the next twelve months，” Mr. Riley said.
It is not an easy goal to complete， but Sphere has the confidence to make it happen. The big Chinese market is one thing， and more importantly， Sphere’s own qualities are the keys to its success.
“We have invested significantly in developing China based partners for distribution of both infant formula and complementary healthcare products. As a result， we are confident of being able to capture the unique opportunity as the only TGA certified manufacturer to be exporting to China，” Mr. Riley said.
This revealed Sphere’s qualities： its high-quality products and special identity as a contract manufacturer.
In Mr. Riley’s opinion， “produced in Australia” and“TGA-licensed” are one of the greatest advantages of Sphere.“The price （of the products） might be a bit high， but for the security issues， we have got the need to leverage of the Australian name to bring products into China，” he said.
It has invested massively to ensure the quality of its products. Since founded eight years ago， Sphere has over 7，800 formulations and 699 Standard Operating Procedures. Its unique and specialized manufacturing process turned it into a leading soft gel manufacturer； its krill oil has proven to be very popular in Australia； and it has developed infant formula exclusively for the Chinese consumers…
In addition， Sphere， which is a contract manufacturer， does not have its own brands of products. It is a supplier of products to those companies with brands. That differentiates Sphere from Mead Johnson， Abbott and Blackmores， which are not Sphere’s competitors， but its potential customers.
“As a manufacturer， we cannot compete with our customers，” Mr. Riley said. “Our job is to manufacture and provide our customers with quality products”.
Therefore， finding “customers” – Sphere prefers the term“partners” – is a necessary step for Sphere in China. According to Mr. Riley， Sphere has produced and is producing milk powders for eight customers， all of which are Chinese.
“Sphere supports customers to grow up. We partner with our customers and we work on the product development with them，” he added. “We work to ensure that， by the development of marketing concept with them， our products could meet the marketing requirements. That’s how we do business. We are not transactional； we are partners.” In spite of these blessings， Sphere is not free of problems in China. The “Blue Hat”， which refers to the mandatory requirements for the logo and standards of healthcare products in China， might be a problem for Sphere’s sector of complementary products. For this， Sphere still thinks the opportunity is very large and the customers will actually be able to comply with the new regulations they find for the products.
“We have a team of technical experts on staff who are working with our customers to ensure that we meet all of the requirements to ensure that a Blue Hat registration can be achieved for their brands. This is part of the ‘value add’ that Sphere provides our customers and we anticipate that these customers will stay with us over the longer term. These customers want to be able to import Australian made product from a TGA licensed facility in China to differentiate them in the market，” Mr. Riley said.
As for the infant formula， Mr. Riley thought that the fake product， which is termed as “Shan Zhai” in China， might be an issue. In order to protect the interest of its own and its customers’， Sphere has introduced some security systems for its infant formula. For example， each tin of milk powder has an iron tag that seals the top of the tin. The iron tag is traceable and unique， which can connect to Sphere’s system for the batch and lot number of the product. Once the tag is broken， the tin cannot be used any more.
These problems could not stop Sphere from developing in China. It has decided to establish a representative office in Shanghai in 2014 for the “better cooperation with Chinese sponsors” in the future. It also caps off an 18 month program of investment and restructuring to meet increasing demand in both domestic and offshore markets， particularly China.
As a company fully licensed by Australia’s Therapeutic Goods Administration （TGA）， Sphere is ONE of the only THREE top-tier Complementary Healthcare manufacturers in Australia， ONE of the only TWO top-tier contract manufacturers in Australia， and the ONLY manufacturer to be exporting milk powder and infant formula manufactured in a TGA licensed facility.
But of course Sphere is more than these numbers. The list of its products covers soft gel capsules， hard capsules， tablets， powders， liquids and creams， infant formula and so on. In the FY 2013 （July 2012-June 2013）， Sphere’s annual turnover was Aus$60 million， up 27% compared with the previous financial year – when the Australian and global economy had not yet recovered from the financial crisis， such an amazing increase is definitely worthy of applause and praise.
Then， what has made Sphere’s business increase so dramatically？ As its managing director Paul Riley revealed， while the Australian domestic market presents strong growth opportunities， Sphere is well positioned in terms of both supply agreements， new relationships and production capacity to sup- ply TGA licensed complementary healthcare products and infant formula to the growing Chinese and other Asian markets.
