SubscribeSanjeev R Sridharan (Frost & Sullivan): Congratulations on the Frost & Sullivan Award.
It was very well deserved considering the excellent feedback that we have been receiving from end-users and market participants. Hartmut Krome (Werum Software and Systems): Thank you very much.
Sanjeev R Sridharan: As you know, traditionally pharmaceutical companies have been very conservative in terms of adopting newer automation solutions as they did not essentially want to tamper with proven and tested manual systems that were working efficiently. How did you manage to convince your customers of your value propositions?
Hartmut Krome: Today, there is clearly a trend towards installing electronic batch recording (EBR) solutions. In particular, large enterprises have recognized the convincing benefits of such systems. EBR systems provide a large potential for minimizing errors, installing lean manufacturing processes and reducing costs in all areas of the production environment.
However, in general, the necessity of such computerized systems and the strong and obvious advantages such Manufacturing Execution Systems (MES) solutions can bring have not yet been fully recognized by small and mid-sized companies. To meet the particular requirements of this target group, we intend to offer easy-to-operate, pre-configured solution packages tailored to their demands. With such out-of-the-box packages good benefits can be achieved easily and almost immediately.
Sanjeev R Sridharan: What are some of the key differentiators for Werum that have helped it to succeed in the marketplace?
Hartmut Krome: We are dedicated to the regulated life sciences industry and that is probably one of the key differentiators for us. Our customers are looking for functions tailored to meet the specific requirements of various manufacturing and packaging processes in the life science sector. Since we are focused on Pharmaceuticals and Biotechnology, we can ultra-package solutions with best practice virtual insights.
We are not offering a toolset for the customer to develop their application but offer a complete 'out-of-the-box' solution. It is because of our end-to-end packaged solution, easy-to-use user interface, pre-configured workflow for the pharmaceutical and biotechnology industries, and our service package that we have been so successful within the marketplace. When you look at the MES market, pharmaceutical and biotechnology is quite small and we have never lost a customer. This is also one of the key points for our success within this market.
Sanjeev R Sridharan: Excellent. That actually ties in with the next question. Being an independent MES company, how have you been able to attract and retain customers and how do you manage to thwart competition from some of the larger vendors in this space?
Hartmut Krome: When you look at some of the larger companies like Novartis and Merck, they use solutions of Werum as well as other smaller companies. In the past, our competitors were also smaller companies. The question is not whether we are small or large. Within the pharmaceutical and biotechnology domains, we are large. Some of our larger competitors have fewer people in this space compared to Werum. It is actually a positive point for us that we are independent because we can seamlessly integrate with automation and enterprise solutions from all large companies within this space. Today, the market and our customer base are growing. The influence of our customers on Werum and their trust on us has actually helped us forge ahead within this domain.
Sanjeev R Sridharan: We also know that Werum stresses a lot on long term partnerships with customers. What in your opinion are some of the reasons why customers tend to come back to you time and again for your solutions?
Hartmut Krome: Long-term partnerships are indeed one of the primary goals of Werum's customer-focused strategy. We assist our clients through all steps of their MES project and are at their side whenever they need us. The comprehensive portfolio we offer includes concept and software consulting, requirements and functional specifications, project management, training, system integration, validation tasks, and last but not the least, maintenance and hotline support - 24 hours a day and 365 days a year. We feel that it is important to be a reliable partner and that a team-based approach is the best way to solve any problem.
Sanjeev R Sridharan: So, how much of an influence do customers actually have on some of Werum's product development plans?
Hartmut Krome: We have a user advisory board and every year our key customers do have an influence by being a part of our product development. We have organized a user forum and special interest groups for our key customers. They tell us what is really needed on the shop floor. Their hands-on knowledge combined with our IT expertise and experience ensures optimal solutions for the crucial business operations of our customers. I think this is a win-win situation for both sides. Our key customers can be rest assured that their main concerns are solved by our software and package. For our new version, we have a lot of customers who say that there is no need for a change process as they are satisfied with our new features.
Sanjeev R Sridharan: A market leader is one who is the best in software, marketing, R&D and strategy. Could you throw some light on your marketing and customer service?
Hartmut Krome: Yes, it is important to address all of the mentioned aspects to stay at the top. We apply a strong emphasis on our Research & Development (R&D); we adopt state-of-the-art technologies like Service Oriented Architecture (SOA) to continuously improve our product. But it is not enough to provide an excellent product. When these systems are in place in validated environments, long term support is crucial and we have been providing that successfully. Our teams of highly qualified and experienced software engineers with in-depth knowledge of pharmaceutical and biotech manufacturing processes are capable of providing competent services throughout the life cycle of a project. As you have mentioned, our customers tend to come back to us. They know that we deliver on our promises. Our oldest maintenance contract dates back from 1993. You cannot win an MES selection process with a marketing show. You have to prove your capabilities as we have done on many large-scale global projects.
