LOUIS T. ROSSO : Chairman, chief executive officer and president, Beckman Instruments Inc.

Louis T. Rosso has been with Beckman Instruments for 35 years and has been at its helm since the medical instrument maker was spun off from SmithKline Beckman Corp. in 1989. Under Rosso’s direction, Beckman has aggressively established itself in Europe and Asia. Because of the push into global markets, about 55% of the company’s revenue comes from overseas sales. Rosso also has strong views about the effect of health care reforms on the medical device industry. He recently spoke with Times staff writer James M. Gomez.

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What do you think the Health Care Task Force is doing right? What do you think it is considering that is simply wrong?

The fact that they are really looking for a way to take care of the disinherited part of the population is very positive. I think the issues of seeing that people don’t get left without insurance is very positive, that somehow we take care of everybody with some basic level of medicine. Those are all right things; they are all right objectives. On the negative side, I don’t think anybody knows how they are going to do that. How are we going to pay for it? I think that it’s a very onerous problem and one that is so complex that simple solutions are not probably going to be the right solutions. It’s going to be a multifaceted group of things worked in over time.

Do you think that the need to lower costs in medical care spurs creation of devices that feature more cost-effective technology?

Absolutely. And it is in contrast to what may have gone on in the late ‘70s and early ‘80s, where the objective was to come up with new and more expensive tests or complicated devices that can do more difficult things. Now you’ve got the cost-constraint mind-set that is saying, “We’re going to do less, maybe on more people, but less.” And so cost-effectiveness for the customers is what it’s all about.

How can a company absorb the high R&D; price tag without raising medical costs and subsequently raising the ire of the Clinton Administration?

It is becoming incredibly expensive to develop and market products. And that means to be in the business you either have to be a very specialized niche player or you have to work toward a global market. The U.S. market by itself will not support the investments required both in R&D; and marketing to provide a return on the products.

Hence, you will see just about anybody in this business with a fairly high propensity to work toward the world markets. And that takes a big investment. But once the infrastructure is there, you have the competitive advantage.

Do you see medical device companies threatened by the same cost-control proposals that pharmaceutical companies have been hit with?

There is such a broad spectrum of devices on the market that there is probably no simple answer to that. I think some devices are going to be limited in their use if there is rationing in medical care. For instance, there may be fewer MRIs (magnetic resonance imaging). I am not saying there will be, but there may be. And if that’s the case, it could be difficult for companies in that business. On the other hand, the Clinton initiative is going to drive toward more primary care orientation. That is going to be augmented by bringing maybe 35 million people into the system, which will provide more demand and more revenue. So it can go both ways.

What kind of voice should medical device companies have in the ongoing health care reform debate?

I think the medical device people ought to have serious, constructive input as to how their efforts can be made to make the system more productive. But I don’t think (the task force members) are at that point yet. They are working at a much higher level right now. They are probably not ready to deal with specifics yet. I would expect that to become important later.

It will have a trickle-down effect. There are going to be broad brush policies and then it’s going to trickle down into how are we going to make health care delivery more efficient.

How does the Food and Drug Administration fit into health care reform? What role should it play?

I am not sure the FDA is necessarily a major element of reform, although it certainly has a very real role in the cost of health care. I would not want to see them step up the bureaucracy in the medical device area. We would like to see some uniformity (in) both the nature of the rules and the way they are enforced.

What are the chief differences between the FDA and regulators overseas?

We are getting some consistency out of the European Community. And it would be nice to see that there might be alignment some time between that kind of consistency and the FDA. I don’t know if that is going to happen or not. But it is very costly to try to conform with whole different sets of standards that are all aimed at the same thing, that is, good quality and efficacy.

What regions of the world do you see as particularly ripe for medical device manufacturers?

I guess it depends on the time frame. If you were talking about 1993, Western Europe is very slow right now. Germany’s got its unification problems. France has got political issues, as does Italy. In the longer term, the unification of Europe through the EC is a good investment.

Right now, the Pacific Rim, all of it, looks very good on a smaller base.

Talking about political problems and regulatory differences, how difficult is it for companies to develop overseas trade these days?

That varies by country. I think one of the issues is commitment and persistence. You can’t go into a new country and say, “I am going to make money the first year.” You have to establish the infrastructure and a presence. You have to make a large investment, establish a reputation as a citizen of the country and hang in for the long haul.

On business opportunities. . .

“In the long run, just about every developed country will have some kind of pharmaceutical, biotechnology base. We see developing countries moving along that path real fast.”

On the EC’s approach to regulating drug and medical devices. . .

“I think that the EC is certainly in the forefront. It is really a very positive force in getting rid of each country’s version of a separate health regulator.”

On hiring locals in overseas operation. . .

“It’s the only way. It’s important to be sensitive to cultural differences and to become a citizen of the country. The worst thing that can happen is to be seen as a branch of an American company.”

On global concerns over health care costs. . .

“Health care cost constraints and reform are not peculiar to the U.S. They have been going on all over the world for years.”