Business Plan

Advanced food safety testing services

INDEX
Page
Executive summary

Introduction

1. Who are we?

2. Market opportunity

3. FIDES LABS innovative business model

14

4.

25

Porter analysis

5. Fides labs replication and scalability inside the food industries and into
other industries.
27
6. Financial requirements.

29

7. FIDES LABSproject evaluation.

31

8. Other considerations.

32

9. What are we seeking?

32

Executive summary
FIDES LABS provides cost-effective food safety testing services for agricultural and food
companies based on mass spectrometry (MSMS). As pesticides residues, antibiotic
residues, contaminant and restrictive substances that under new regulations as EC
1886/2006 agricultural and food exporter companies must to analyze through the whole
supply chain vertically and horizontally.
th

Chile being the 15 worldwide food exporter with over US$ 12.000 million food exports
annually will increase food exports to US$ 60.000 million for 2030. However Chile and the
Latin American region lack of a world class mass spectrometry food safety testing
laboratory (LC-MSMS, GC-MSMS), required to comply with international regulations in a
cost-efficient way and with the right technical support.
The demand from agricultural and food companies for food safety testing services based
on LC-MSMS/GC-MSMS is over MMUS$ 100 a year in Chile, > US$ 3 billion in Latin
America and over US$ 10 billion globally, increasing 25 % yearly.
The revenue model is through sample analyzed in an average price of US$ 200 per
sample and with special pricing for contracts.
FIDES LABS is a commercial MSMS food safety laboratory with competitive advantages
that has been gotten through an open innovation approach with experts around the world,
the innovative business model allow to offer to the clients answer times from 2-5 working
days (and not weeks), in 20 % less costs with better technical support services.
Fides labs requires an investment of US$ 4.2 million, it has a NPV (15 %)= MMUS$ 34,4;
ROI= 79% and a payback period of 3 years.
Fides labs has the feasibility to grow to a company with annual sales of US$ 10-30 millions
in Chile, US$ 20-200 million in a Latin-American level and 50-500 million worldwide, with
high margins, if is combined with an organic and acquisitions growth strategy.
We are seeking an anchor investor with a common and/or complementary vision and
capabilities to execute and expand Fides labs.

Introduction
BBG through its founder has developed relationships with leading agrifood companies,
with worldwide R&D centers in food and biotechnology, as well as it has implemented
LC-MSMS, GC-MSMS laboratories and expanded the business associated for the
biggest quality control and certification companies on the planet.
Combining technical, executive and strategic experience in biotechnology, LC-MSMS,
GC-MSMS and agri-food industries, with innovation management methodologies we
implement blinded technological business models for food safety testing services that
allow generating competitive advantages in the Latin American markets.
It is important to consider that these types of projects are based on detailed knowledge of
local customers, local-global markets, industry context, national and international
regulatory frameworks, open networking, cutting-edge technical knowledge, highperformance teams, business models and innovation management methodologies.
These intangibles are the added value to the project, and not just the equipments.
This project represents investments in technology infrastructure and the latest LCMSMS, GC-MSMS equipments, laboratory design and workspaces as the center
elements in the success of the project. However, the value is not in the equipments, but
in the technical and strategic knowledge, in the ability to generate high performance
teams, in the optimum configuration of the equipments for integration with a business
model that creates competitive advantages and its integration with an innovation
management system that generates sustainable growth. All this primarily focused on
close relationships with local food companies, and an understanding of their explicit and
implicit needs.
These intangibles available by BBG will be detailed below.

1. Who are we?

Bio Business Group specializes in the businesses creation and expansion in the
areas of molecular biology and mass spectrometry testing oriented to quality control
and food safety. BBG has the experience of having designed, implemented and
expanded these business lines for the largest quality control and certification
companies on the planet.

Our Vision
Become the largest food safety testing provider in Latam

Mission
Increase the competitiveness of agriculture and food companies

Director
Lesley Robles Sedan is the founder and director of Bio Business Group, chemical
engineer and civil engineer in biotechnology at the University of Chile, with
specialization in innovation management at the University Adolfo Ibez. 10 years
professional experience in business development and expansion based on mass
spectrometry (LC-MSMS, GC-MSMS) technologies combined with innovative
business models for Latin American and international markets. Before founded BBG,
Lesley Robles held several executive positions in Chile and in Australia, in entities
such as the State Agricultural Biotechnology Center at Murdoch University, Australia,
Corthorn Quality and SGS.
Lesley Robles has a global and multicultural vision because of his experience of life
in 40 countries and 4 continents.

