“It’s just plain fun” aren’t words you’d expect to hear from a CEO of a medical device company working in a crowded market and physically surrounded by a cluster of competitors.
But this company does things a little differently. It doesn’t employ a sales force, advertise its products or exhibit at trade shows. Although it incubates startups in-house, it’s not trying to be a game changer. Its CEO — who “loves” audits because they’re like free consulting — didn’t even have a business plan for the first several years of the company’s existence. He says no to customers sometimes. He’s never tapped into venture capital and makes it clear he has no intention of divesting or selling off equity in the company.
“I wouldn’t do that to my people or to the community,” said Brian Emerick.
That’s the corporate culture at Micropulse Inc., a medical device manufacturer that employs 230 people in rural northeast Indiana. The company brings in about $30 million in annual revenue from orthopedic instruments, implants and sterilization cases and trays, but Emerick will tell you it hasn’t always been that way.
A bootstrapper from the beginning, he started Micropulse in 1988 in his farmhouse garage as a small tool-and-die operation with a can-do-it-all attitude. Most of his business was initially focused on the booming automobile industry.
When that work went largely overseas in the late ’90s, Emerick decided to change directions. The company went from getting 70 percent to 80 percent of its business from the automotive industry in 2003 to getting 100 percent of it from the medical industry in 2004.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Although he was originally concerned that a focus on medical and orthopedic products would limit his business, Emerick said it’s actually done exactly the opposite. “I don’t care what kind of opportunity you would dangle in front of my nose now, I would never do anything but medical,” he said. “It’s about focus, focus, focus.”
The 100,000-square-foot manufacturing facility that is Micropulse now sits on land next to Emerick’s farmhouse and gets about $2 million worth of new equipment every year. The company’s revenue grew 26 percent in 2010 and 7 percent last year. And it’s gotten to this point without any venture capital investments.
“We’re bootstrappers,” Emerick said. “It’s not in our Midwest nature to do high risk.”
The company’s growth strategy is equally grassroots. It favors the “build it and they will come” philosophy, relying on culture, integrity, relationships and patience. “It can take two years to develop a relationship with a new customer,” said Emerick, who couldn’t recall the last time Micropulse lost a customer. “If it happens quickly, something’s wrong.”
Micropulse aims for manageable growth of 10 percent to 15 percent annually. “The industry is growing — all you have to do is stay status quo to grow with the market, and if you do something better than the guy next door, you’re going to grow faster,” he said. “We’re always just trying to be better, and the growth will come with that.”
Although it’s primarily a manufacturer, Micropulse does create some intellectual property via the orthopedic startups it houses and incubates in its in-house OrthoVation Center. Upon investment, Micropulse becomes the manufacturing partner of these companies and takes a 10 percent to 15 percent equity stake in exchange for use of Micropulse’s resources.
The incubator currently hosts four companies: Biospine, a spine implant company; Sites Medical, which develops innovations focused on spine, sports medicine and orthopedic oncology; Del Palma Orthopedics, which creates devices for hand surgeons; and Nanovis Inc., a nanotechnology company creating surfaces that make orthopedic implants more tissue friendly.
This down-home type of business structure certainly wouldn’t work for everyone or every market. But it’s working for Micropulse, which is why Emerick said he has no interest in divesting any parts of the company. Instead, he’ll keep chugging forward, focusing on automation, lean manufacturing and complex instruments that other manufacturers can’t make.
“It’s just plain fun,” Emerick said of running the business. “It’s like fishing: you take your bait out there [and] see what you can get.”
