In its chosen fields of perinatal and neonatal care, Inspiration Healthcare PLC (LON:IHC) punches on a par with companies substantially larger including giant medical equipment manufacturers such as Philips and Siemens.
That's pretty impressive given it only turned over £15mln to January 2019, but chief executive Neil Campbell says the company is widely recognised as a pioneer in the neonatal intensive sector.
Much of that respect comes from work undertaken fifteen years ago when based on a research idea it developed a new technique of cooling premature babies to reduce the risk of cerebral palsy.
It was ground-breaking and counter-intuitive at the time but so successful that the UK’s medical regulator NICE adopted it as the standard of care within two years of the study being completed.
“One in six babies doesn’t develop the symptoms of cerebral palsy because they have been cooled,” says Campbell, himself an acknowledged expert in the field of premature births.
Sales of the cooling product still account for a healthy chunk of Inspiration’s sales and have helped it establish a solid and profitable base, but Campbell says the time is now right to spread its wings and become larger.
Crucial role at start of life
Neonatal and perinatal care is a crucial part of the life cycle and a market worth anything between US$5-7bn.
About 10% of babies born are premature yet Inspiration is one of the few companies anywhere where neonatal care is the main focus.
Often neonatal is part of a larger division, where the main activity is machines that can cost in the hundreds of thousands of pounds.
Pharmaceutical companies, meanwhile, are looking for blockbuster treatments for cancer, autoimmune diseases and diabetes.
For a health service, however, premature births remain one of the largest costs and for children under five, it remains the largest cause of fatalities.
Looked at as a cost per patient – neonatal intensive care is the greatest drain on any health service, says Campbell.
In Britain, a baby born three months premature could require between 6-8 weeks in intensive care costing approx. £1,500 per day, followed by a period of supervised care in hospital at around £800 per day.
Premature births are expensive
For each premature birth, that can mean about £75,000 on average for around three months in hospital.
After that, there is potential surgery, home oxygen, aftercare physiotherapy and issues such as sight and hearing impairments, mobility problems and learning difficulties.
The ambition now is for Inspiration to take a larger share of the market through a combination of organic growth, new technology and acquisitions.
On the organic side, Inspiration already sells into 50-70 countries worldwide but as health provision in the third world improves and more money is earmarked for maternity, Inspiration should see a boost for its existing product line.
A contract was recently signed with the Ministry of Health in Sri Lanka for a suite of workstations, for example.
The workstations comprised Inspiration’s cerebral function monitor for diagnosing brain injury and its Tecotherm Neo, which is used to cool and warm babies who have suffered from a lack of oxygen at the time of birth.
Campbell is also proud of Inspiration's tradition of bringing in disruptive new technologies and is especially excited about a disruptive technology development currently ongoing with a US university.
Looking for a transformational acquisition
Finally, the group is looking for a ‘transformational acquisition.
Last year, it strengthened its manufacturing capability in single-use products with the £4mln purchase of Viomedex, but it is prepared for something considerably larger.
Profits in the year to January 2019 were £1.2mln and in the latest half-year, there was a 21% rise in underlying profits to £0.8mln.
Sales in the current half-year rose 9% to £8.1mln but Campbell eventually wants to get annual sales closer to £100mln.
That’s a substantial move up the leagues, but Inspiration knows its market and what needs to be done to improve the outcome for babies born early.
“Huge numbers are dying not because they are born premature - they just don’t get care,” says Campbell.
“It's a very ethical investment in terms of the purpose of the company, which is saving the lives and improve the outcomes of premature babies.”
At 64.5p, Inspiration is valued at £25mln.