FRUGAL: Ashley Uys is growing his rapid test-kit manufacturing business by reinvesting all the income from sales. Picture: TREVOR SAMSON
FRUGAL: Ashley Uys is growing his rapid test-kit manufacturing business by reinvesting all the income from sales. Picture: TREVOR SAMSON

IF SOUTH Africa is to improve its competitiveness in the global economy and create more jobs, it must foster more innovative entrepreneurs such as Ashley Uys.

Uys, who runs Real World Diagnostics, manufactures a series of rapid test kits, which can help detect pregnancy, HIV, malaria and five different types of drugs, including cocaine, tik and dagga.

Last month, he won R1m from the South African Breweries (SAB) Foundation as first prize in its annual Social Innovation awards. The grant will help fund his new and expanded factory in Brackenfell, Cape Town.

Uys exemplifies how industry, the government and universities can partner to improve innovation. After graduating with a BSc honours in biotechnologies from the University of the Western Cape (UWC) in 2003, Uys enrolled in a two-year incubation internship, run by Wits University, the University of Cape Town (UCT) and Acorn Technologies — a Cape Town-based incubator which, at the time, was funded by the Department of Trade and Industry but has since been absorbed by the Technology Innovation Agency.

He was then placed in a host company, Vision Biotech, where he was able to hone his skills, while the incubator paid half his salary. Initially he spent two days a week working on his business idea, slowly stretching this as his sales picked up, until he was spending the bulk of his time on his own business.

At the time, Uys was the only one in his class of 13 to opt to start a new enterprise during the internship. The remainder chose to write business plans on how they would assist existing companies. "I always wanted to be in business and be my own boss," says Uys. "I always wanted to be an entrepreneur, but I wanted to stay in science."

On completion of his internship, he set up Real World Diagnostics in 2006 and moved temporarily to UWC, which gave him office space, and then to Muizenberg, where he set up a small factory.

Instead of looking around for venture capital investments to fund the large capital outlay he needed for developing new tests, he opted to start small, initially just marketing his products and those of others, while outsourcing the manufacturing to a third party.

The only equity he has given away has been that in his manufacturing company, Medical Diagnostech, where he has given 14% to a UCT professor, with whom he consults, and the remainder to one of his lab technicians, Lyndon Mungur.

In 2008, he won the national leg of the SAB Kickstart Competition and with it R200,000 in prize money and a further R125,000 in grant money, which he ploughed back into his business. With the cash flow he generated from distributing his products, as well as the cash he won through SAB Kickstart, he was able to start buying laboratory and injection-moulding equipment to manufacture his own products, until he was able to afford his own factory space.

Last year, he exported more than 2.5-million malaria test kits to Pakistan, Papua New Guinea and other countries via a distributor to the World Health Organisation. He also sells his kits to Alpha Pharmacies and local wholesaler Pinnacle Pharmaceuticals.

He says his new factory will allow him to manufacture about 20-million test kits a year, and once his ISO (International Standards Organisation) accreditation is approved, he will begin shipping new HIV kits into the rest of Africa.

He claims it is just him and his former host company that manufacture rapid test kits in Africa; the remainder of the African companies in the sector simply assemble kits shipped in from overseas.

Kits cost between R4 for a simple pregnancy test and R23 for a full drug-abuse test that can test for five different types of drugs and can produce results within five minutes. Uys says the tests are 99.9% accurate, but that it is still necessary to have results confirmed by a medical laboratory. Along with the kits, he also produces a battery-operated breathalyser, which he sells mainly to pharmacies as well as to SAB, which distributes them to staff.

Despite his advances, Uys learnt a hard lesson about lawyers and contracts two years ago, when the Western Cape High Court ruled in favour of a UK businessman in an intellectual property dispute over the development of drugs and alcohol rapid tests.

The case left Uys R300,000 out of pocket — "I basically paid all that money for a practical course on law."

Uys says that when he signed a contract with the businessman to set up a joint company, he made the mistake of not taking the contract to a lawyer first before he signed, because he trusted the businessman as a friend.

However, two months ago, the businessman came back to him and the two signed a contract, with the UK businessman settling for a 2.5% cut of sales for the first two years of sales.

Uys is now looking ahead. He says that within the next five years he wants to be able to manufacture his own antibodies — which are used in rapid tests, along with antigens — as now he has to import them from the US. When he is able to do this, he will be able to develop kits for any test possible.

He’s also developing a prediabetes test, which will allow someone to make the necessary lifestyle and diet changes before the onset of diabetes.

Uys says he has gradually built up his business, which has allowed him to reinvest income from sales into his business.

Many business owners often make the mistake of dipping into their business’s income to cover personal expenses, but Uys is firmly against this: "At the end of the day, the only time your lifestyle should go up is when the company makes enough money to increase your salary."

Strangely, the incubation internship that helped Uys get started is no more. After the initial pilot, of which he was part, the department closed the programme.

This surprises Uys, who points out that coming up with a new product takes hundreds of thousands of rand in development, making it vital that any would-be entrepreneur developing a product gets all the support he can.

"If it wasn’t for the internship, I wouldn’t have had a business, so I don’t know why the government didn’t invest in something like that again."

The best way for the country to develop more innovative businesses, he believes, is to have universities help commercialise intellectual property through business centres and incubators, with the support from the government to help start a business.

"That’s where it all starts — formal education and then the support of the government to start your own venture."

The only time your lifestyle should go up is when the company makes enough money to increase your salary