Q&A Medical

Jan 12, 2024 – In the Medical presentation (Capital Markets Day 2023) it was said that the size of the sleep apnea diagnosis market is estimated to be slightly less than one billion euros, does this mean the entire market or the market that Bittium can reach?

Unfortunately, you didn’t mention anything about the market size of the Faros family in the event, could you tell me how much the size of the market Bittium is aiming for.

At the capital market days, we talked about the growth opportunities of our business segments. In all these examples, we talked about general market growth expectations, and did not estimate Bittium’s possible shares in them. Growth estimates were based on estimates made by Markets & Markets and Allied Market Research. According to these estimates, the international sleep apnea diagnostic devices market size is now estimated to be just under US $1 billion and is expected to grow at a double-digit annual growth rate going forward. The international market for ECG measuring devices and electrode labels is estimated to be around US $ 1.2 billion in 2022 and is also believed to grow at a double-digit rate between 2023 and 2030.

Jan 12, 2024 – How dependent is the Medical business on external sales organizations (Preventice & Resmed)?

Preventice, currently the Boston Scientific Cardiac Diagnostics (BSCDx), is very important customer to us. We have publicly stated that BSCDx sales are a large part of Medical’s sales. BSCDx is our customer, which uses our products in their own service business. So, they are not our reseller – at least not yet. Resmed’s role is more of a reseller, but we believe they will also use our products as part of their service sales. However, we consider it an achievement that BSCDx and Resmed use and sell our products.

We try to sell our products directly to service operators, and other sales channels are established depending on distributors. As a small top player, Bittium cannot afford to build an extensive distribution channel of its own. The bigger and better distributor we can get to sell our products, the better.

Nov 23, 2023 – After Respiro, are there plans to take over a bigger piece of the sleep apnea market and offer an easy-to-use and safe breathing device?

Currently, Bittium has no plans to increase the product offering for CPAP devices. We are now focusing on bringing Respiro to market and achieving the company’s goal of profitable growth with our existing product portfolio.

Aug 23, 2023 – Are there component availability problems related to the Respiro product, or are sales this year just dependent on the development of demand?

The component availability problems are not related to Bittium Respiro, which measures sleep apnea. Sales of Respiro, as in general, of products considered to be new medical devices, will develop moderately at first. Before obtaining official approval or a sales license, the product cannot be sold for clinical use. A certain number of clinical trials are required for approval, but after approval, customers (hospitals, treatment facilities, clinics) conduct their own clinical trials before purchasing larger batches of equipment and starting patient care with the new technology. This is common market practice.

Another significant factor is the different insurance practices of different countries, which affect the sale of equipment and the process. We have sold and delivered the first Bittium Respiros to our customers in Europe, and they are currently conducting their own clinical trials as part of the commercialization of the product. Feedback from these studies has been positive. We are actively taking measures to promote and strengthen commercialization. We are also negotiating with several partner candidates to find good support for European sales.

May 23, 2023 – Could we receive a new comment from the company regarding the components? Are there plenty of them available or is the Faros production line on hold?

Bittium Faros’ production has improved, but as we can see, the challenges of component availability are not yet completely over for this year.

Mar 23, 2023 – Why are R&D costs only increasing?

It is true that Bittium’s R&D investments are significant, especially when the investments are compared to the turnover. The company’s competitive advantage and future growth is based on competitive products, competitors are constantly developing their own products and we have to keep up with this race to succeed.

The graphs below show that, in absolute terms, R&D investments have increased between 2016 and 2019 and have declined since 2019. A similar trend can also be seen in the relative share of costs in turnover. The exception to this trend was last year, when R&D investments increased both absolutely and relatively, but they are still lower than in 2020. The absolute increase in 2022 was around €2.5 M, of which around half happened as planned and the other half was due to delays. The R&D investments of the Medical business area increased their relative share. Product development costs have therefore not continued to grow all the time.

After the collapse of service business turnover in 2017, the core of Bittium’s strategy has been to grow the product business by investing very heavily in product development. The goal has been to increase the product business, whereby the share of product development costs will decrease relatively while staying at approximately the same level in absolute terms. We have succeeded in increasing product turnover from 2016 until 2021 – that is, five years in a row. Last year was the first in Bittium’s history when product turnover decreased (-11%) and service business increased (5%) compared to the previous year. We failed to increase turnover in 2022, so we also failed to reduce the relative share of R&D expenses. Our intention is not necessarily to reduce the absolute amounts of R&D expenses, they may even increase somewhat, but we also do not keep them up unnecessarily.

The absolute level of product development investments will probably not decrease, but with the growth we aim for, the relative level will decrease. There is no special curtain and we open the product development costs, emphasizing our investment priorities, not project by project in detail.

Feb 23, 2023 – Even in Finland, doctors are not necessarily familiar with Bittium’s solutions. Have you collected information from a significant market about the awareness of your products among potential customers?

Recently, we have not conducted surveys related to the awareness of our products in the medical market. And it is certainly true that not all doctors are familiar with our products even here in our home market in Finland. However, there are several large hospitals or clinics in Finland that use our products, such as KYS, OYS, HYKS, TAYS, TYKS or Coronaria and Oulu Heart Center, to name a few. Many operators, both domestic and foreign, can be a well-known factor even among clinicians, but in general it is not always so well known that these service providers use our solutions. Currently, small hospitals and small sales volumes would employ us too much in relation to the sales volume, which is why our strategy is to focus our sales and marketing resources on targeting service providers and well-known and trusted distributors. In marketing, one of our most important goals is to increase awareness, and we run targeted advertising campaigns not only for service providers but also for doctors (cardiologists, neurologists, specialists in sleep disorders).

Feb 23, 2023 – How does Bittium Respiro stand out from competing products currently on the market?

Bittium Respiro is one of the smallest sleep apnea measuring devices on the market, if not the smallest. The device is very competitive in both its technical performance and physical characteristics. The solution representing the latest technology supports 12-channel measurement, which makes the measurement very extensive. The solution supports three different configuration options, which is a big advantage for the customer. The attending physician can choose what kind of measurement to prescribe for his patient, for example, whether an EKG measurement is required or not, or whether one belt is enough or whether two must be used. Reimbursement criteria for sleep apnea measurements vary from country to country, and the option to choose between different configuration models supports the reimbursement practices of different countries. User organizations (customers) can always choose the entity they need at any given time, so that the measurement can be reimbursed by the insurance company.

An integral part of the Respiro solution includes the cloud-based analysis software Respiro Analyst, regardless of time and place, which makes it possible to eliminate the need to install separate software for data analysis and diagnostics. The preliminary analysis made in advance by the analysis software can be easily modified by the doctor, which speeds up diagnostics. Of course, this is not a unique service, but most of the software on the market requires local installation. Based on the feedback, Respiro Analyst is a modern and easy-to-use analysis software.