Sanjeev R Sridharan: What is your view of the growing markets of China and India with the emergence of contract manufacturing and contract research?
Hartmut Krome: The Asia Pacific region with its fast growing economies is indeed one of the MES markets with a large potential for new business. We expect that this market will open up substantial opportunities in the next few years, particularly in the contract manufacturing segment, but also with regard to production sites for the local market. Probably, the demand for MES solutions in the region will intensify in the next 2-3 years.
Sanjeev R Sridharan: So, what have been Werum's initiatives to cater to customers in the growing regions of Asia-Pacific and Eastern Europe?
Hartmut Krome: We cover Eastern Europe quite well due to its proximity. In Asia and Eastern Europe, implementations are typically done by large international life science companies. The large companies are typically subsidiaries of larger multi-national pharmaceutical companies. We started catering to the Asia-Pacific market three years ago and we have a large implementation in Japan which comprises a complete paperless EBR system. We are working in China with our local partners. Large companies have MES requirements but the major markets in Asia such as China and Japan will start showing demand in the near future.
Sanjeev R Sridharan: What have been some of Werum's initiatives in the US considering that Werum is a European based company holding dominant share in Europe?
Hartmut Krome: In the last three years we have focused our attention on the U.S. business and were able to further increase our market share in the pharma and biotech MES segment. Large American pharmaceutical enterprises, such as Merck & Co, Schering-Plough, as well as one of the biggest biotech companies have standardized their MES landscape based on our PAS-X product line. In addition we are intensifying our strategic cooperation with selected service providers established on the US market. Out of the top 20 companies in the US, 10 are our customers, 4 are our key customers. So the question is not whether Werum is large in the US but do customers look at Werum at the same level as some of our US based competitors, which of course I think they do.
Sanjeev R Sridharan: Do you think that Werum has done something right over the past couple of years to have achieved such success in the US?
Hartmut Krome: We had successfully implemented the 2 big complete MES and EBR systems in the US in 2001-02. The first one was in 2001-02 and that was an important reference. Shortly thereafter, we had another big implementation in 2002-03. These both were very good references for Werum that actually helped us increase our US market share. I think we were the only company to have successfully completed two big implementations in the US. End-users were looking at Werum and asking "Can they do it?" and we proved that it is possible and they changed their mind and relied on our services and products.
Sanjeev R Sridharan: What do you think are some of the challenges that you face while dealing with your customers?
Hartmut Krome: Going forward, I think it is very important to provide more services because our customers are outsourcing a lot of work in the core MES project. It means that the operation of the system will be outsourced in the future. We will establish a worldwide partnership and service so that we can cover more of the cost of the MES system than in the past. This is big challenge as well as a driver for growth in the next few years.
Sanjeev R Sridharan: What are some of the critical tasks that need to be accomplished in order to maintain Werum's leadership position within this space?
Hartmut Krome: Werum is one of the very few independent MES providers, which has gradually grown to become a global player in the manufacturing market. Ongoing product improvement strategies, well-established quality management policies and, as said before, a "wellness package" addressing all our customers' service needs - these are the key factors to sustain our current success. The PAS-X line is an advanced product family and yet we will further improve the technological platform as well as the functional scope steadily to drive our customers' efforts to streamline and optimize their shop floor operations. Qualification and validation is high on the agenda of the regulated industries.
Our computer-based in-house quality management system integrates powerful features for providing and handling the numerous qualification and validation documents required to meet compliance. Traceability is no longer a tedious task, requirements tracing through all life cycle documents is easily available. An extensive and well-balanced portfolio of best practice products and customer-centered services will certainly help us to maintain and strengthen our leading position in the MES pharma and biotech space in Europe and the US and get a footprint in the Asia Pacific region.
Hartmut Krome is chairman of the executive board of Werum Software & Systems AG headquartered in Lueneburg, Germany. Mr. Krome holds a master's degree in Physics from the Technical University in Brunswick, Germany. From 1974 on he worked for the company BBC (today ABB) in Germany and Switzerland in the field of process control computers for chemical and pharmaceutical systems.
In 1982 Hartmut Krome and Dr. Hans Windauer took over the majority in shares and the management of Werum Datenverarbeitungssysteme GmbH as it was called then. In 1983, he started to set up the PAS-X product line and, since then, has continually expanded it to become one of the leading MES in process industry.
