Start-up to rising star


BDO has worked closely with Star Combo as they have transformed from a start up to a listed company in fast growth mode. BDO National Leader for Manufacturing, Ryan Pollett, and Star Combo CFO, Daniel Zheng, talk about their journey.

Manufacturers’ Monthly finds out more behind the growth of Australian vitamins business, Star Comboas they worked with BDO to become one of the country’s leading contract manufacturers of supplements.  

Star Combo Pharma Limited’s journey from start up in 2004 to implementation of a high growth strategy has had little to do with luck. Extensive industry knowledge and expertise has seen the Sydney-based business well on the road to fulfilling their strategy to become Australia’s leading contract manufacturer of vitamins and health supplements.  

Founder and Managing Director, Star JinXing Zhang, is a biochemist with over 35 years’ sector experience and CEO Su Zhang has been working in pharmaceutical industry for over 10 years. From manufacturing a few product lines and selling small volumes into chemists in the early days, the company now has a multi-channel distribution for own-brand and contract manufacturing. Star Combo established the organisation’s strategy of ensuring quality through management of the entire production chain, which has led to the stringent quality Therapeutic Goods Association (TGA) certification. 

Building a partnership with the right professional expertise has been central to Star Combo’s development and success. BDO Audit were first engaged by Star Combo in 2018 to assist with the initial public offering (IPO) on the ASX, with partner Grant Saxon assisting the company to transition from a privately owned business to a listed entity.  

According to CFO Daniel Zheng, BDO’s guidance was “transformational”, delivering much more than the statutory audit. “Our journey through this transition was complex and required a number of recommendations around structural and governance changes. BDO provided this and more. We realised the value of having a trusted advisor in the professional services sector to help guide us through our growth and development. This relationship has been something we have been able to rely on as we navigate our growth strategy.” 

BDO’s National Leader for Manufacturing, Ryan Pollett, connects BDO service line experts with Star Combo where they are needed most. “We work with them across a number of different areas: audit and assurance, corporate finance, corporate tax, transfer pricing, indirect taxes, R&D, financial reporting… whoever the subject matter expert is at BDO is the person we put forward to work with them.” 

Vitamin supplements produced by Star Combo.

What a growth strategy looks like in practise 

Since the IPO in May 2018, Star Combo has acquired an Australian-based e-commerce platform and two physical retail stores in Sydney to sell their own-branded and contract-manufactured products.  

Online distribution accounts for over 50 per cent of revenue and has enabled the group to expand internationally, with multiple distribution channels throughout Australia, China, New Zealand, Vietnam, Korea, Thailand and Russia. Significant contracts with the likes of TerryWhite Chemmart and Chemist Warehouse means that that there is also a very strong retail base for Star Combo’s nutraceutical product in the Australian market. 

Today, Star Combo’s strategy is twofold: to grow their manufacturing capabilities and effectively double production, and to leverage government initiatives and keep abreast of the market through development of an R&D capability.  

According to Daniel Zheng, both initiatives have been developed with the assistance of Ryan Pollett and the team at BDO. “Ryan has the expert knowledge and experience in the manufacturing sector. He’s on top of sector trends and initiatives, and in our fast growth mode his skills and knowledge are very handy.” 

The upscale the current manufacturing facility capabilities is in progress, improving the site and inserting new production lines which will double output. 

Star Combo have also purchased the land adjacent to their manufacturing facility to develop a new, multi-level complex to accommodate a purpose-built R&D and test laboratory centre. This facility will enable the company to develop new and innovative products that will not only extend their product offering but attract a higher margin. 

With the assistance of BDO’s Research & Development (R&D) team, Star Combo receives the R&D Tax Incentive Offset to fund their ongoing R&D program so that they can continue to deliver new and innovative products to the market.  

Strengthening relationships 

BDO has worked closely with Star Combo throughout the growth of their business, building a partnership that is highly valued by both parties. “There’s no doubt that it is a journey” said Ryan Pollett. “Like all businesses they have had challenges, and COVID has thrown in a few stumbling blocks – but they are doing well. I believe that authenticity and trust has been an essential part of the relationship. We do have robust conversations – it is, after all, our job to provide recommendations – but it’s all done in a very collegiate and collaborative way.” 

BDO’s governance advice and internal control recommendations have been welcomed and implemented by Star Combo. “After working with Ryan for a number of years I feel we have developed a relationship based on mutual trust,” said Daniel. “From my perspective this is built on two key things: a personal connection, and the technical skills and relevant industry expertise. These factors, and the trust that has resulted, have helped our business grow.” 

“Ryan is very approachable and down-to-earth. He is very easy to contact – when I have questions, he is just a phone call or e-mail away. However, behind this amicable person is someone who is very driven. For example, our ASX reporting is always very tight, yet each time Ryan makes sure these timelines are met comfortably. His commitment and professionalism really stand out.” 

Clearly, a successful growth strategy in manufacturing has far more to do with good planning and establishing the right partnerships than it has to do with luck.