2. Market opportunity
a.

Market opportunity context

New food safety regulations

In the 90's, Europe, Japan and the United States strengthened research in the areas of
quality and food safety, which led to strict new regulations on pesticide residues, antibiotic
residues, contaminants, banned substances, mycotoxins and allergens, among others.
These regulations have been issued globally (CE1881/2006, Japanese Positive List
Testing, CE 396/2005) and affect all food industries vertically and horizontally, as milk and
dairy products, meat, corn, seeds, fresh fruits, processed foods, nuts, feed, fishmeal, wine,
water and wastewater, fisheries and aquaculture.
Agriculture and food exporters must complain with these regulations and do these food
safety testings through the whole supply chain.
To comply with these regulations are required new technologies (LC-MSMS, GCMSMS) rarely available in South America.
To meet these regulations, especially for exports to developed countries, are required new
technologies as mass spectrometry (LC-MSMS, GC-MSMS).These technologies are rarely
available in South America where traditional laboratories operate primarily traditional
microbiology and chemistry areas, without qualified human resources in areas such as
biotechnology, molecular biology and mass spectrometry. As an example, we can mention
that Australia with similar agri-food exports than Chile, has hundreds of the latest LCMSMS & GC-MSMS equipments to comply with international food safety regulations. In
Chile, however, there are 9 of these equipments but only 5 are engaged in commercial
laboratories. Also, it is important to note that the LC-MSMS models and their
configurations existing in Chile and South America are NOT suitable to meet in a costeffective way quality requirements demanded internationally (SANCO 10232/2006,
2002/657 EC) and specific market needs or specific methods of analysis.

Multinational quality control companies are customers, not competitors, operating

an efficient laboratory and under the right business model
The largest multinational companies in these areas such as SGS, Inspectorate, Bureau
Veritas, Intertek Calebret, do not operate these advanced labs in South America, do not
have the local knowledge and the ones operating these business lines, lack of the right
technological packing and the right business model. Which we handle locally and globally.
Growing demand in food safety
As advisers of food exporters and quality control companies, we have seen a growing
need for food safety management and cost effective food safety testing services in Chile
and the Latam region.
Chile, with the creation of the Agency for Food Safety (ACHIPIA) is increasing its food
safety policy, standardizing its regulatory framework to levels equivalent to those of the
European Food Safety Authority (EFSA). A similar situation is happening in other South
American countries.
Competitors
Globally there are four main companies in the area of quality control and certification:
SGS, Bureau Veritas, Intertek-Inspectorate and Alex Stewart, which have sales of U.S. $
billion and operations in > 100 countries, providing four main types of services:
Inspections
Verifications
Laboratory testing
Certification
These services are delivered to various industries such as mining, pharmaceutical, food,
environmental, petrochemical and automotive. Depending on the country, these four
companies are positioned differently in distinct industries, mainly providing traditional
services from inspections or laboratory testing. For example, the largest multinational
quality control and certification company worldwide is SGS, with a network of 625
laboratories in 140 countries, but SGS has only 4 Laboratories (Taiwan, France, Germany
and Belgium) operating correctly in the area of applied mass spectrometry for food safety
testing.
These is the reason because appear local specialized laboratories in the areas of mass
spectrometry (LC-MSMS, GC-MSMS) for food safety testing. Particularly in Australia,
country that has the same level of food exports that Chile, a local laboratory that began 15
years ago, Assure Quality, today has annual revenues over US$ 100 million.

In Chile and Latin America, the situation is rather particular, because large corporations do
not operate specialized businesses in the region, limited to traditional businesses such as
inspections, especially in the food industry. Also these companies have a rigid
organizational structure and philosophy that focuses on low-cost professionals, managers
who do not allow the flourishing of high performance teams. Technically, they do not have
professionals with expertise in the area of mass spectrometry and high technology
businesses. Their development strategy does not allow them setting more advanced
businesses, both in medium and long term.
Because an increase in demand for food safety mass spectrometry testing services, there
have been family owned businesses that have established laboratories, which serve
partially and unsatisfactorily the country's needs. Table I summarizes these companies.
Table I Laboratories that provide some agricultural and food analysis in Chile

These laboratories have the following common features:

Lack of right equipment (LC-MSMS, GC-MSMS models) and deficient laboratory

design.

Several are family owned labs without major financial and management capabilities

Lack of high qualified professionals at technical and management level.

Services limited to a few methods

Long answer times.

No technical support after analysis

Growing disappointment from clients

Testimonials
"We have not found a laboratory in Latin America that gives us the answer times, advice
and technical support that we need for our pesticide residues analysis"
Cecilia Duran, Chief Quality Control Anasac.
"We ask for a veterinary antibiotic residues study to Inspectorate, we explain them all the
associated protocols and they were not able to offer the service
Francisco Gonzalez, Chief of Quality and R & D Drag Pharma.
"We lost a shipment of several
U.S. $ million, because in Japan certain pesticides
exceeded the maximum residues limits, even though we had shipped because the
analysis in Control Andes Lab in Chile was satisfactory. Then we found that the
method of analysis used in Chile, did not meet the standards of the Japanese
Positive List Testing "
Chief Quality, Andes Foods
Fides labs is not just a business, it is a Latam agri-food industry infrastructure needs and
to protect consumers, the region requires urgently a world class LC-MSMS, GCMSMS Laboratory
Lesley Robles, Director BBG

b.

