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[Trade Insight report] The World Second Largest Humidifier and Breathing Tubing Manufacturer- VADI

2021-02-20Industrail News

VADI Medical Technology Company was founded by President Huang Chao-Chin more than 20 years ago. Being regarded as one of the leading brands in respiratory humidifier and breathing tubing in the field of Respiratory and Thoracic, VADI has been marketed to more than 100 countries around the world. In the coming future, it continues to focus on the field of respiratory consumables business for Ventilator and breathing mask.

In COVID-19 pandemic, ventilators once became the most important medical material in the world, in particular, the invasive ventilators for severe patients are life-saving equipment in the first half of 2020. More than ever, this had led many leading ventilator brands, such as Medtronic, Philip, Dräger, and Hamilton to invest lots of time and money in the development and production as well as other large existing manufacturers, General Motors, Ford, Tesla and others.

At such an emergent moment, in the worldwide intensive care units and respiratory treatment rooms, respiratory humidifiers that match with these invasive ventilators, provide tracheal intubation to patients with respiratory failure, and give humid air the same as the lungs do have also become key medical materials and the demands has skyrocketed. Among them, VADI is regarded as the leading brand of humidifier and breathing tubing in the medical field of Respiratory and Thoracic. It is from VADI Medical Technology Company in Taiwan, which has a global market share of more than 30%, second only to Fisher & Paykel.

Visiting the headquarter of VADI in Yangmei, Taoyuan city, the world's largest medical silicone injection molding machine is still operating 24/7. Cargo trucks loaded with containers are constantly entering and leaving the factory, they will be shipped worldwide to provide the important humidifiers and breathing tubing that will work with ventilators to save lives at this critical moment.

From OEM to OBM

VADI Medical Technology Company was founded by President Huang Chao-Chin more than 20 years ago. Graduated from National Taipei Institute of Technology, he had showed his talents in mechanical design and production management very early in the workplace. After starting his own business, with excellent mold development capabilities and unique machine designs, he quickly got the opportunity to OEM respirator consumables for European and American medical brands. However, with the fierce competition in OEM industry and the continuous bargaining of prices by customers, the gross profit had been declining year by year.

Facing the decline of profits, and afterthought from few direct contacts with end distributors, Huang realized that the market value created by original brands and sales channels is multiple times than those only engaged in manufacturing in the medical industry. "The cost of manufacturing expensive medical equipment is actually not high, but when it comes with the logo of American brands, the terminal price could be triple or more higher.", Huang said. The idea of creating his own brand came to his mind, so he started to develop his own products, applied for certifications in the major markets, and visited the exhibitions for medical device, a so-called suitcase business mode to promote the "VADI" brand.

Entering the emerging market to the major one

The medical market takes the most important to the creditability of brand and the word-of-mouth recommendations from the professionals, and it starts at a high point to enter this exclusive market. It usually takes more than 5 years for the application to product patents or drug permit license; even Huang has been well-experienced from his ODM period of time for major European and American brands and has the capability in handling the massive production of breathing tubing with high quality. He clearly understands that if a new brand of medical material wants to enter the European and American medicalmarkets, it requires plenty time and resources and the scale of investment is far beyond the imagination.

In order to have a steady start, Huang initially focused on the emerging markets whose brand awareness was relatively weak and had been valued less by major European and American brands, such as China, Southeast Asia, and Central and South America.

On one hand, Huang is bold and brave to invest and active to apply for patent certification in the emerging markets in advance; on the other hand, he continues to attempt to cooperate with Medtronic, Dräger and other ventilator brands in the sales of matching respiratory breathing tubing.

By the strategy of cooperation with European and American brand ventilators and the acquisition of local certifications, VADI has reduced the clients’ doubts about the quality to a small new brand. Along with large-scale flat pricing, the distributors who sells the tubing from major European and American brands, are also willing to try VADI which is still a not well-known brand to them. "The agents and distributors of major European and American brands will come to the exhibition of medical material. I showed them that VADI product has the same quality as those major brands, but would only take them half the price. We don't do OEM, we start directly from the agents and distributors. We also suggest the hospitals to buy the original ventilators to pair with our humidifiers and other accessories”, Huang recalled.

