Export success story | Sonic Healthcare 

May 2012

Positive prognosis for

Sonic Healthcare

Quality, innovation and a unique business model helps

an Australian company succeed in one of the worlds
most advanced health markets.

Image courtesy of Sonic Healthcare

People are living longer. Cutting-edge tests are helping doctors

push the boundaries of medical science. Greater emphasis on
preventative medicine means healthcare providers are under
increasing pressure to serve an ever more demanding public.
This is the brave new world facing Sonic Healthcare.
Founded in 1987 in Sydney, Sonic Healthcare is now one
of the worlds largest medical diagnostics companies. It
supplies laboratory and radiology services through hundreds
of laboratories, clinics and primary care centres, as well as
thousands of collection centres.
Each year Sonic serves more than 75 million patients through
referring doctors, hospitals, and community health centres in
Australia, the United States, Germany, Belgium, Switzerland, the
United Kingdom, Ireland and New Zealand.
Listed on the Australian Stock Exchange, Sonic currently
employs more than 25,000 people, including 500 specialist
pathologists and radiologists, and hundreds of medical scientists
and technicians.

The Australian Sonic Healthcare story has

opened many hearts and minds and doors
in Germany.
Evangelos Kotsopoulos, CEO of Sonic Healthcare Germany

Over the last 20 years Sonic Healthcare has grown significantly.

Strategic acquisitions and strong organic growth have seen the
companys annual revenue rise from A$25 million to over
A$3 billion. Having made the decision to enter international
markets in 1999, today Sonic is Europes largest medical
laboratory group, and joins a number of Australian healthcare
companies enjoying success in Europe including Cochlear, CSL
and ResMed.

The appeal of Germany

Nowhere has Sonics growth been faster than in Germany, where

in the 2011 financial year Sonic earned 18 per cent of its total
revenue. Having acquired laboratory businesses in Ingelheim,
Augsburg, Berlin and Hamburg, Sonic established a head office
for Germany in Berlin to accelerate the companys expansion and
operational integration.

Germany ticks all the boxes for us, says Kotsopoulos. Its
a stable, democratic, blue chip economy with reliable legal,
tax, and regulatory systems and, above all, ethical market
practices and high-quality medical services. Culturally, many
labs in Germany operate in similar ways to Sonic labs in other
countries.

According to Evangelos Kotsopoulos, CEO of Sonic Healthcare

Germany, the German market was attractive to Sonic
Healthcare for many reasons.

At the time of our entry, the market was highly fragmented, with
several hundred small and mid-sized, private labs competing.
Germany fit Sonics experience of consolidating a market, as we
did in Australia in the 1980s and 90s.
The German market is also large, and growing, with total lab
expenditure of more than 6 billion per annum.

Australias healthcare reputation

wins hearts and minds
Dr Colin Goldschmidt, Sonic Healthcares CEO says Sonic has
never faced any operational or cultural difficulties in Germany
because of the companys Australian heritage.
On the contrary, he says. The Australian Sonic Healthcare
story has opened many hearts and minds and doors enabling
Sonic to execute many high-profile acquisitions over the past
seven years, bringing together more than 30 laboratory sites and
about 4,000 staff in Germany alone.
Our story is credible to doctors, who are our customers, and
to regulators and politicians alike. Our reputation is of topclass, high-quality medical service to thousands of doctors and
hundreds of hospitals every day.

Dr Goldschmidt says despite the companys size, Sonic does not

have the personality of a large corporate, but rather of an alliance
of local medical practices under a joint roof. This federation
model ensures Sonic retains a local aspect. Entities Sonic
acquires keep their name, brand, and unique market positioning.
As a consequence, Sonic retains goodwill and referrers.
This concept has great appeal to the founders or sellers of
laboratories and has been a key reason for local labs selling
to Sonic and then staying on board for many years after the
deal, says Kotsopoulos who has observed the same positive
dynamic in other European countries Sonic has entered, such as
Switzerland, Belgium, the UK and Ireland.

The Sonic Healthcare experience in Germany

Kotsopoulos says Sonic has been warmly received in Germany
and has established itself as the private laboratory market leader,
despite fierce competition.
Customers, rivals and regulators respect Sonic Healthcare
Germany as a reliable, medically-driven, and long-term oriented
participant in the German healthcare system.

Future plans
Growing the Sonic business
To establish itself and grow in Germany, Sonic started with an
initial acquisition in mid-2004, buying a majority stake in a large
laboratory group. The labs founders remained in the business as
managers and shareholders. This gave Sonic a methodical start
in a new market with co-shareholders at its side.
The next large investment followed only three years later a
100 per cent acquisition which prompted Sonic to buy out the
minority shareholders in the first group. From 2007 onwards,
Sonics infrastructure in the country became truly national.
Sonics medical leadership and federation model has since
attracted many high-quality, like-minded labs. Several Sonic
Healthcare Board members, the group CEO and most country
CEOs are medical doctors, including pathologists and other
specialists in laboratory medicine.
We ensure that the business at all levels is run by specialist
doctors, scientists or managers who have deep experience of
the medical laboratory industry, says Dr Goldschmidt.
Sonic is a medical business for medical doctors and their
patients, and we believe this is the only long-term sustainable
way to succeed in direct patient care.

Sonic plans to pursue further growth organically and by

acquisition. The company is also in the process of expanding its
portfolio to ancillary medical services, such as cytology, human
genetics, and molecular diagnostics.
Sonic in Germany is also the only laboratory which offers doctors
an in-house IT solution for entering orders and transmitting
results online and via iPhone and iPad Apps. They have become
leading tools to win and retain customers and to change how
doctors and laboratories work together.
The web-based applications allow direct access to Sonics
secure database from any location. They provide prompt and
reliable laboratory reports and help people to manage sensitive
information.
Any company savvy enough to have developed such mobile
technology is ready for whatever the future brings.

About Austrade
The Australian Trade Commission Austrade is the Australian
Governments trade and investment development agency.
Through our global network, we assist Australian companies to
grow their international business and attract productive foreign
direct investment into Australia.

For more information email info@austrade.gov.au or visit www.austrade.gov.au