Market estimation

Strict new global regulations on quality and food safety as CE 1881/206, Japanese
Positive List Testing and CE 396/2005, the demand of international markets that require
certification in food processing safety standards such as GLOBALGAP, ISO22000:2007
and British Retail Consortium (BRC), and national regulations as the resolution 187 of
Ministry of Health, requires that all food-processing establishments implement HACCP1
under standard Nch 2861, generating an increasing demand for mass spectrometry food
safety testing services. In addition, the limited availability of these technologies and the low
level of knowledge in the management of these business models, make Chile and Latin
America, considering their growth rates in agri-food exports, the best country to expand
global business based on mass spectrometry oriented to agriculture and food industries.
Chile corresponds to one of the five Mediterranean regions worldwide and has exceptional
sanitary conditions for the food production. These factors, coupled with its economic
stability and its open economy, has made Chile grow dramatically, from food exports in the
th
80's from $50 million to be the 15 agrifood exporter in the world with over U.S. $ 12.000
million today. Projections indicate that Chile will be within the top 10 worldwide agri-food
exporters by 2017 achieving U.S. $20.000 million and US$ 60.000 million for 2030.
2

Table II Main agricultural and food exports in Chile

1
2

HACCP: Hazard and control points analysis

Ref. Odepa, SAG, Chilealimentos, SalmonChile

10
10

The agricultural and food Chilean industry growth in average rates > 10% and some
industries as poultry > 35 %, production for domestic use is U.S. $ 18.000 million per year
and agri-food imports U.S. $6.000 million, representing an annual agrifood trading above
US $36.000 million and growing. This provides a growing market for FIDES LABS. It is
also important to consider that 70% of Chileans agri-food exports go to highly regulated
markets like USA, Europe, Japan and Korea.
Market research
We developed a three years market research of analysis based on mass spectrometry as
pesticides, mycotoxins, antibiotic residues and banned substances required by the
agricultural and food companies. The study was conducted through personal meetings
with key companies, online surveys, analysis of regulatory frameworks, seminars,
workshops and other mechanisms.
Examples of demand for MSMS food safety testing services are listed below:
Pesticide residues
The 7 main fresh fruit exporters of the country as Rio Blanco and Subsole spend
on average US $ 600.000 a year in pesticide residues analysis each one. This
represents a demand > U.S. $ 4.2 billion in annual pesticide analysis required by
the 7 biggest Chilean fresh fruits exporters.
The country has 13,538 fresh fruit producers, who spend on average $ 1,000 a
year in pesticide residue analysis, which represents a demand > U.S. $13.5
million in pesticide residue analysis.
The country has 534 fresh fruit exporters. On average each spends U.S. $ 50,000
in pesticide residue analysis, which provides a demand > U.S. $ 26.7 million
annually.
Anasac, spends an average of $ 250 000 annually in pesticide residue analysis
and another U.S. $500 thousand in MSMS specific services, provided by foreign
laboratories.

Contaminants and banned substances

CCU is a beer producer; it requires spending just in a single operation in its silos in
San Pedro, US$ 200.000 in mycotoxins analysis in rice imported from Uruguay.
Skretting, salmon feed supplier, spends U.S. $ 750.000 annually in the analysis of
melanin, crystal violet and leuco malachite green. Four other companies spend
similar values, which represents a demand > U.S. $3 million annually from these 4
companies actually.
The European Community by the directives 96/22/EC and 96/23/EC establishes
that countries wishing to export to the EC agricultural products of animal origin,
must implement a national residue monitoring program (pesticides, antibiotics,
hormones) and contaminants in these products. This program in Chile is carried
out by the Agricultural and Livestock Service (SAG) and SERNAPESCA to
products of agriculture and aquaculture, respectively. The program is implemented
through the accreditation of private testing laboratories, which are accredited by
the SAG, to carry out certain analytes / matrices testing. The combination of
analyte / matrix requires the constant development of new tests under validation
standards required by the European Community. Also, other countries like Japan
and Korea have set even more demanding standards for certain analytes /
matrices. For these reasons it is necessary to constantly generate new tests and
methodologies. The number of analytes / matrices required being monitored
increases every year and currently there is a limited number of analytes / matrices
in our national capabilities. This monitoring analysis generates a demand for
MSMS testing services of US$ 6 million annually, growing every year about 10%.
APA-ASPROCER, the association of poultry and swine, spend > US $1 million
annually in MSMS food safety testing and increasing expenditure > 20% year.
Due to new SAGs regulations, the producers of veterinary medicinal products
must do drug residue studies locally. For this reason, the company Drag Pharma
in the next 4 years, need to perform these studies for at least 150 of its 300 drugs.
Each study requires U.S. $ 50.000 in MSMS analysis, which represents a demand
> U.S. $ 7.5 million. At least 7 companies are in a similar situation, which
represents a demand> U.S. $ 52.5 million over the next 4 years, and this situation
is increasing because every year come along new regulations.
SGS has two clients in the fishmeal industry and due to new regulations in China,
these clients require the analysis of nitrofurans, what is outsourced to other
laboratories, representing U.S.$ 200.000 annually.

