A leading Brazilian specialist in optoelectronics, Opto Eletrônica has always been sharply focused on its goal of developing cutting-edge technology for Brazilian industries. As President Jarbas Caiado de Castro Neto confesses to Michael Sommers, now that Opto has found the ideal niche markets, it’s focused on earning profits as well.
The founders of Opto Eletrônica were no strangers to learning when they decided to start up a small optoelectronics company in 1985. In fact, they were all researchers and technicians who worked in the physics department of the São Carlos campus of the University of São Paulo (USP), a state school considered one of the most prestigious universities in Latin America. As if these credentials weren’t enough, the company they created was located within the university itself – which made it easy for the company’s founders and many of its employees to continue teaching and carrying out cutting-edge research.
And yet, despite the scholarly atmosphere, when it came to running a profitable business, Opto Electrônica found itself confronted with a steep learning curve. “For the first 10 years we hardly grew at all. We had no experience in managing a company and it took us a while to learn how,” confesses co-founder, professor, and current president, Jarbas Caiado de Castro Neto. “In truth, it was only 15 years ago that we discovered and began to operate in the three markets in which we work today: ophthalmic, anti-reflective coatings, and aerospace/defense.”
FINDING ITS NICHES
While Opto wasn’t racking up profits during its first decade of existence, it was hardly idle. Between 1986 and 1996, the company carried out research and developed new products for a wide variety of industries. Opto nationalized the production of blue filters used for dental resins and reflectors. It was also the first company in the southern hemisphere to produce a Helium-Neon laser for which it subsequently developed a wide range of industrial applications. Along the way, Opto garnered a reputation for being in the technological vanguard. Important innovative breakthroughs ranged from the development of equipment capable of measuring cane’s sugar content to Brazil’s first supermarket barcode reader.
“Companies from various industries would come to us with a problem and we’d develop equipment for them,” recalls Castro Neto. “Afterward, the company would be happy as a clam – and we’d be without a product! The most famous example was the barcode reader, which we sold to Itautec. Because we didn’t have our market niches defined, we always ended up selling our technology to other companies for them to manufacture.”
The turning point came in 1996 when the company launched a pioneering anti-reflective coating treatment for glasses that revolutionized the lens market in Brazil. Prior to this, Opto had already been focusing on technology for the ophthalmic industry, but with the anti-reflective treatment it finally found its niche and took off. Although initially Opto had the market to itself, it wasn’t long before French giant Essilor set up shop in Brazil as well. Today, Essilor ranks first in the market with a 45 percent share, while Opto is in second place with 35 percent. Aside from its São Carlos headquarters, the company has opened four affiliates throughout Brazil – in São Paulo, Fortaleza, Brasília, and Porto Alegre – whose strategic locations have ensured Opto’s continued organic growth.
Meanwhile, in 2000, the company – which had been producing equipment such as photocoagulation lasers and surgical microscopes since the early 1990s – began to pursue, in earnest, the market for medical (principally opthalmic) devices. Almost immediately Opto conquered the Brazilian market by offering clients vanguard technology with which no other companies could compete. Today, for example, Opto is one of the only manufacturers in the world of a completely digital retinograph as well as various types of lasers such as the innovative i-MP (Indocyanine Green Mediated Photothrombosis) laser treatment, which is still undergoing clinical trials.
“The technology we come up with is the most modern in the world,” declares Castro Neto. “And because of this we’ve really consolidated our place in the Brazilian market. Today, we’re the Number One producer of opthalmic equipment in Brazil, with a 60 percent market share. For this reason, our present goal is to branch out internationally. The Brazilian opthalmic market represents 2 percent of the total world market; this means we have 98 percent that we can try to capture. Our most conservative goal is to conquer 5 percent of the global market – which would be the equivalent of 4 times our share of the national market. Of course, this would also mean we would quadruple our profits.”
Opto is not attempting to meet these ambitious goals on its own. Instead, the company is forging strategic alliances with international partners such as Optos – “just like us, but with an extra ‘s’” laughs Castro Neto – a Scottish-based retinal imaging company that has a very strong presence in the U.S. market. “Although we possess international patents for all of our technology, brand recognition and marketing are key for international sales. For these reasons, forming these global partnerships will really be advantageous for us.”
Interestingly, Opto’s successful domination of Brazil’s ophthalmic market is due, in significant part, to the company’s simultaneous forays into the aerospace and defense sector. “This is a highly strategic area that demands a total commitment to state-of-the-art technology,” explains Castro Neto. “It isn’t surprising that a lot of the technology we began developing for aerospace and defense ended up driving the progress we made in the medical sector.”
Opto produced its first optical components – high precision prisms for imaging systems – for the aerospace sector in 1993. The following year, it branched out into the military realm with the creation of laser sensors for defense systems. However, it wasn’t until a decade later that the company entered the aerospace/defense market in earnest. A watershed moment occurred in 2006 when the company was invited to bid for a project involving the development of cameras that would be used on Sino-Brazilian satellites CBERS 3, CBERS 4, and Amazônia 1.
Opto’s winning the contract had massive repercussions, including the construction of a new 15,000-square-foot facility and the hiring of 70 new researchers (Opto currently employs 400 full-time workers), as well the investment in new high-tech equipment, which included the first production line of aspherical lenses in Latin America. As a result of these expansions, in terms of space and equipment the company has the potential to triple current production levels which, in 2010, netted the company R$100 million (roughly US$60 million) in revenues (antireflective coatings accounted for 20 percent while opthalmic and aerospace/defense equipment each yielded 40 percent).
“The aerospacial/defense sector is very strategic to Brazil right now. And our role is pivotal since in terms of satellite equipment, we’re the ones that provide the icing on the cake,” says Castro Noto. “After all, everything else – from sensors to processing software – supports the cameras we supply. Since we’re the only ones in Brazil who specialize in optronics, we’re considered strategic by the government. That said, we still have international competitors. Although in theory we have an edge because we’re Brazilian, in practice we have to compete for resources and projects. Viewed the aggressiveness of Brazil’s national defense program, competition is fierce. At the same time, it’s this competitive factor that forces us to stay ahead in terms of new technology.”
Moreover, it’s this commitment to new technology that keeps Opto ahead in the markets in which it operates. “Our company philosophy is centered around a culture that is driven by the need to find new ways of bringing benefits to our clients,” say Castro Neto. “And what better way to do this than by being located right in the midst of four universities?”
Aside from two USP campuses, Opto is also surrounded by the federal University of São Carlos and the privately-owned Unicep. “Our ties with these universities – and many others around Brazil – are invaluable,” states Castro Neto. “Because of the marketing we do, students view Opto as a good employer and this has valuable consequences for us. All the members of our R&D team are undergraduate, masters and doctoral students, and they are very motivated.” Ultimately, being in this academic environment keeps Opto close to its original roots while ensuring its dynamism. It also guarantees that the company known for its imaging expertise never loses its focus.