JUST 11 OUNCES OF WIZARDRY FILL A COLUMBIA FIRM WITH HOPE; MERIDIAN MEDICAL OFFERS HIGH-TECH HELP FOR HOME HEALTH CARE

THE BALTIMORE SUN

James H. Miller, the chief executive officer of Meridian Medical Technologies Inc., gets a kick out of strapping on a hand-sized gadget that seems straight out of "Star Trek."

Called the CardioBeeper, the 11-ounce device looks a bit like a Walkman with a tail or strap.

The strap contains electrodes that can read vital heart signs and transmit them by phone to a doctor's office or hospital.

"This is where medicine is headed," says the affable executive.

Perhaps. But one thing is certain: It is high-tech, portable wizardry like the CardioBeeper that Miller is banking on to transform the Columbia-based company from a little-known military contractor into a diversified medical company.

"Essentially, we are trying to form a new company," says Miller.

The risks of pushing beyond its 30-year-old reliance on the U.S. military market might seem big for Meridian, which as Survival Technologies Inc. supplied self-injection devices loaded with chemical warfare antidotes to U.S. troops during the Gulf War.

For one, the company faces competition from heavy hitters such as Johnson & Johnson, Abbott Laboratories and Boston Scientific Corp., which already have large market shares.

But the potential rewards are significant.

Namely, the company -- which changed its name and moved from Rockville late last year -- hopes to gain a foothold in a niche of the $93 billion world market for medical devices that is rapidly growing -- home health care.

"This is a market where early intervention can save lives and health care costs," says Miller.

While Wall Street does not follow Meridian -- its stock historically has been closely held by the late founder and his estate -- industry analysts say that in general companies offering reasonably priced new technology are experiencing sales growth. The key: The technology should offer cost benefits to health care providers and insurers.

Miller says Meridian's engineers are heavily focused on designing new technology with product cost in mind.

"We have to keep prices down to compete," he says.

The CardioBeeper is an example of that strategy. At a cost of about $300, it allows heart patients to be monitored at home, thus avoiding expensive hospital stays or doctor visits.

Meridian also hopes that sales to emerging countries, particularly in Asia, will fuel growth. In particular, Miller sees strong opportunities in the Philippines, Taiwan and China, where medical care is a high priority and where U.S. export channels are developed.

The company, which employs about 100 people in the United States, Ireland and England, has seen international sales grow to one-third of its total volume since 1992, when they represented just 5 percent of sales.

The Health Industry Manufacturers Association, a Washington trade group, projects that sales of medical devices will grow three to four times faster in Asia than in the United States and Europe over the next several years.

In fact, the most recent data available show that between 1994 and 1995, medical device sales grew 22 percent in Asia, compared with 7 percent in the United States, HIMA says.

Meridian and other U.S. companies, however, face tough competition in the Asian markets, HIMA warns, from Japanese companies.

Miller says Meridian's strategy is to dominate selected parts of the market.

"We are looking for niches we can get into and control," says the former pharmaceutical executive at Abbott Laboratories.

Meridian wants to leverage its considerable expertise in developing injection devices so that drugs can be easily and safely self-administered.

Meridian now markets a line of injection pens for the civilian market that are loaded with epinephrine to treat anaphylactic shock from allergic reactions caused by bee stings, food and other allergens.

A new model, which has a child protective cap and conceals the needle from the skittish, is expected to hit the market soon.

Earlier this month, Meridian struck a product development and marketing alliance with Mylan Laboratories.

The Pittsburgh-based company is considered by industry analysts to be one of the leading -manufacturers of generic pharmaceuticals in the United States.

Under the partnership, Meridian will license, develop and produce a line of injectable generic drugs.

Mylan, in turn, will market them to physicians, nursing homes and other health care providers. Currently, Mylan doesn't carry any injectable generic drug products in its portfolio.

The companies are silent on what the first line of products will be. But Miller says they should fit into the home health care market strategy.

Ian Sanderson, a health care analyst with Cowen & Co. in Boston, says the alliance provides Meridian with a partner that has a well-entrenched sales division that should be able to quickly build sales for self-injection products.

Mylan, meanwhile, gains access to advanced injection technology so it can broaden its product line, Sanderson notes.

"Meridian brings to Mylan a low-cost, low-risk product-development engine," says the analyst.

Miller is also working to strike other alliances that will add marketing clout to Meridian.

He also has high hopes for Meridian's other leading product line, noninvasive diagnostic devices such as the CardioBeeper.

This line of products is the result of the November merger with Brunswick Biomedical Corp., a privately held New England-based developer and manufacturer of emergency diagnostic devices for the cardiopulmonary market.

The marriage was considered a natural fit for two reasons. Brunswick's principals owned a large stake in Meridian, having bought out the 61 percent stake of founder Stanley J. Sarnoff after his death in 1990.

Also, both companies were interested in developing and marketing medical devices that could tap the home-use market.

Meridian recently got a big boost for broadening that very market in March when the Food and Drug Administration approved the CardioBeeper, developed at Brunswick, for marketing in the United States. The device already is in wide use in Israel.

At the same time, Meridian's military market has grown to about $17 million, up from $10 million in 1995 and 1996.

Miller says that, while Meridian has a lock on 90 percent of the U.S. military trade for automatic injection devices, he remains cautious because of fluctuating world tensions and budget woes. As a result, the CEO isn't banking on company growth to be fueled by military contracts.

For example, the company was hurt in 1995 when two foreign military contracts didn't come through. In the meantime, it was incurring costs to upgrade its St. Louis manufacturing plant.

It all added up to a rough financial report for 1995, with profits off 76 percent.

Revenues were up significantly in 1996 over the previous year, rising to $31.4 million from $25.5 million, a 23 percent gain, thanks largely to inroads in foreign markets.

Profits were up as well in the same period, to $1.3 million from $500,000, a 160 percent gain.

But as a result of the Brunswick merger, the Mylan alliance and the new direction the company is taking, Miller is projecting revenues of $40 million this year and double-digit revenue growth the next three years.

Meridian's stock price, however, reflects investors' wariness. It's been on a roller coaster the past 12 months, dropping as low as $4.625 and rising as high as $12 a share.

On Friday, shares in Meridian closed at $4.625.

Miller says the share-price instability has been a concern to company executives. But he's got a prescription for that, too.

Now that the company's stock is more widely held, Miller is hoping to boost its value and the interest of stock analysts by drumming up new institutional investors.

"Five years ago, not many people outside the military had ever heard of us," says Miller.

"My hope is that five years from now, we'll be well known as a leader in the early-intervention and home health care markets."

Pub Date: 4/20/97

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