Requirement of mass spectrometry (LC-MSMS, GC-MSMS) testing services as pesticides

residues, antibiotics, mycotoxins and restrictive substances span vertically and horizontally
throughout the whole production chain (fresh fruit, wine, milk, nuts, processed foods, baby
foods, cereals, salmon, meat , seeds and grains).
This represents a market with thousands control points, where testing are required.
The market is heterogeneous and consists of large companies, small and medium
producers. FIDES LABS can generate large contracts, as well as provide individual and
specific analysis. The variety of choices, needs, profiles and customer volumes, makes
possible reduce the business risk.
Based on our market research, meetings, INE statistics, ODEPA, SAG, Chilealimentos,
Fedefruta and analysis of regulatory frameworks, we estimated the demand for mass
spectrometry food safety analysis for Chile, and Latin American demand was extrapolated
by a factor of 30.
Table III Foods safety testing actual demand based on mass spectrometry in Chile and Latin
America.
Increasing rate is > 25 % yearly.

The increasing demand for MSMS food safety testing is > 25 % annually.

3.

FIDES LABS innovative business model

FIDES LABS is a unique business model of its kind, obtained through a process of open
innovation with worldwide experts in mass spectrometry (MSMS) applied to food safety.
The technological heart of FIDES LABS is based on an optimal configuration of the latest
models of LC MSMS and GC MSMS equipment for the area of food safety testing in
Latin-America. This optimal technological packing increase in 30 % sample processing
capabilities, reducing costs by 25%, providing an order of magnitude major sensitivity and
giving the option to provide specific services for niches markets. This configuration is part
of the technological packaging offered by BBG and generates competitive advantages.
(Technological packing not available in any laboratory in South America).
The element composing the Fides Labs business model is described below:
a. Optimal technological packing
i. Technical and economical analysis of LC-MSM optimized

for food safety testing, focusing on the Chilean and South

American markets.
A technical-economical analysis of 8 LC-MSMS
models from 4 different suitable suppliers was
conducted for 2 years. The process includes
collection and analysis of technical and market
information, meetings with providers, meetings
with laboratories of international excellence,
expert network consultation, attendance at
seminars specialized international competitor
analysis, technology monitoring, visits to laboratories equipped with LC-MS,
meetings and consultations with local and international users.
The study considered the following factors:

Price
Equipment usability for applications in the context of local industries
Criteria and technical factors (eg, sensitivity)
Local support and experience of local support
Support for global networks

Technological obsolescence
Additional services such as facilities, guarantees and others.
Complete technical configuration of the equipment to operate optimally
service lines.
Integration of technologies and auxiliary features for:
i.
ii.
iii.

Reduced method development time

Increase productivity and
Build a blinded and competitive business model.

The study took two years through an open innovation approach, where information was
crossover analyzed with worldwide experts in LC-MSMS, applied to food and agricultural
analysis. The result was an optimal configuration for LC-MSMS equipment oriented to agrifood applications, thereby reducing implementations method from months to weeks,
operating costs reduced in 20%, production capabilities increased at 30%, sensitivity by an
order of magnitude higher, and allowing access to specific market niches. All these
features, integrated with methodologies to generate high performance teams, thus offering
faster & higher quality services at a lower price to the customers.
The main features incorporated in the optimized LC-MSMS model are shown in Table IV.

Tabla III Differentiating elements incorporated in the optimized LC-MSMS equipment for
Fides Labs

3.1.2 Technical and economical analysis of GC-MSMS equipment for

an optimized food safety laboratory in the Latam markets.
A two-year technical-economic analysis was done to 6 GCMSMS models belonging to different providers. The process
included collection and analysis of technica and market
information, meetings with suppliers, meeting with international
laboratories of excellence, consultation to worldwide experts,
specialized seminars attendance, visits to laboratories with
GC-MSMS equipment, meetings and consultations with local
and international first level users. Factors considered in the analysis were the same as
described in section 3.1.1.
The study took two years and as a result was an optimal configuration for a GC-MSMS
equipment oriented to agrifood applications that complement the capabilities of LC-MSMS,
generating a suitable module (LC-MSMS, GC-MSMS) that allows to offer complete
services packages to the food industry, reduce methods deployment, savings in operating
costs of consumables. All these features associated with a business model that allows us
offering higher quality services with competitive advantages to the customers.
The main features incorporating the optimized GC-MSMS model are:
Table V Elements of an optimized GC-MSMS for Fides Labs.

3.1.3 Sample preparation equipments technical-economical analysis

One of the critical point in the technological packing
that is required for a commercial MSMS laboratory is
to have a high throughput sample preparation room.
The sample preparation room is the biggest
bottleneck in a commercial food safety testing MSM
laboratory. BBG through market trends analysis,
regulatory and client meetings identified the needs of
local markets, the testing required and analytical
methods to meet these needs. This scenario sets up a
series of sample preparation requirements.
Experience in implementing MSMSM laboratories for
quality control and certification companies, was turned into a three-year study to identify
and design an optimal high throughput sample preparation room for a commercial MSMS
food safety testing lab. The studys methodology included visits to international
laboratories, meeting with international experts, meetings with agri-food companies, an
extensive literature methods review, visits to fairs and conventions in mass spectrometry
applied to the agri-food sectors.
The study identified 17 sample preparation equipments critical to meet the wide range of
sample preparation techniques, required for the different food safety testing methods. After
this identification, we conducted a technical and economic analysis of each sample
preparation equipment from different local suppliers, achieving a cost optimization,
because the price difference between equipments or technically identical equipments have
difference in price from local suppliers.

