I read with interest the recent press release from Invitrogen that they have established a “Philanthropic Foundation.” I can’t restrain myself any longer. And let me be up front that this is a rant for my own benefit. I am stating facts as I know them and don’t have any specific documentation to back any of this up.
Invitrogen acquired Life Technologies (LTI) in 2000 after a 2-3 year struggle for control of LTI Board by the Dexter Corporation, that majority owners of LTI. For many years, the State of Wisconsin Teachers pension Fund (or it may have been WARF) was a 25 something percent owner of LTI stock, Dexter owned about 70 % and most of the remaining 5% was split between members of the Board of Dexter and the Executive Officers of LTI.
When I started in the old Molecular Diagnostics Division of LTI (now known as Digene) in 1988, sales of Maryland Produced products were about $20MM annually on overall sales of about $110MM (GIBCO products accounting for 90MM, primarily FBS products). Back in those days, Fetal was king, and because this was traded as a commodity, it was a wild ride. My recollection is that somewhere in the neighborhood of 40% of our revenue in those days was linked to Fetal Bovine Serum and derivatives.
So the timing for the explosion of Molecular Biology techniques couldn’t have been more perfect, because we needed some new products to offset the turbulent Fetal market. LTI had already recruited some of the top molecular biology talent of the time. Hiring guys who were the first to isolate restriction endonucleases, Reverse Transcriptases, Cationic lipids, tranferases, polymerases, and competent cells. We were on the leading edge, creating tools for cloning and gene manipulation that were so advanced we had to explain to our customers how they could use them in their research.
Maryland produced products grew from about $20MM in 1988 to about $250MM by 2000 with gross margins approaching 80% in some cases. The corporation was generating between $60MM and $80MM in cash year over year, most of which was paid as “special dividends” to the share holders (namely, Dexter, who were losing their shirts in their other businesses and were being raped by the EPA for years of pollution of the Boston Harbor). We built a new Corporate HQ in 1993 on Shady Grove (which was subsequently purchased and bungled by HGS) for $75MM, paid in cash and opened a new Manufacturing & distribution center in Frederick in 1994.
Somewhere in 1997 or 1998, Dexter announced that, due to the overwhelming success of LTI, they were going to sell off their other, less profitable divisions and focus on being a Life Sciences company. Shortly thereafter, International Specialty Products made an offer to the Wisconsin group for their 30% share of LTI that they could not refuse.
This little bit in Wikipedia is a good summary of things:
“Until 2000, Windsor Locks was home to the oldest corporation listed on the New York Stock Exchange, The Dexter Corporation. Established in 1767 as C.H. Dexter and Sons, the company grew from a family-owned saw and grist mill and evolved into a multi-national producer of long fiber papers and chemical laminates. In its 233 years of operation, the company grew from manufacturing tissues, toilet paper, and tea bags to marketing more specialized products like medical garments and industrial finishes. Faced with a proposed buyout by International Specialty Products Incorporated in 2000, the Dexter Corporation separated its three divisions and sold them off to avoid a hostile takeover. The Life Sciences division merged with Invitrogen Corporation. The Specialty Polymers division was sold in part to Akzo Nobel, and the remaining businesses merged with Loctite Corporation. The third division, Dexter Nonwoven Materials, located on the company’s original site in Windsor Locks, was sold to the Finnish Ahlstrom Paper Group. The physical plant was expected to continue operating, but the corporate headquarters were closed. “
This is not entirely accurate: Invitrogen purchased Dexter for $1.9BB. Part of the purchase agreement was that Dexter had arranged buyers for the other divisions, but technically Invitrogen sold off the other divisions.
But anyway, Invitrogen came in and immediately began making plans to purchase all of the land available in the Omega Center in Frederick in order to relocate R&D and all of the Carlsbad operations to Frederick. After all, Invitrogen, prior to purchasing NOVEX about 6 months before, was only a 20-30MM/yr business and they were buying up the leader in the industry, with about 1,200 full time employees in Maryland: 800 or so at “The Palace” HQ in Gaithersburg and 400 in Frederick.
After we’d made arrangements to purchase the Omega Center, suddenly communications with the new owners stopped. A couple weeks goes by and something is obviously wrong. Plans have changed and we weren’t in on the decision. Not a good sign. Then word comes out that everything is moving to Carlsbad and Maryland Operations are to be terminated.
Everything in Maryland is slashed, aside from 30 or so people Custom Primers, facilities and IT in Frederick between 2000 and 2002. 800 or so in a single day just after Thanksgiving 2000, yours truly included.
Why the change in plans? As it turns out, the CEO at the time’s wife was from Hagerstown and fancied a move back east. Long story short, CEO gets caught with his pants down while running back and forth to Maryland, wife drops CEO, wife gets half his money, everyone in Maryland loses their job.
And all of this because we were so successful.
I am glad to see that Invitrogen decided to can the CEO in question and hire a bunch of guys from GE, the Jack Welsh types, to turn things around. They’ve resumed operations in Maryland, firing the Distribution center up again (one of their biggest strategical errors was shutting it down in the first place. That must have cost them millions) and even getting the fermentation suites back up and running. They are pushing Six Sigma and Lean as a way of life. Funny thing is, I was pushing this agenda from 1995 to 200, but was told in 2000 by Invitrogen they have no interest in this philosophy. I was, yet again, ahead of the times.
So maybe now they have embraced the philosophy that people matter. Maybe now they can try to rebuild the great enterprise we all worked for years to establish that was Life Technologies. The company voted as one of the top 10 places to work in the country, where we had community outreach programs, lactation suites for new mothers, generous bonus and paid time off structure. But more importantly, for the most part the people cared. They wanted to do the right thing. They were being treated well and treated the company well in return. This is not to say that we didn’t have our share of scandal, trysts, dishonest managers, lazy workers, sexual harassment and racial discrimination law suits. We certainly did. But in spite of it all we were incredibly successful and made a lot of people a lot of money and advanced the concept of molecular biology as common practice.
As I alluded to in an earlier post, the disintegration of LTI-Maryland have proved to be a boom for growth in Biotech in the region, as the people with talent (who flocked out if they were not forced out) seeded other companies in the region or started their own companies.
OK, I am done. I’m glad I got that out.
