Since 1987, Merit Medical Systems, Inc. has weathered many an economic storm as a leader in the field of single use, disposable medical devices. But as Hurricane Rita came barreling down on the Utah company’s Angleton, Texas plant, Merit officers wondered if they would survive the coming environmental onslaught.

“We could have been destroyed,” says Merit chairman and CEO Fred Lampropoulos. As it was, the company’s losses due to temporarily shutting down the Texas facility amounted to about $300,000. But it could have been much worse. “My staff did an extraordinary job of evacuating everyone,” says Lampropoulos. “But it caused me to think about how we can protect ourselves in the future.”

Fred Lampropoulos had been in the medical device industry for almost a decade when he started Merit Medical more than 18 years ago “as a single product company with a lot of ideas.” He has since obtained more than 100 device patents used in the diagnostic and therapeutic treatment of cardiovascular disease. Among Merit Medical’s primary products are inflation devices used in angioplasty; guide wires used to place balloon angioplasty catheters within a patient's coronary arteries; and products used to manage and monitor the administration of contrast and other fluid solutions during diagnostic and therapeutic procedures.

Those early ideas have led not only to a publicly traded company with predicted revenues of more than $170 million in 2005, but also to a CEO who is as comfortable singing warm-up for the Beach Boys as he is running a multi-million dollar business. Lampropoulos was also recently named "Business Executive of the Year" by the Utah Manufacturers Association.

Investing in Utah

But the Utah-grown company’s influence reaches far beyond the confines of the state where it has plants in Murray and South Jordan, or even the manufacturing plant in Texas. Merit Medical has five additional facilities in California, New Jersey, Virginia, Ireland and the Netherlands. With such a worldwide presence, why would Merit choose to spend $24 million to expand its South Jordan facility by 165,000 square feet? For Lampropoulos, the choice went beyond simple economics. “The majority of our employees are right here in Utah,” he says. “Utah is a community of medical device companies, and it’s home. We have a reliable workforce here.”

From a dollar standpoint, the cost structure in Utah is 50 to 60 percent less than other states, due to lower health insurance and workmen’s compensation costs and property taxes. While expansion in other areas—Ireland, for instance—may be more competitive, additional expenses such as travel costs would ultimately bring the bottom line down.  “At the end of the day,” Lampropoulos says, “you have to look at what it is going to cost you to do business.”

In addition, another 12 acres have been purchased around the existing 53 acres of the South Jordan campus in preparation for anticipated future growth. When it comes to the future, Lampropoulos doesn’t just hope for great things to happen; he dreams big and acts accordingly. With revenues set to be in the $350-400 million range by next year, Merit Medical, which was chosen as a founding member of the new NASDAQ Health Care Index, will be a third of the way to Lampropoulos’ goal of being a billion-dollar company.

“We are anticipating 15 percent growth per year,” says Lampropoulos. “At that rate of growth, Merit could double within five years without acquisition. We’re also planning on adding an additional 750 to 1,000 employees within the same time period.” Merit Medical currently employs 1,560 people worldwide, with more than a thousand employees here in Utah. 

“We are very proud of Merit,” adds Brian Moss, president and executive director of the Utah Life Sciences Association. “It is one of our homegrown companies that has stayed homegrown, yet they’re players in the market with the big boys. They’ve done an excellent job and are extremely well led. It’s the kind of company we love to have.”

Merit Medical is certainly not alone in the Utah field of disposable medical device companies, and this healthy competition helps drive the company’s growth. There have been consolidations of local firms here in Utah, as well as competitors who have expanded and subsequently moved their business out of state.

“For a community,” explains Lampropoulos, “it’s a loss to have companies move, but the upside is that we have picked up some of the most well-qualified professionals in the field because they don’t want to relocate.”

Looking past his own headquarters, Lampropoulos is equally concerned about the future of the industry as a whole and the need to connect with educational communities in the area. Merit recently hired two professionals in the injection molding industry from out of state because engineers with these specific skills could not be found here in Utah. In response to requests from companies such as Merit for more well-trained engineers with bio-technical skills, many area colleges and universities are working to revamp their programs to fit the growing needs of the industry.

Community Builders

“We look to Merit to guide us in our programs,” says Tami Goetz, director of the Bio-Technology Program at Salt Lake Community College. “If you look at life sciences here in Utah, over half are in the medical device industry, and Merit is the largest. This relationship is critical in helping us define program content, obtain supplies, [and helps us by] hiring students and giving them internships. It’s a really great partnership.”

Meeting with community and government leaders and maintaining an open and honest dialogue are also important to Lampropoulos and to the success and growth of Merit Medical.

“Merit has tried to make public officials more aware and conscientious about the needs of the medical device industry and the function of the state in that role,” he says. “I appreciate that we can be involved in policy making. It is unique and enjoyable for me that there is a dialog. These businesses in Utah are stable during tough times.”

Through lobbying efforts of the industry, a number of federal laws related to the use of safer products have been implemented. And while the enforcement of these laws has been slower than expected, many progressive hospitals are seeing the long-term financial benefits of investing in these products.

“The increase of risks related to blood-borne pathogens has been a product growth factor for Merit,” says Lampropoulos. “Every needle-stick accident costs $8,000 to $10,000. We’ve developed five to ten products or product lines that make it safer for physicians and health care workers and ultimately help to restrain the costs of health care.”

With a bit of theatrical flair, Merit Medical announced the production of the “Magnificent Seven,” a new line of catheters, valves and other medical devices to be released in 2005.

“What we were trying to do was demonstrate to the shareholders that Merit was still bringing new products on line,” says Lampropoulos. “Over the past few years, we’ve been slow to bring new products to market. We have restructured our system this year, and are going forward. With these products, we’ll be in a better position to reach that 15 percent growth.”

To attain that growth, Merit Medical will continue to expand and improve upon its products in interventional radiology and cardiology, as well as exploring the areas of gastrointestinal and critical care medicine for additional product opportunities. “In this business, you’re either a player or in the crowd,” says Lampropoulos. “Merit is definitely a player.”

Janine Simons Creager is a Farmington-based freelance writer.