3.1.4.

Laboratory design, conditioning rooms and operational areas

BBG overturned its experience in the design and implementation of laboratories, towards
the design of an optimized food safety testing MSMS laboratory oriented to the local needs
of the agricultural and food sectors.
The study took two years of technical analysis, the methodology included meetings with
international experts, architects, specialized professionals, visits to international
laboratories, analysis of regulatory frameworks, work flows analyses, all orientated to
generate an impact in the technological packing, the business model and finally the
financial results. The result was optimal design and technical specifications for each one of
the areas required for the Fides Labs, including:

LC-MSMS room
GC-MSMS room
Samples preparation room
Samples reception room
Samples grinding room
Stowage and storage requirements
Wash room
Refrigeration and freezing requirements
R&D rooms
Baths, support and administrative areas

For every room is available a data sheet with the technical specifications as dimensions,
environmental conditions, electrical conditions, temperature, gas systems, furniture,
between other factors, and its spatial interrelationship to generate an optimal laboratory
design.

3.1.4.

Technical-economical analysis of food safety methods

A three years study to identify the optimal food safety methods was carried out. The
methodology included extensive literature review, exchange of information/methods with
global experts, costs analysis with suppliers, visits to laboratories, visits to clients. The
feasibility of method implementation was evaluated considering the following parameters:

Number of steps involved to obtain a suitable purified sample for its

injection in the LC-MSMS or GC-MSMS system.

The numbers of steps determine the general method evaluation. This criterion includes the
identification of number of reagents used, the number of purification systems, instruments
numbers, and glass material involved to obtain the purified extract.
o

A method with a minor number of steps generates:

Less execution costs:

Less time
Minor numbers of inputs and involved instruments.
Minor numbers of critical steps. Improving method reproducibility
Major final implementation feasibility.
Minor rate of accumulated uncertainty
Major percentage of success in its respective validation.

Level of complexity of the analytical technique

Methods were prioritized by a suitable relationship between complexity of its application
and results expected from its application. The ideal expected relationship corresponds to a
low level of complexity associated with the ability to determine several analytes. The
analytical methods with a high level of complexity and involving a low number of analytes
were rejected.

Number of reagents involved in the analytical method.

The methods were prioritized by a limited use of incidental reagents (understanding itself
for incidental reagent, a reagent that is not related directly to the extraction and purification
of the sample, for example, derivatizing reagents).

20
20

Number of analytes belonging to the same chemical family, involved in

a unique analytical technique.
We prioritized the selection of methods that involve the major number of analytes of the
same chemical family, for example, pigments antifungals and bactericidal (Crystal violet,
leuco violet, malachite green and Leuco malachite leuco green). The expected result is the
selection of a major number of methods that possess a wide spectrum of analytes of one
or more chemical families, instead of a high number of methods with a limited spectrum of
analytes.

3.2.

Innovation management system for FIDES LABS

FIDES LABS considers a quality management system in accordance with ISO 9001:2008
and ISO 17025, as also management & financial control models, which give course to
generate an operational excellence. This operational excellence will be integrated with an
innovation management system to generate sustainable growth.
This is how FIDES LABS is the combination of an optimal technological packing focused in
the reality and needs of the target markets, integrated with soft management skills and an
innovation management system for the continuous and sustainable growth.
Figure 1 Innovation management system for Fides Labs

3.3.

Human resource management and high performance teams.

The heart of FIDES LABS is based on human resource management and the capability to
generate high performance teams, central element of our differentiation. The majority of
the national and international laboratories fail in talent management.
Fides Labs considers the latest soft management skills applied to business, as positive
psychology, integrity management and high performance teams management
methodologies.
FIDES LABS is based in the following values and principles, which all professionals and
workers must fulfill independently from their technical skills:

Client orientation
Respect
Leadership
Confidence
Aptitude to listen
Humility
Integrity
Teamwork
Orientation to results
resilience
Excellence
Optimism

3.4.

Commercial networks and marketing innovation

Commercial networks
BBG, through his founder, has 10 years generating local and global networks in the
agriculture & food industries. For four years in Chile, and previously in Australia, we have
devoted ourselves to realize market research studies for high technology business
oriented to the agricultural and food sectors, and due to our different experiences in quality
control and certification companies and weekly meeting with agricultural and food
companies, we have developed a commercial network. Some of them are:
Networks with the global quality control and certification companies operating in
Chile and Latam: SGS, Inspectorate, Eurofins, Bureau, Intertek, Alex Stewart and others.
A contact database with 15.000 key executives from agricultural and food
companies.
Personal networks with the main agricultural and food companies (agrosuper (US$
1700 millions in sale), Nestl, Agroprodex (US$ 50 millions in sale), CCU, Coca Cola,
Invertec (US$ 400 millions in sale), Multiexports, associations like Chilealimentos,
SalmonChile, Fedefruta, Chilenut, and others) and other dozens of companies.
BBG and its executives, support an average of three meetings a week, with key
members of agrifood companies of interest for Fides Labs.
We have important contacts with companies and associations, needing high
volumes of analysis based by mass spectrometry. Requirement of expenditure in LCMSMS, GC-MSMS analysis over US$ 0.5 million a year.

