The situation

Rapid action has given Quattromed a competitive advantage: the prototype products have been developed very fast - within 6 months. Penetration into world market however appeared to be more difficult than had been predicted by the four founders of the company in 1998. The Estonian domestic market for Quattromed biotechnology products does not exist in a meaningful scale for a growing business (i.e. it is extremely small). The technology and products of Quattromed are not unique globally, but have some advantages and are more innovative than mainstream products. These advantages are mostly biological i.e. high affinity of antibodies (antibody-tag complexes tolerate high salt). Innovation means "all tools in one box" and "easy cloning" quality (vectors contain sequences to enable easy and fast reconstruction). The product is offered together with services.

There is some analogy between applying this business model to offering to a client a freezer and taking care of freezing berries for him in this freezer. That is not a usual business model in the biotechnology sector. Networking has a specific role in developing this approach. The networking idea was picked up from a presentation by an IT-company during a workshop.

The process

The first two steps were taken by Quattromed owners and managers to create international sales and generate a small cash flow. These were:

1. Quattromed signed agreements with two big international companies who sell similar products worldwide. The products of Quattromed were included into the "big players" catalogues. Unfortunately these big players did not make any marketing efforts to promote Quattromed products. Then Quattromed turned its efforts to widening its customer base through services and networking.
2. Quattromed started to provide services based on the Quattromed tools. These tools enabled labelling the proteins encoded by the tagged (labelled) genes with the E2Tag which is patented by Quattromed. (The protein tagging is needed to study the action mechanism of proteins in different cells, to discover candidate drugs etc.) Customers can buy the toolkit and label the gene of interest by themselves or buy the service, which involves the customer sending the gene of interest to Quattromed who add the E2tag and send this intermediate product back to customer for further investigations. For these studies the customer has to buy extra antibodies from Quattromed. Selling services means a higher turnover and greater sales promotion. The service is 20 times more expensive than the corresponding product, although products have higher profit margins than services in this field.

The outsourcing business is growing business area in biotechnology and drug discovery. This service providing strategy has generated resources for R&D and for marketing of products and services of Quattromed. Customers of the services became interested in Quattromed products. They also generated positive publicity and "word of mouth" marketing for the company. Quattromed also started to conduct hands-on training courses for potential customers that demonstrated competence of their staff and simultaneously increased awareness of customers.

To overcome the bottlenecks inhibiting rapid development (to get more customers, to build up better marketing, to enhance technology development) Quattromed started to participate in different networks. Quattromed management also understood that Estonian biotechnology companies have to co-operate and build their own learning community in order to share their contacts and knowledge about new technology and business trends between themselves.

The outcome

Quattromed has participated in:

1. Estonian networking - Quattromed is founder of Estonian Biotechnology Society, Quattromed has signed different agreements with different scientific institutions for collaborative R&D, Quattromed has founded networking between Estonian biotechnology companies to share the marketing knowledge, to collaborate in R&D, to provide co-services to meet the most sophisticated customer's needs etc. Such networks have already broadened their views and makes them more interesting for potential international partners. In transition economies, SMEs are busy coping with everyday business and grasping new business opportunities as they are presented. In many sectors SMEs have no time or resources to create a strong organisation that could represent them and act as a learning community. Estonian biotechnology sector has been a positive exception. Members of this network actively use virtual mailing lists. They arrange joint seminars to introduce international lecturers and experts. Knowledge sharing and trust are based on intensive personal contacts, and also on studies of some network leaders at MBA courses and in discussions during joint seminars. There is often a good match of personalities.
   
   Estonian SMEs in this sector are essentially not competitors to each other at a foreign marketplace. Their market segments supplement each other. It means that international marketing experience can be shared: how to communicate with resellers, how to assess profitability of various marketing activities.
2. Scandinavian networking - Quattromed has participated in Connect and Scanbalt activities. Connect has provided many courses, individual training for management, and springboards. All these events have created valuable personal contacts as well as Scanbalt events.
3. Russian networking - Quattromed has created contacts with Russian scientists and biotechnology organisations. The contacts are in the beginning phase and needs further development.
4. European networking
          EC Framework 6 - Quattromed has participated in different consortiums
          SUN-SUP -development of specific measures for SMEs
          STRATA - foresight analysis of Estonian biotechnology
          SCONE EW ISME
   Plus others like Eurobio, NeoBio, CORDIS etc
5. Quattromed has started to build up a distribution network in EU. Information from various EU projects and resulting contacts has facilitated marketing efforts.

The most useful outcomes of the networking are :

	Personal contacts
	New (shared/learned) experience
	Possibility to find new customers
	Possibility to find R&D partners
	Possibility to find partners to whom to outsource some processes

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Learning points

1. The most useful outcome of networking is a wide range of personal contacts. High tech and R&D efforts assume high human touch and good interpersonal communication.
2. Many events/activities/programs bring together people from very different research, technology and business areas and with very diversified background. It is good one or two times to share common experiences in a loosely defined large audience but later the actions should become more interactive and focused to more similar businesses. Long-term networking and sustainable learning community assumes focus on a practice that is interesting to all community participants.
3. Big networking events are good only 1-2 times per year. Small events with participants from the same sector or interrelated business are more fruitful.
4. Companies at different stages of development have different experience and different needs. Correspondingly they have different expectations for networking events. Network members have to understand each other priorities.
5. The nature of networking changes during the SME development spiral. At the start-up phase SMEs are eager to learn from different sectors. At the next stage the value of contacts and specific knowledge inside the sector is perceived. When this stage is passed, more diversified inter-sector contacts may bring knowledge for developing and implementing creative and ambitious business visions. Workshops are a good arena for finding interesting links with seemingly far-away sectors. Quattromed has experienced it with IT-companies but also with a SME that develops laser technology in Tartu. You have to travel sometimes to a workshop away from your home town in order to find new development partners daily doing interesting work less than one mile away.
6. Usually SMEs have to count their money they invest into networking and as they have limited budgets they have to calculate very carefully where and when to participate. Important criteria are 1) geographic coverage; 2) network participants developing companies, potential winners; 3) relevance to the development stage of the SME - does network offer new knowledge on just on time bases; 4) participation costs.

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