By the advantage of the same quality, but half the price to the well-known brands, VADI guided the customers to try and import VADI product. It also established a firm business relationship and friendship with local agents by supporting them with complete education, training, and resources.

After years of hard work, VADI product has been prompted and sold in more than 100 countries around the world and have more than 200 distributors. The coverage of tubing product is almost over all medical institutions in Taiwan; its market share in Russia has surpassed its largest competitor; it has reached nearly 100% market share of humidifiers in Thailand and Vietnam. VADI has started steady and stood strong in the emerging markets, and has transformed from a small factory to a leading brand, therefore, it is ready to move on to the more competitive European and American medical markets.

Product Strategy: focus on its advantage and expand

"In the early days, because VADI is not well-known enough, agents only bought our breathing tubing to pair with the humidifiers from other major brands. The strategy is to establish a good reputation by providing tubing with good quality and then gradually introduced our humidifiers.", Huang said. VADI initial product line only included the accessories for ventilators such as breathing tubing and connectors. As VADI had become a worldwide well-known brand and has selling channels all over the emerging markets, VADI began to extend its product line to humidifiers and other peripheral products for ventilators.

Huang knows well that the brand credibility and professional selling channels are VADI main advantages in the respiratory medical field. In addition to repeatedly decline the procurement proposals from other divisions of medicine, he even focused more, by brand credibility and professional selling channels, to expand its product lines as strategy in business extension. Beginning with the consumables which has higher alternativeness, after the reputation, brand awareness and market share accumulated from the medical professionals, according to his blue print, he launched the respiratory humidifier product, the key medical material of respiratory therapy. At present, VADI has more than 2,000 related products, including suitable peripheral accessories and consumables, that can work with for all levels of ventilators.

VADI focuses on its main advantages and continues to expand its product lines. The target blueprint from 2021 to 2022 is that VADI brand will include ventilator, nasal masks and other related consumables, but in order to avoid to overlap to the current clients of invasive ventilators, VADI ventilators product will mainly be home-based BiPAP, High Flow, and CPAP.

Insist on its own capacity and the strongest supporter in COVID-19

The key to the medical device market competition is R&D and marketing. Most brand owners do not want to spend resources in their own factories because of low return on investment. In order to maximize the profits, most of them would choose to outsource production capacity and only do R&D, assembly and testing. However, Huang prioritizes the product quality and preserve technique and production capacity. Instead of chasing the profit, Huang insists on developing his own production technique and manufacturing all products in hiw own factory.

The beginning of VADI brand was not smooth all along. Some product lines were subcontracted, but the clients were snatched after the subcontractors had learned and mastered the technique.  Huang couldn't help thinking about this: Branding itself is not enough. When a product is highly replaceable and does not have its own production capacity, it will have huge impact on operations if business talents quit jobs or OEM factories grab business. Therefore, Huang insists on self-owned production lines. In this way, not only can the quality be effectively controlled, but also the risk of the theft of business secrets can be minimized. Under this wave of epidemics, the global demand for respiratory medical products have skyrocketed, and OEM production lines are difficult to find. VADI’s own production capacity strategy has become the biggest winner, and it also highlights Huang’s foresight.

Persistence on the business philosophy of keeping growing

"Enterprises need to grow bigger and absorb enough experiences. If they don't grow up, they will be stepped on by others. Development of product has to be faster than others, and there is not a day to rest." Huang described his business philosophy. In fact, from VADI market expansion to product strategy, you can see that Huang’s insistence on growing and expanding the corporate culture is firmly and deeply implemented.

Looking out the window from Huang’s office, VADI second-phase plant is under construction. “The equipment has been purchased, and the new products BiPAP, High Flow, and CPAP ventilators can be led into massive production in 2021; the land for the third-phase plant has just been purchased." Huang confidently talked about his new production capacity plan.

The achievement of the world's second largest breathing tubing factory seems to be just a starting point for Huang. He still works 12 hours a day, and keeps investing the full company's surplus in plant expansion and production technique development. Huang still has the same dream as he started his business and moves toward his goal persistently and strong-paced, let VADI, together with Taiwan's medical materials industry, to be the best brand and supplier in the global market.