Newport Labs finding success in China
WORTHINGTON -- Farmers in China raise nearly half of the world's supply of pork, but nearly 100 percent of the pigs processed in the country are infected with mycoplasma pneumonia when sent for processing.
Pneumonia is one of many diseases impacting swine herds in China, making the country an appealing place for Prairie Holdings Group's Newport Laboratories division to build relationships and develop technologies.
"We're involved in several different countries right now, and each and every one of them have come to us and wanted to emulate our business model," said Randy Simonson, veterinarian and PHG director. "What we've tried to do, here in the U.S., is focus on using contemporary science -- leading-edge science -- to solve everyday problems ... both in our diagnostics and custom-made vaccines."
Meanwhile, in cities and countries around the world, most pork producers have access only to off-the-shelf products.
"Most companies don't have a model for developing custom vaccines," Simonson said.
It was five years ago that a hog equipment dealer contacted Newport Labs and invited the company to bring its custom vaccine business model to China. Shortly thereafter, an equity partnership was forged with Wuhan Chopper, a veterinary biological product manufacturing and distribution firm located in the Hubei Province.
Today, after clearing national and province regulators, training Chinese workers and opening its own laboratory, Yabote, PHG is seeing the fruits of its labor turn a profit.
"We spent a lot of time meeting with potential customers, talking to them about the services and products we could offer," said Simonson. "Business has grown substantially, but it's still not where it can be."
With Yabote located in the Hubei Province, it is surrounded by pork production. The city of Wuhan, located 100 kilometers away, is home to 10 million people and some 40 million pigs, Simonson said.
Boost to business
In 2011, Simonson made three trips to China to work on the company's business model there. Annual audits are completed by PHG, as well as troubleshooting.
"Several of our people have gone over there and spent time in their lab, and vice-versa," he said. "We've set up a webcam system so now we can communicate back and forth that way. That will allow for a closer working relationship."
Yabote, which has about a dozen employees, has its own general manager and staff of veterinarians that meet with customers.
"We're in the process of moving to a new laboratory within the next year, which will be expanded and have more equipment," he added.
Simonson said growing Newport Labs' business in China made good sense.
"We're a small, privately held company, and we've done this to help us grow and leverage our technology," he said. "It's a way to expand our business in the world's biggest market in terms of livestock. That's one positive. The other is they have technologies -- they have some things over there that we learn."
While the company has equity stake only in China at this time, it also has relationships with firms in Mexico, Canada, Germany and Chile.
"Our partnership in Europe is working very well," Simonson said. "In Mexico, they never had regulations to implement this type of business -- they do now. We helped get them implemented."
"China is about where the United States was at the beginning of the 1900s. There's a lot of growth going on -- it's really exciting," said Simonson.
Established as the People's Republic of China in 1949, the country joined the World Trade Organization in 2001. It's a country with a booming middle class, estimated to reach 600 million by 2015, filled with younger, more educated people.
"The business economy is growing rapidly," he added. "It's history in the making. Every time I go over there I see something new. You see all extremes when you go to China."
With a population of 900 million in China, Simonson said about 100 million people work in production agriculture. The average farm is about 1 hectare (2.2 acres), yet China is the largest pork producing country in the world.
"We process about 100 to 110 million pigs in the U.S. -- they process about 600 million and consume most of it," he added. "They have a lot of backyard pigs -- having five sows isn't uncommon."
Simonson said China's pork production methods are a long way from the three-site production systems in the United States, but it is coming.
"Three-site production over here really helped us (contain the spread) of diseases," he said, adding that it is the type of system needed in China.
"They have everything in the world over there and it creates a big challenge of what to attack first," Simonson said. "You have to figure out which one is the most important.
"They have a high mortality rate from disease ... that's why they're coming over here, seeking our western technology more and more," he added.
Prairie Holdings Group is comprised of 11 companies employing more than 230 people in Worthington. Its businesses include everything from veterinary medicine to diagnostics, autogenously biologics, pork production, cattle nutrition and consultation, risk management, transportation, technology and marketing.
Newport Laboratories, its largest company, received USDA licensure in 1997 and recorded its first sales a year later.
One of the real hurdles in doing business in China, aside from the culture, said Simonson, is that veterinarians have difficulty obtaining tissue to research diseases impacting swine herds.
"Here in the U.S., we can go in and get a sick pig and euthanize it. Over there, they don't want you to take a live pig and euthanize it to do diagnostic work because pigs are so valuable," he added.