Marketing innovation
In general the laboratories possess technical profile, neglecting commercial and marketing
elements. FIDES LABS considers the combination of the best traditional marketing
practices combined with the latest digital marketing strategies and tools as:

Web 2.0, e-commerce

SEO, web analytics
Adwords
Videos
Online seminars
Email marketing
Social networks
Online publicity
Online content management

We want to become a reference information center in food safety for the agricultural and
food industries.

3.5.

Technical & sales support

Great clients dissatisfaction exists regarding the technical and sales support received from
food safety testing laboratories in Chile and Latam, basically these laboratories do the
testing, but they do not have a technical support department or qualified people that can
give assistance or explain the testing meaning to the clients. FIDES LABS considers a
sales and technical support center that gives orientation to the clients about food safety
and testing results, so they can use the information for food safety management. This is
complemented with a training strategy through courses, seminars and workshops in food
safety.
The figure 2 describe the FIDES LABS business model.
Figure 2 FIDES LABS business model

INFRASTRUCTURE
CENTRAL
CAPABILITIES

First class technology

optimized
Technical expertise
People management
Innovation management
Library of
methods available
Knowledge of local
markets
Learning curve overcame

Equipment depreciation
Leases
Permanent HR
Variables HR
Fixed and variable
trade costs
Variables analysis costs
Operational costs

NETWORKS
Business associations
I+D Centers
International Universities
Expert network
Reference Laboratories
Quality control and
certification companies.
MSMS suppliers
Agrifood associations

SETTING VALUE
Competitive methods
Build knowledge that adds
value to customers
Generate technical
expertise

COST STRUCTURE

OFFER
food safety
testing services, based
on mass spectrometry
with lower price
than competitors, faster
answer times,
fulfilling
international
standards,
supplemented with
technical advice and
support.

FINANCES

CUSTOMER RELATIONS
Long term
Level strategic partner
Technical reference
Specialized and
personalized attention.
Social media, web 2.0

DISTRIBUTION CHANNELS
AND COMMUNICATIONS
Operations at national level
Technical e newsletter
email marketing
Member associations
Seminars workshops
Specialized magazines
Partnership with other labs

INCOME

CLIENTS
TARGET MARKETS

Agrif ood
exporting companies
companies
Customers requiring ppb
analysis.
Vulnerable niches, baby
f oods, and others.
I+D centers, public
entities, universities
Quality labs

Sampling
Sample analysis
Technical consultancy

24
24

4.

Porter analysis

STRENGTHS:
Fides Labs is a world class center of excellence in MSMS food safety testing
services, not available at Latin American level. Its technological packing, commercial and
management approach allow to Fides Labs offering MSMS food safety testing services
under competitive advantages as:
o

Lower answer times. 2-5 working days, regarding 1 or 2 weeks local or

international laboratories.

30 % more sample analysis capabilities

25 % less costs

Specific methods for niche markets

Technical and sales support

Few professionals exist worldwide that handle technically and commercially mass
spectrometry food safety testing laboratories. Having these professionals is one of the
principal FIDES LABS strengths.
Knowledge and networks with the local industries and business culture.
Knowledge in ISO 9001:2008 and ISO 17025, including regulatory frameworks and
accreditations mechanism.
Deep knowledge of competitors.
International networks with the principal R& D centers, private laboratories and
global experts in MSMS.
The creativity, digital marketing knowledge and a culture centered in the clients
implicit and explicit needs is one of our strength.

OPPORTUNITY
Historically food safety has been a traditional area mainly based on microbiological and
traditional chemist analysis. Nevertheless, in the decade of ' 90 Europe, USA and Japan,
between other developed countries, initiated a strong R&D in food safety, which has given
origin in the last years to new and strict regulations, which the food exporting countries
must fulfill as residues of pesticides, mycotoxins, antibiotics residues, pollutants and
restrictive substances regulations. To comply with these international regulations, testing
based on technologies as mass spectrometry (LC-MSMS, GC-MSMS) are required, which
are technologies rarely available in Chile and Latam. No existing in the Latam region a
world class commercial MSMS food safety lab.

th

Chile is the 15 worldwide food exporter with > US$ 12.000 million annually, will achieve
US$ 60.000 million in food exports for 2030. By the other side regulations as CE
1881/2006, internal regulations requiring HACCP, GLOBALGAP, ISO 22000
implementation generate actual demands for MSMS testing in Chile > US$ 100 million,
increasing 25 % per year. In a Latin American level the demand is over 30 times the
Chilean market.

