Surgical Specialties: Acquisition Adds Fresh Ideas and Capital to a Growing Medical Business
There’s nothing like a sudden infusion of new ideas and resources to give a successful company an even rosier outlook on the future. That’s exactly what happened when Angiotech purchased Surgical Specialties in early 2006, and Pete Molinaro couldn’t be more optimistic.
Surgical Specialties manufactures wound closure needles and sutures and ophthalmic surgical knives. The company, which began as Sharpoint more than 35 years ago in Reading, achieved distinction for its patented chemical etching process used to make microsurgical scalpels that have a sharpness unrivaled in the eye surgery market.
Molinaro joined the company as president in 1999 and helped bring it to $100 million in sales by 2006. “We were growing at a rate of 25 percent every year both in sales and earnings,” he says. “Being owned by a private equity firm, we were very focused on short-term financial performance, and because of that, we didn’t invest much in new products. We were bootstrapping research and development.”
Enter Vancouver-based Angiotech, a successful intellectual property development company focused on new drug coatings for surgical devices. According to Molinaro, the acquisition made perfect business sense and brought out the best in both companies.
“It’s a real treasure chest,” says Molinaro, who now serves as president of the company’s Wound Closure, OEM and Ophthalmology businesses. “Combining the think-tank mentality of Angiotech with the manufacturing know-how of Surgical Specialties gives us an almost endless pipeline of new products and the resources to develop them.”
The Overlap of Two Technologies
One of the most exciting areas of overlap for the two companies is the wound closure market. Surgical Specialties, which employs 300 people in Reading alone, had exclusively licensed a special thread for surgical sutures that took its inspiration from the porcupine quill. It features microscopic barbs that point in both directions along the entire length of the suture.
“This is the first major technology change in this market since the introduction of synthetic absorbable sutures,” says Molinaro. The barbs provide what is essentially a “self-anchoring” suture, which allows the surgeon to close a wound without having to tie any knots. In addition, tension is spread evenly along the entire wound, alleviating gaps and reducing the likelihood of wound leaks or scarring. The product is being marketed to plastic surgeons, emergency room physicians and a host of other physician specialties.
Meanwhile, Angiotech was developing a method to add anti-infection and wound-healing agents directly onto sutures. “Imagine a cancer patient who has just undergone a biopsy,” says Molinaro. “Sewing up the biopsied area with a coated suture could deliver a specific dosage of chemotherapy to the patient.” Sutures coated with wound-healing agents can also be used in patients who don’t heal well, such as diabetics, thus lessening incidents of post-operative infection.
Molinaro says the new energy and capital that have infused the company appeal to his entrepreneurial spirit. “This is exactly why I’ve been involved with startups my entire career,” he says. “I enjoy being associated with companies and technologies that are truly dynamic and have the potential to make a difference in peoples’ lives.”
Networking for Success
Soon after taking the helm of Surgical Specialties, Molinaro was seeking ways to improve the manufacturing processes for the company’s products and turned to Ben Franklin Technology Partners (BFTP) for advice. BFTP linked Molinaro with the Electrotechnology Applications Center (ETAC) at Northampton Community College. ETAC provided precisely the expertise Molinaro was seeking.
“The health care market is dynamic. Technology is always changing,” he says. “But it’s still a very cost-conscious environment. Ben Franklin’s networking gave us access to process improvements, cost reductions and professional consultants that would have taken us years and years to develop on our own. There’s real power in that.”
Molinaro was so impressed by Ben Franklin’s expertise and support that he joined the board of directors for BFTP’s Northeastern Pennsylvania office in 2004. His three decades of business development experience is now helping other entrepreneurs clear the many hurdles that startup companies face today. He’s also involved in a medical device consortium in northeastern Pennsylvania that BFTP coordinates and organizes. The 12-company organization meets several times a year to network, benchmark and share best practices.
“Every new business needs three things in order to survive,” says Molinaro. “Good people, good products or ideas and access to cash. It sounds simple, but in practice it’s very complex. Being part of the Ben Franklin network allows me to share my business experience in order to make a real difference to these companies. It’s my way of supporting the community.”
Keynotes February, 2007
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