Yes， the overseas market， especially the Chinese market， has played an important role in the development of Sphere. The company is also deeply attracted to this grand market， trying to capture the dramatic growth driven by the increasing demand of China’s booming demand for complementary products and infant formula.
The more attention Chinese people pay to their own wellbeing， the better understanding of complementary products in China， the gradual relaxation of the “one child” policy after the third plenum of China’s CPC Congress， and the Chinese consumers’ distrust of domestic-made milk powder due to the “melamine” scandal and other crises all mean great opportunities for Sphere.
Actually， Sphere has already seen the benefits from China. The story between Sphere and China started in August 2012 when the company began to export the infant formula to China. Now China can contribute 10% of its total turnover， as Mr. Riley told China Business Focus （CBF）. The development was fast， but Sphere has a bigger ambition. “We are going to increase the proportion of turnover in China from 10% to 25% in the next twelve months，” Mr. Riley said.
It is not an easy goal to complete， but Sphere has the confidence to make it happen. The big Chinese market is one thing， and more importantly， Sphere’s own qualities are the keys to its success.
“We have invested significantly in developing China based partners for distribution of both infant formula and complementary healthcare products. As a result， we are confident of being able to capture the unique opportunity as the only TGA certified manufacturer to be exporting to China，” Mr. Riley said.
This revealed Sphere’s qualities： its high-quality products and special identity as a contract manufacturer.
In Mr. Riley’s opinion， “produced in Australia” and“TGA-licensed” are one of the greatest advantages of Sphere.“The price （of the products） might be a bit high， but for the security issues， we have got the need to leverage of the Australian name to bring products into China，” he said.
It has invested massively to ensure the quality of its products. Since founded eight years ago， Sphere has over 7，800 formulations and 699 Standard Operating Procedures. Its unique and specialized manufacturing process turned it into a leading soft gel manufacturer； its krill oil has proven to be very popular in Australia； and it has developed infant formula exclusively for the Chinese consumers…
In addition， Sphere， which is a contract manufacturer， does not have its own brands of products. It is a supplier of products to those companies with brands. That differentiates Sphere from Mead Johnson， Abbott and Blackmores， which are not Sphere’s competitors， but its potential customers.
“As a manufacturer， we cannot compete with our customers，” Mr. Riley said. “Our job is to manufacture and provide our customers with quality products”.
Therefore， finding “customers” – Sphere prefers the term“partners” – is a necessary step for Sphere in China. According to Mr. Riley， Sphere has produced and is producing milk powders for eight customers， all of which are Chinese.
“Sphere supports customers to grow up. We partner with our customers and we work on the product development with them，” he added. “We work to ensure that， by the development of marketing concept with them， our products could meet the marketing requirements. That’s how we do business. We are not transactional； we are partners.” In spite of these blessings， Sphere is not free of problems in China. The “Blue Hat”， which refers to the mandatory requirements for the logo and standards of healthcare products in China， might be a problem for Sphere’s sector of complementary products. For this， Sphere still thinks the opportunity is very large and the customers will actually be able to comply with the new regulations they find for the products.
“We have a team of technical experts on staff who are working with our customers to ensure that we meet all of the requirements to ensure that a Blue Hat registration can be achieved for their brands. This is part of the ‘value add’ that Sphere provides our customers and we anticipate that these customers will stay with us over the longer term. These customers want to be able to import Australian made product from a TGA licensed facility in China to differentiate them in the market，” Mr. Riley said.
As for the infant formula， Mr. Riley thought that the fake product， which is termed as “Shan Zhai” in China， might be an issue. In order to protect the interest of its own and its customers’， Sphere has introduced some security systems for its infant formula. For example， each tin of milk powder has an iron tag that seals the top of the tin. The iron tag is traceable and unique， which can connect to Sphere’s system for the batch and lot number of the product. Once the tag is broken， the tin cannot be used any more.
These problems could not stop Sphere from developing in China. It has decided to establish a representative office in Shanghai in 2014 for the “better cooperation with Chinese sponsors” in the future. It also caps off an 18 month program of investment and restructuring to meet increasing demand in both domestic and offshore markets， particularly China.