WEAKNESSES
Be a new player in the industry is one of the weaknesses of the FIDES LABS project,
nevertheless, in view of the advantages of operational efficiency, the technological and
management model, the commercial strategy, the marketing, the knowledge and the
networks already established with the potential clients, we will be able to accelerate the
market entry process.
For diminish these risks we are considering to execute an acquisitions strategy of local
laboratories, merges with international laboratories and/or formation of a consortium.
We also expect that the ANCHOR INVESTOR that we are seeking in this first round will
bring to the table not only financial capabilities, but also global networks that will help to
catalyze the company expansion.

COMPETITORS
A risk is that an international laboratory or multinational quality control company enters into
the Chilean and Latam markets. Nevertheless, this risk is mitigated by the following
context: the professionals who possess the technical knowledge in the area of masses
spectrometry in developed countries, in general are professionals from the scientific area
tied to R&D centers, public institutions and/or universities without the management skills to
set up a commercial MSMS food safety testing laboratory.
By the other side, exist a few privately owned MSMS food safety testing laboratories, that
generally operate in 1-10 countries, with sales between US$ 20-100 millions, considering
other countries and other regions of the world as a priority for business expansion, being
unlikely that they are going to enter into the Chilean and/or Latam market, because
distance, cultural knowledge and ignorance of local markets. Inclusive after get an anchor
investor, we will be targeting these laboratories to make a consortium if is required and
strategically convenient to generate a global network and catalyze the expansion process
in Latam.
Furthermore, the biggest quality control and certification companies as SGS, Bureau and
Intertek, they do not handle more than 3 MSMS's laboratories applied to the agrifood
sector in an efficient way, and principally they are located in developed countries of
Europe. For example SGS has good MSMS laboratories in Belgium, Taiwan and
Germany.

However in Latin America they are positioned in other more traditional business, as for
example basic inspection services, and in other industries such as mining or construction.
The local country managers do not visualize as priority to expand these businesses in the
region or high technology business. These companies do not have high qualified
professionals in the areas of biotechnology, MSMS or technology management to develop
these businesses locally. Considering the business development stage of these
companies in the Latam region and the corporative business development alignments,
they are not allowed to execute these sophisticated projects.
This is how the biggest quality control and certification companies are potential clients and
commercialization channels more than competitors in the Latam region.

5.
Fides labs replication and exponential expansion
inside the food industries and into other industries.
FIDES LABS is a world class MSMS food safety testing laboratory center of excellence
designed to grow exponentially. Once FIDES LABS is constructed, growing every US$ 5
million in sale, above the US$ 10 million annual revenue starting capacity, it will need
marginal investments of US$0.9 million.
Furthermore, the variety of MSMS applications integrated with an innovation management
system, will allow to us grow vertically and horizontally inside the agricultural and food
industries, but also generate collateral expansion into another industries as environmental,
life sciences, biotechnology, pharmaceutical, petrochemicals and chemical industries,
among others.
It is important to emphasize that this business also is replicable to other regions of the
world. Fides labs has the feasibility to grow to a company with annual sales of US$ 10-30
millions in Chile, US$ 20-200 millions to Latin-American level and 50-500 million
worldwide, with high margins, if is combined with an organic and acquisitions growth
strategy.

Figure 3 Fides labs collateral expansion possibilities

Other agrifood applications

Functional food, nutraceuticals, active ingredients, I+D+i
Enviromental applications
Containers safety

Life sciences
Bioequivalence, PK/PD studies
Clinical assays, medicaments quality control
Toxicology , forensic service

Petrochemical, gas industry and various other applications

Quality control
Other applications

6.

Financial requirements

INVESTMENTS

Assets
High technology equipments 2 LC-MSMS y 1 GC-MSMS optimally
configured.
Sample preparation equipments
Other minor investments, licenses, IT platforms.
Total Investments

US$ Thousands
1.500
200
200
1.900

HUMAN RESOURCES

Fixed Human Resources

General management and development (at the beginning the general
manager will act also as development manager supported by the
partners network).
Technical HR (This includes a technical manager, chief laboratory
manager, quality coordinator, 2 LC-MSMS chromatographers, 1 GCMSMS chromatographer, 4 analysts, 4 sampling preparers)

US$ Miles annuals

101

390

HR operations ( 1 project manager, 2 inspectors)

43

HR Commercial and marketing (1 commercial boss, 1 marketing boss,

4 sales executives, 2 telemarketing).

