Abaxis: Producing 'disruptive technology'

Source: Healthcare Digital

Date :07/10/2008 10:11:03

This California company’s development of a small, portable blood-testing machine could mean big changes in healthcare

Written by Barbara Taormina and Produced by Shaheen Mohammadipour

A dozen or so years ago, a Harvard Business School professor coined the term “disruptive technology” to describe something that overturns existing technology or the status quo. People most often use words such as innovative and revolutionary to explain those types of advances.

Union City, CA medical device manufacturer Abaxis Inc, under President, Chairman and CEO Clint Severson, has developed that type of change with its flagship product. The Piccolo xpress is a portable, shoebox sized blood-testing machine than can run 24 different blood tests in just over 12 minutes.

“Only a sales guy could have made this work,” says Severson who joined the company in 1996 when Abaxis was struggling with production problems, government regulations and sales hardly worth mentioning. Today Abaxis employs more than 300 people, takes in US$100 million a year and has a copy or two of the Oct. 29, 2007 edition of Forbes Magazine around the office. That edition named Severson “Entrepreneur of the Year” and the company 11th on Forbes’ list of the top 200 best small companies in the United States.

THEN AND NOW

It’s an exciting time for Abaxis and Severson, but it was a long and sometimes arduous climb. The company was founded back in 1989 when scientists Gary Story, Richard Leute and Vladimir Ostoich acquired the rights to the medical technology from NASA after that agency saw much of its funding dry up in the wake of the Challenger tragedy.

The trio had dreams of marketing a portable blood-testing machine that would yield quick results for a wide range of tests, on-site or POC (point-of-care). A doctor or EMT would be able to run a test to discover if a patient had suffered a heart attack and begin treatment immediately rather than spending life-threatening time waiting for results from a lab. Cancer patients who need a blood test before each dose of chemotherapy would only need to make one trip to the hospital or clinic for each treatment.

The machine had the potential to significantly enhance the quality of medical care, but there were years of design and development setbacks along with regulatory red tape that required every lab performing blood tests to be licensed, including individual physicians who might want use the machine in an office. Although the government has since agreed to grant waivers to physicians who use the machines, the hurdles looked insurmountable back in the ‘90s.

In 1996, Severson – a North Dakota native and business manager who had racked up an impressive resume with successful runs as General Manager of 3M Diagnostic Systems and President & CEO of MAST Immunosystems – joined Abaxis. Severson helped push the company’s sales force to market the blood-testing machines to veterinarians who weren’t as tightly regulated as physicians but who still had a lot of uses for a portable diagnostic machine.

ANIMALS FIRST

Over the years, the vet market has become Abaxis’ bread and butter and early in 2006 the company introduced its Vetscan VS2, a state-of-the-art chemistry, electrolyte, immunoassay and blood gas analyzer that with just a couple drops of blood can tell an owner what’s wrong with their pet in a matter of minutes.

As livestock and pets were reaping the benefits of Abaxis’ years of research and development, the company was perfecting the machine and a menu of tests that doctors generally use in routine blood work. In 2003, the Piccolo was finally approved by the Food and Drug Administration for use on humans. That same year, Abaxis caught its first big break – the military bought its first round of a couple hundred of the machines to be used with troops deployed to Iraq.

Since then, Abaxis has been slowly biting into the US$5 billion-a-year global blood chemistry market. According to Forbes Magazine, as of last October, Abaxis has installed Piccolo machines in about 1,000 doctor’s offices – about .02 percent of all physicians in the United States. Distributors include: Cardinal Health, Dublin, OH, Fisher HealthCare, Houston TX, Henry Schein, Inc, Melville, NY, McKesson Medical Surgical, Richmond, VA, National Distribution & Contracting Inc, Nashville, TN, and Physician Sales & Services, Jacksonville, FL.

“It’s an appropriate tool for any site or any place where they need results quickly,” says Severson.

MOVING FORWARD

The Piccolo is sold through medical supply distributors, at trade shows and through direct mailing. The sales staff, now 15 members strong, faces some pretty stiff challenges.

“We are competing in a large market that is highly centralized and there’s a lot of entrenched thinking,” says Severson. The big labs, with their huge overhead in staff, equipment and buildings are hardly pleased that Abaxis is stepping in with the US$15,000-per-unit Piccolo and allowing doctors to perform a US$100-plus blood screen for a fraction of the cost.

“Abaxis is a company with a disruptive technology that takes routine blood tests from a centralized lab,” says Severson. “That allows a shorter cycle time between diagnosis and treatment which improves care for patients.”

Severson says the technology makes doctors more efficient and allows them to earn additional revenue rather than outsourcing work to the labs. While that revenue stream may not be huge, it can aid a growing practice, or one that treats patients who don’t have health insurance and can’t always afford to pay for care.

With a product that simplifies and improves medical care and cuts costs, Severson is feeling good about the opportunities ahead for the company. He doesn’t even groan when recalling the years of battles with regulators, competitors and a medical community resistant to change. In fact, it seems Severson enjoys the battle even more than the success. He says the best moments keep changing – first it was breaking even with the Piccolo, then it was reaching a half million in sales, then it was launching the machine in different medical markets.

The goals keep moving but the motivation is essentially the same. Severson knows he and Abaxis are disrupting things, breaking new ground and making some significant advances in technology and medicine that promise some huge benefits for patients. Ultimately that’s what’s most satisfying. As Severson puts it: “We save lives out there.”

Click here to view Abaxis brochure