Gene Solutions: How an initially risky investment became one of Vietnam’s first successful biotechnology companies and expanded throughout Southeast Asia

Author: Chris Freund, Founder and Managing Partner – Mekong Capital

January 25, 2024

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Over the last 20 years, we learned that it is best to invest into companies that are already well established in their core business. For example, our past investments in MobileWorld, Masan Consumer, PNJ, Golden Gate, Traphaco, FPT Software, Vietnam Australia International School (VAS), Pizza 4Ps, and others were already well established in their core business when we invested. In those cases, our initial objective was to support them to continue to grow their core business to achieve its full potential. And at a later stage, they may start to add new brands, divisions or services that complement their core business and leverage their management infrastructure.

Conversely, some of our worst investments were in companies that were not yet well-established in their core business. A company like F88 is an exception to this as it was small and not well established when we first invested in December 2015, yet it found a way to be successful and grew its loan balance by 250x since 2016. On the other hand, we did make several investments that were “venture capital” in nature, which did not turn out well.

When we invested in October 2021, Gene Solutions was already the market leader in Vietnam with around 90% market share in their original business, Non-Invasive Prenatal Testing (NIPT). NIPT is a method for determining the risk that the fetus will be born with certain genetic abnormalities. This test analyzes small fragments of DNA that are circulating in a pregnant woman’s blood. These fragments, known as cell-free DNA (cfDNA), originate from the placenta and carry genetic information about the fetus.

But Gene Solutions’ plan was to expand into quite a different segment of the market, Early Cancer Detection (ECD). At the time of our investment, the founders of Gene Solutions had a dream to use blood samples of cell-free DNA to detect cancer much earlier than when it is typically detected using traditional methods, in other words, to detect cancer before any symptoms are experienced by the person. This is very important because the earlier that cancer is detected, the easier, safer and cheaper it is to treat. There could be as much as a 10x difference in survival rates between detecting cancer early and detecting it too late.

This seemed like shooting for the moon because only a few U.S. companies were in clinical trials for such tests, and those companies were already worth billions of dollars. Success in this field would require new technological breakthroughs, successfully publishing clinical trials, new medical partners (cancer doctors rather than obstetricians), and different distribution channels than their NIPT tests. So when we initially invested into Gene Solutions in October 2021, it did seem quite risky.

Fast forward 2 ¼ years and the successes of Gene Solutions are beyond our expectations. During this period:

They developed the necessary technology, ran clinical trials with 12,000 patients in partnership with 85 hospitals in Vietnam and other Southeast Asia countries, and validated the efficacy of their early cancer detection tests. The results of these clinical trials were published in leading medical journals eLife, American Society of Clinical Oncology (ASCO), European Journal for Medical Oncology (ESMO) and others.
They opened a branch office and diagnostics lab in Singapore as a regional service center, and formed a partnership with Innoquest Diagnostics.
They established a subsidiary in Thailand and formed partnerships with the leading hospital chains such as Bumrungrad International and Bangkok Dusit Medical Services (BDMS).
They established a subsidiary and opened a diagnostics lab in Indonesia, and formed a partnership with a leading medical group, Kalbe Farma, as well as other leading hospital chains. Meanwhile they partnered with the Indonesian Obstetrics and Gynecology Association (POGI) to promote Gene Solutions NIPT tests to pregnant women in Indonesia.
They established a subsidiary in the Philippines and formed a partnership with leading hospital chains St. Luke’s Medical Center and The Medical City.
They established a subsidiary in Malaysia and formed a partnership with leading hospital chain, Pantai Hospitals.
During this time, revenues grew from $15 million in 2021 to $40 million in 2023, a CAGR of 63% since we invested.

So 2 ¼ years after our investment they converted their dream into reality, became a regional company in Southeast Asia and the first mover in making Early Cancer Detection more affordable for the people of Southeast Asia.

Why is Gene Solutions so successful?

In Mekong Capital, we look at our investee companies through the lens of Vision Driven Investing. It is not something we can give to them or do for them, but rather Vision Driven Investing is 15 aspects of running an organization, that when companies put their attention on those and do those well, they will reliably achieve their long-term goals. We started this Vision Driven Investing approach around 2009 when we observed what worked at companies such as MobileWorld and Golden Gate that were performing very well. We continued to refine it over the years based on what worked or didn’t work at our investee companies. These days we have a Data Science and Business Intelligence team who help us to validate and improve each of the 15 aspects of Vision Driven Investing. And the data validates that companies that are “mature” in these 15 areas do perform exceptionally well, and have a high probability of achieving their long-term goals (which we call their “Vision”).

Now I’ll illustrate how Gene Solutions is a model of Vision Driven Investing and how they stand out in some of these areas. Reading this, it should be self-evident that a company where these things are happening will very likely be successful.

Vision: In November 2021 Gene Solutions led a 2-day Vision connection event for its senior team. The event was co-led by the founder/CEO, Dr. Nguyen Hoai Nghia, and a member of Mekong’s team who specializes in facilitating such events. During the event, Dr. Nghia shared his vision and got the alignment of the team around that vision through a series of conversations. That event was a great success.

Dr. Nguyen Hoai Nghia, Founder & CEO, Gene Solutions

Given the company is evolving quickly, Gene Solutions occasionally modifies their vision whenever necessary. Currently their vision through 2029 looks like this:

Gene Solutions envisions a transformative impact on NIPT and cancer care in Vietnam and Southeast Asia by 2025-2030.
Targeting 50% of all pregnancies across Southeast Asia to have affordable NIPT by 2029.
Targeting to reach around 850,000 affordable oncology tests across Southeast Asia by 2029, including annual early-stage multi-cancer detection, precision diagnostic and relapse monitoring tests.
Expanding precision therapy access to 300,000 Southeast Asian patients through an integrated healthcare ecosystem.
Advancing immunotherapy and cell-based treatments in our specialized Cancer Research Center and Hospital.
Aiming for a 3-fold increase in survival rates, making cutting-edge cancer treatments accessible and cost-effective.