130

HR finance and administration ( 1 finance manager, 1 accountant, 1

control management manager)
TOTAL annual fixed HR

65

729

OPERATIONAL AND COMMERCIAL REGIONAL OFFICES FIRST STAGE

Regional offices
Office south zone placed in Concepcin

US$ Miles anuales

84

Office north zone placed in Antofagasta

84

Office for Peru and Bolivia placed in Lima

84

Office for Argentina placed in Buenos Aires

84

TOTAL annual regional offices first stage

336

OPERATIONAL AND COMMERCIAL REGIONAL OFFICES SECOND STAGE

Oficinas Regionales
Office for Colombia

US$ Miles anuales

84

Office for Ecuador

84

Office for Central America placed in Costa Rica or Panama

84

TOTAL annual regional offices second stage

Rental
Building rent and others

252

US$ Miles annuals

120*

LAUNCHING FIDES LABS

Start Up (8 months)
Reagents and Inputs for methods implementation

US$ Miles annuals

120

Accreditation expenses

50

RRHH

485

Buildings rent
Design, architecture, permissions, remodeling, construction, LAB
facilities
Start up regional offices first stage ( 4 months)
Budget initial Marketing

80
800**
112
100

TOTAL annual regional offices

1.747

* Rent costs depend of the final location to be chosen.

* *This value depends on the conditions of the building or space to rent, and if it decided to remodel
existing facilities or to construct a new laboratory. Depending on these factors this article can
change between US$ 0.5-1.5 millions.

30
30

7. FIDES LABSproject evaluation

Item/ year

10

SALES (1) MUS$

LC-MSMS y GC-MSMS testing

2.000

6.000

12.000

13.800

15.870

18.251

20.988

24.136

27.757

31.920

Sampling and inspection

200

600

1.200

1.380

1.587

1.825

2.099

2.414

2.776

3.192

Consultancy and training

100

200

230

265

304

350

402

463

532

612

R&D services

200

400

460

529

608

700

805

925

1.064

1.224

2.500

7.200

13.890

15.974

18.370

21.125

24.294

27.938

32.128

36.948

Total income (MUS$)

Operational costs
Fixed costs (hr, rent, others)

1.185

1.437

1.437

1.437

1.437

1.437

1.437

1.437

1.437

1.437

Variable costs

395

1.090

2.019

2.321

2.669

3.070

3.530

4.060

4.669

5.369

Inspection and sampling costs

200

600

1.200

1.380

1.587

1.825

2.099

2.414

2.776

3.192

Management and marketing costs

250

720

1.389

1.597

1.837

2.112

2.429

2.794

3.213

3.695

2.030

3.847

6.044

6.735

7.530

8.444

9.495

10.704

12.094

13.693

470

3.353

7.846

9.238

10.839

12.681

14.799

17.234

20.034

23.255

19

47

56

58

59

60

61

62

62

63

Depreciation

230

230

320

320

320

330

330

330

420

420

Start up amortization

175

175

175

175

175

175

175

175

175

175

Total amortizations and depreciations

405

405

495

495

495

505

505

505

595

595

2.434

4.251

6.539

7.230

8.025

8.949

10.000

11.209

12.689

14.287

66

2.949

7.351

8.744

10.345

12.176

14.294

16.729

19.440

22.660

41

53

55

56

58

59

60

61

61

11

501

1.250

1.486

1.759

2.070

2.430

2.844

3.305

3.852

54

2.447

6.101

7.257

8.586

10.106

11.864

13.885

16.135

18.808

405

405

495

495

495

505

505

505

595

595

Total operational costs

EBITDA
EBITDA (%)
Amotizations and depreciation

Total operations costs, depreciation and amortizations

MUS$
EBIT
EBIT (%)
Company tax (17%)
Profit after taxation
Plus depreciation and amortization
INVESTMENTS (3)
Equipment

900

1.900
1.747
500

Start up
Working capital

900

900

Investment recovery (4)

NET CASH FLOW

-4.147

459

2.852

5.696

7.752

9.081

9.711

12.369

14.390

15.830

1.850
21.253

NET CASH FLOS ACTUALIZED YEAR 0

-4.147

383

1.981

3.296

3.738

3.649

3.252

3.452

3.347

3.068

3.432

Results

Results

ROI 79%

ROI 79%

NPV (20% ) kUS $ 25. 451

VAN (15%) kUS$ 34. 406

Pay back period: 3 years

Pay back period 3 years

Sales at all times are considered under a market share below 15%. There are
agricultural and food companies that alone spend over US$ 700 thousand in these
analysis annually.

Variable costs are 15% of sales. Inspection and sampling sales were considered
equal to the costs.

Administrative and marketing costs were considered as 10% of total sales.

(Considers that people and expenses will be incorporated in these items,
proportionally to sales).

8. Other considerations

FIDES LABS losses control: If the project does not become profitable after three
years, exists the possibility to liquidate all assets, especially high technology
equipments are convertible to cash. For these reasons, the maximum loss that can
produce the project is bounded to US$ 2 millions.

High technology invest Chile grant available: Being a high tech project with
positive externalities throughout the agricultural and food industries, the FIDES
LABS project can be co financed by a non refundable government grant up to
US$ 2 million.
The cash flows presented before do not consider co financing contribution
through government grants. If deemed, the project risk becomes positive, even in
the worst case scenario the losses control become less than US$ 0.5 million.

9. What are we seeking?

An anchor investor with a common and complementary vision to execute the Fides Labs
project.

Further details please do not hesitate contact us:

Bio Business Group

Eliodoro Yaez 1742, Providencia
Santiago de Chile
+56 2 2042034
info@biobusinessgroup.com
www.biobusinessgroup.com