Ivac Founder Chosen to Guide Fisher Scientific
Richard A. Cramer, the co-founder of Ivac and Imed, has been selected chairman and chief executive of Fisher Scientific Group, a newly formed medical and scientific technologies company with $1 billion in annual revenue, a Henley Group spokesman said Monday.
Fisher Scientific Group, a combination of four companies owned by the Henley Group, “could ultimately become a public company in its own right,” according to Henley Chairman Michael Dingman. He has previously said that Henley, the Allied-Signal spinoff consisting of 35 diverse companies with $3.5 billion in revenue, would actively buy and sell companies to bolster the value of its stock.
The new group was formed in part to give Henley “access to markets for the products of other firms we plan to acquire,” according to Dingman, who described the group as a potential “source of significant growth in earnings and shareholder value.”
Fisher Scientific Group will be based in the former Signal Cos. La Jolla headquarters building.
Fisher Scientific Group includes Imed, a San Diego-based manufacturer of intravenous devices; Pittsburgh-based Fisher Scientific, a laboratory-products manufacturer and distributor, and Instrumentation Laboratory, which is based in Lexington, Mass., and manufactures medical and scientific instruments.
Last week, Henley acquired a “significant interest but not a controlling interest” in Barrett Laboratories, a Sacramento-based company that designs and produces electronic information management systems, Cramer said.
For Cramer, the announcement signaled a return to running Imed, the company he helped found in 1972. Warner-Lambert purchased Imed in 1982 for $468 million, and in April, Henley acquired the company for $163.5 million.
“I see this as an almost ideal combination of four elements (that will) really take advantage of (cost-cutting) trends in the hospital industry during the next three to five years,” said Cramer. In 1967 he founded Ivac, another intravenous products company that was sold to Eli Lilly & Co. for $53 million in 1977.
Cramer suggested that his La Jolla-based management team--which will include no more than 10 corporate officers--should “go into 1987 on a profitable note. We hope to get (the company) cleaned up and operating at a break-even level this year.”
Part of Fisher Scientific Group’s growth will come from an “aggressive” acquisition plan that will result in new products the company can move through a 1,600-person sales and marketing force, Cramer said.
“Although Fisher salesmen have not been selling high-ticket items, they do (have) absolute market ownership,” Cramer said. “A Fisher Scientific truck pulls up to every hospital in the U.S. at least once a week. (Fisher is) a superb service organization with a great supply system.”
Laurence Lytton, a vice president with Drexel Burnham Lambert in New York, said, “I think that part of Cramer’s strategy is to increase the quality of the product being pushed through the distribution system. That’s where Imed, with its proprietary product line, would fit in.”
Katherine M. Stults, a New York-based vice president of research with Dean Witter Reynolds, said, “It shouldn’t be that difficult (for Fisher Scientific Group) to turn a profit. For one thing, they can make better use of (Imed’s and Fisher Scientific’s) distribution systems because the products are not incompatible.”
Cramer also expects to benefit from expensive research and development projects initiated by Fisher Scientific Group and Instrumentation Laboratory when the two companies were part of Allied Corp. Consequently, Fisher Scientific Group will soon unveil a “brand-new product line that has been in the works for some time now,” Cramer said.
Fisher Scientific Group also will gain access to technology through its role as the largest single shareholder in Barrett Laboratories.
Cramer said, “They are really a ‘Star Wars’ company in terms of Silicon Valley high-tech software and devices that tie instrumentation together.”
Cramer also suggested that Fisher Scientific Group will be able to capitalize on a national push to reduce the cost of health care.
“The whole new thing that we’re doing fits right in with regulations that mandate lower costs,” Cramer said. “These regulations fit companies like Fisher Scientific, Imed and Instrumentation Laboratory” that can help hospitals trim costs.
If Fisher Scientific Group did move into the black, it would be seen as “a company that is doing the kinds of things that the market would like,” Stults said. “There are some former Allied-Signal businesses--like soda ash--that wouldn’t be interesting even if they were doing wonderfully.
“I think (Cramer) is going to try and build some kind of track record that would make (the new group) desirable as a takeover candidate or an independent company. They’ll also be able to use this as an illustration of what (Henley Group) wants to do down the road.”
Lytton said the quick acquisition of Imed from Warner-Lambert and the formation of Fisher Scientific Group is “important because (Wall Street is) very happy to see that Henley’s restructuring is already beginning.”
“I think Cramer’s certainly well-qualified to integrate the companies,” Lytton continued. “He knows the business very well.”