One thing that is notable about their vision is how actionable and measurable each element is. It’s not fluffy and aspirational. Rather it consists of clear goals that provide great clarity to Gene Solutions’ team what they will deliver over the coming years.

Furthermore, most managers in the company are very clear about what the vision is and they have their attention on it. Whenever we meet the CEO, Dr. Nghia, he always mentions some aspect of the vision even when we don’t ask about it. He makes the vision the central context of what Gene Solutions is doing. And I know that if he is doing that when he meets us, he is doing that with his team as well. So most people in Gene Solutions are on the same page about where the company is headed and what is their role in delivering that.

Strategy: We look at “strategy” as what is the most optimal and direct path and key milestones for achieving the vision. While it is normal that the strategy of many companies is just to do more each year of what they are already doing, Gene Solutions is quite different. They have clearly mapped within all aspects of their business exactly what milestones or new developments are necessary in every period in order to ultimately achieve the vision for 2029. Their priorities in the first half of 2024 are quite different from their priorities in the 2^nd half of 2024, and this continues all the way through the achievement of their vision in 2029. It is well thought out, and provides clarity and certainty to the team and the Board that there is a clear path to actually achieving the vision.

Employee Engagement and Management Team: Gene Solutions has been able to attract and keep an extraordinarily competent team. They are almost never vacancies in the senior team, and when there are openings, those positions are filled quickly with highly competent people. In addition to their department heads, and country teams in 5 countries outside of Vietnam, Gene Solutions has assembled a world class R&D team comprising 40 people including 12 PhDs, and a world class data science team with 22 people including 7 PhDs. Employee turnover is extremely low.

Gene Solutions attractiveness as an employer and employee engagement is so high due to a few factors:

It is a purpose driven company in which the employees and even the Board and shareholders can experience a strong sense of fulfillment that they are helping to save people’s lives through their ecosystems of oncology and maternity products.
The caliber of people who work at Gene Solutions is very high and employees are given great challenges to solve. Hence it attracts competent professionals who wish to be surrounded by other highly competent people.
Gene Solutions is a pioneer in Vietnam and brings pride to Vietnamese employees to be part of that. It validates that Vietnamese companies can develop world class cutting-edge biotechnologies, and also that Vietnamese companies can successfully expand and become regional leaders.
Gene Solutions provides great career development and advancement opportunities. At Gene Solutions, people in technical roles can become leading experts, while people in management roles have regular opportunities to move up as the company continues to grow.
Finally, the people at Gene Solutions firmly believe in the future of the company. The vision is alive, and people working there are confident that Gene Solutions will continue to be successful.

Velocity of Action: In recent years we started to notice that companies that have a rapid pace of action and decision making tend to perform much better than those who are slow to act. Conversely there are some companies that know what needs to happen but due to various considerations, bureaucracy or endless planning it takes them months or years to get it done. Gene Solutions is a model for fast pace of action. As soon as they know that something needs to be done, they will normally be working on it the same day. This is in part how they successfully expanded into 5 new countries over the last year. This fast pace of action has become a competitive advantage and played a role in Gene Solutions being the pioneering company that it is.

Business Intelligence & Data Science:

At Gene Solutions each Senior Leader relates to Business Intelligence (BI) & Data Science (DS) as an access to breakthrough in business performance. Their BI system easily makes results visible and accessible to everyone. Their Senior Leadership team have built a data-driven culture which can be experienced insofar that all teams are using data to make informed decisions. Multiple team leaders (Operations, Sales, Finance) are providing regular input on how to optimize their dashboard system in an agile manner.

Gene Solutions also leverages their forecast/prediction models for sales pricing and product development.

Delegation & Accountability:

While the team is certainly working hard, no senior team member at Gene Solutions is a significant bottleneck. They delegate down to the necessary levels, while holding people accountable to perform. This enables the team to execute and deliver great results across a wide range of operations in multiple countries, without having to involve the CEO or COO in everything.

What’s next?

Now that the efficacy of Gene Solutions Early Cancer Detection, SPOT-MAS™, has been validated in clinical trials and published in leading medical journals, they will be partnering with more hospitals in Vietnam and Southeast Asia to make these tests more widely available. Already offered at a fraction of the price of similar tests offered by competitors from the U.S., Gene Solutions’ goal is to ramp up test volumes while bringing down the costs so that Early Cancer Detection is available and affordable to ordinary people throughout Southeast Asia.

Gene Solutions is also in the early stages of establishing a Cancer Research Center in Vietnam, which will develop novel technologies for cancer treatment, such as immunotherapy, with the goal of making these therapies much more affordable than what is the norm today.

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Mekong Capital makes investments in consumer-driven businesses and adds substantial value to those companies based on its proven framework called Vision Driven Investing. Our investee companies are typically among the fastest-growing companies in Vietnam’s consumer sectors.

In January 2022, Mekong Capital founder Chris Freund published Crab Hotpot, a story about a bunch of crabs who found themselves stuck in a boiling pot. The colorful cover of “Crab Hot Pot,” complete with expressive cartoon crustaceans, looks like a children’s tale at first glance. But as one continues reading, it becomes clear that the work has an important message about organizational transformation, leadership and focusing on a clear vision for the future.

The book is available on Tiki (Hard copy): bit.ly/38baF8a (Vietnamese) and Amazon: amzn.to/3yWunzG (English)