Small Columbia firm gains Russian contract Medical equipment, technology to come from HealthWatch


A Columbia start-up company that develops and makes medical diagnostic equipment plans to sign a $60 million contract tomorrow to supply a Russian health care company with disease-testing equipment, oral vaccines and medical equipment manufacturing expertise.

The deal to be signed between Universal HealthWatch Inc., a privately held venture less than a year old, and Health Care Ltd., a publicly traded company on the Russian stock exchange, is considered by international trade experts as an example of the strong business opportunities for medical equipment and pharmaceutical companies as a result of the dismantling of the former Soviet Union's government-controlled health care structure.

American companies are in fierce competition for the newly opened Russian market for medical supplies with companies in Britain and India, health industry and trade experts said.

"There is a definitely a lot of opportunity there for small companies with the right products," said Gary Litman, director of trade policy for Central and Eastern Europe at the U.S. Chamber of Commerce in Washington.

"This is a good deal for such a small company. They are entering an excellent market for medical supplies," he added.

The need for advanced medicines and medical equipment is strong in Russia today because "local production has collapsed" for pharmaceuticals and medical supplies, Mr. Litman said.

Also, Russia's trade with Hungary and the former Yugoslavia -- the country's longtime sources for such products -- has dried up. There are an estimated 300 American companies doing business in Russia and about 15, or 5 percent of them, are thought to be selling medical supplies, according to the U.S. Chamber of Commerce.

While the Universal HealthWatch deal is considered small when compared to such industry giants as Lilly & Co. and Baxter International Inc. -- which have business worth hundreds of millions in Russia -- it is considered a significant coup by such a new, small company. They often must grind away for years just to develop a domestic market for their product lines.

Universal HealthWatch employs just 14. But that payroll is expected to grow to more than 50 quickly as the company ratchets up operations to meet the demands of the deal, said Erick Gray, co-founder and chief executive officer of Universal HealthWatch.

"We're obviously very excited about this. We look at it as a reciprocal arrangement in which we hope to learn from the Russians about their own medical techniques," Mr. Gray said.

James Hughes, director of the Maryland Office for International Trade, said the deal was a model for the way the state would like to see employment grow in Maryland.

"This is how employment can really grow in Maryland -- through lots of little companies striking deals like this."

Mr. Hughes said state trade officials are also upbeat about the deal because it ties in with the state's interest in trying to use Maryland's medical industry infrastructure and world-class institutions, such as Johns Hopkins Hospital, to help medical equipment and research companies market their products overseas.

The bulk of Universal HealthWatch's deal, worth about $12 million annually over five years, calls for the firm to supply Moscow-based Health Care Ltd. with testing kits for communicable diseases, help Health Care Ltd. set up an immunization program using oral vaccines, and run seminars showing the Russians how to manufacture specific medical devices.

One of the key products that Universal HealthWatch will supply is what is known as "rapid detection kits" for cholera and other life-threatening diseases, Mr. Gray said.

These kits -- a marvel of medical research -- are contained in instruments that fit the palm of a hand, are very portable, and allow medical professionals to detect disease, food and water contamination in a matter of minutes.

Mr. Litman at the Chamber of Commerce said there is a strong need for this type of advanced medical technology because diseases such as malaria and cholera are re-emerging in Russia now that free public health care is no longer available and sanitary conditions have declined.

"There are eruptions of all kinds of old diseases throughout Russia. Disease testing equipment is definitely" needed in some parts of the country, he said.

Universal HealthWatch's deal is part of a growing interest by the Russians in good medical equipment, health industry experts say.

The Health Industry Manufacturers Association estimates that exports of American medical equipment and technology increased significantly during the past two years to $43 million in 1993, up from $15 million in 1992.

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