Manufacturer Is Will Rogers of Small Business : Applied Medical Resources head uses common sense to describe his philosophy in building his medical device manufacturing firm.
Call him the Will Rogers of small business.
Said Hilal sits in his sparsely furnished office at Applied Medical Resources and uses homespun, common-sense terms to describe his philosophy in building a small medical device manufacturing firm from the ground up.
Consider: “What does the health care community need? It needs better medicine at a lower price.”
Or: “Too many people say, ‘Business is business.’ I say that business is relationships. And my commitment is to build relationships.”
And so goes a chat with Hilal, 44, a Lebanese immigrant who came to the United States in 1968. He founded Applied Medical Resources in 1988 and is its president. He reminds a visitor that there is no chief executive officer in his organization.
He hates the title, he stresses.
Hilal, who holds an MBA from USC and a master’s degree in mechanical engineering from Cal State Long Beach, also stresses that the tie he wears is pulled out of the closet only for special occasions.
By taking a family approach to management and a customer-is-always-right approach to sales, Hilal has crafted a business with high productivity and has helped the privately held company garner a growing reputation as an up-and-comer.
The small manufacturer, with seven product lines including catheters, surgical clamps and laparoscopy tools, which are used to view the inside of the body during surgery, is well on its way to becoming solvent while avoiding selling shares of the company to the public.
The trick?
Keep it simple, keep the company private--at least for the time being--shy away from an endless search for the “big breakthrough product” and offer high-quality, basic medical devices at affordable prices.
“Overall, their business strategy seems to be succeeding,” said David G. Anast, publisher of the Biomedical Market Newsletter, based in Costa Mesa. “I think they will do well in the next two or three years.”
Hilal said that the $10-million-a-year concern began with funding from Menlo Park venture capitalist Institutional Venture Partners.
Consisting of seven employees at the time, Applied Medical Resources opened in a tiny office in Santa Ana. Since then it has moved to a 40,000-square-foot complex in a hillside in south Laguna Hills, employing 148 people.
Inside the company’s small offices and laboratories, an absence of suits is readily apparent. Hilal is on a first-name basis with fellow workers as he tours the small plant.
The facility is rife with examples of pared-down management and a no-frills operation that allows Applied Medical Resources to undercut its competitors. There is no ornate foyer, the offices are mostly bare-walled and the owner has no personal secretary.
“The concept was from the beginning, ‘Let’s get this company profitable in three or four years,’ ” Hilal said. “Let’s not get into the opulence or get into big buildings. Let’s just do business and keep our nose to the grindstone.”
By limiting administrative costs and dividing the company into three divisions--vascular (relating to blood vessels); urology (urinary tract); and laparoscopy--Hilal said he has been able to offer products at prices that are 20% to 30% lower than competitors. There have been no price increases since the company first began churning out vascular clamps that are less damaging to blood vessels.
The company moved quickly to produce a line of catheters that surgeons use to unclog arteries or perform specialized surgical procedures. Those two products have made the vascular division profitable in its first three years, he said.
“We have the bread-and-butter products that pay the bills and keep the lights on,” Hilal said. The company is now working on more specialized medical devices in the urology and laparoscopy fields. He estimates that with several new devices within months of being approved by the FDA, those two divisions should also become solvent by the end of the year.
Peter Thomas, a general partner with Institutional Venture Partners, said his company has invested more than $10 million in the start-up firm.
That money has been well spent, he said.
“They certainly have a value-driven strategy,” Thomas said. “Plus, their success is (due) to a combination of creativity and hard work.”
Creativity and hard work, Hilal said, could drive the company’s revenue to double to $20 million by the end of 1993, not by raising prices, but increasing sales.
Hilal said his company invests about 15% of the company’s profit in research and development, but he adds that developing new technology for its own sake will not lower the cost of health care. He said he staunchly supports cost cuts.
“I am absolutely convinced that you shouldn’t create technology in search of an application,” Hilal said. “That gets too expensive. Technology shouldn’t lead the company. I would rather concentrate on people.”
