Bjella: Focus on logistics helps DDN to grow in down economic market
By Brian E. Clark
These are trying times for many in the biotech industry, with funding sources buttoning up as a result of the deepening recession.
But at least one drug-related firm, Menomonee Falls-based DDN, is thriving as a third-party logistics company, handling warehousing and distribution of pharmaceutical products from its hubs in Tennessee and California.
In addition, DDN also provides IT services and call centers for pharma companies, while also helping them bring products to market by navigating regulatory and logistical mazes.
In the future, it may also offer post-marketing research studies the government could require to track the safety and efficiency of products.
Three years ago, however, things weren’t quite so positive for DDN.
In 2005, the company’s revenues had declined 25 percent compared to the previous year and the profits were negligible.
Since then, however, the company has doubled its revenues to $50 million and President Ross Bjella -- who spoke recently at the annual meeting of the Wisconsin Biotech and Medical Device Association -- says DDN has experienced strong profit growth.
“In this time of economic uncertainty, the life science community is increasingly relying on the services DDN offers to build a world-class company with only a handful of employees, while large businesses turn to DDN with a goal of simplifying their operations,” says Bjella.
A little more than half of the company’s 100 clients are start-ups, but it also contracts with such giants as GE Healthcare, Abraxis Bioscience and Procter & Gamble.
Bjella -- credited with turning his company into the industry’s largest privately held provider of outsourced services to the life science industry -- says he is convinced Wisconsin can become a biotech force by developing the science corridor between Madison and Chicago.
“I spend a lot of my time on airplanes going to places like Boston, Research Triangle Park, San Francisco and San Diego,” he said.
“But the corridor between Madison and north Chicago has all the same infrastructure, experience and top-level research institutions,” he said.
So instead of small companies having to partner out their technologies and products, he says they can join with DDN so they will have the incentive to set up their corporate headquarters in this state.
“Now is the time to bring government, the education system and business leaders together to prove Wisconsin can be a global leader in the life science industry,” says Bjella, who has worked for E.R. Squibb, Allergan, Schwarz Pharma and other drug companies.
A key to that, he said, is additional tax credits and other infrastructure support for growing life science companies.
Bjella said DDN began to hemorrhage money in 2004, when the biotech and pharmaceutical industries went through a period of consolidation.
“We provide services to emerging life science companies, so when consolidation hits, it affects us directly,” he said. “So in ‘04 and ’05, when venture capital was drying up, we had some tough times.
“Our top line declined 25 percent and our profits declined considerably,” he said.
“But our president at the time and our founder, Cynthia LaConte, put us on the path of growth again by cutting costs, conserving cash and focusing on near-term results.”
“But we did more than just maintain, we did some things to grow in that challenging environment,” he said, noting that the company had layoffs in both its corporate office and warehouse facilities.
Bjella, who started with DDN in 2044 as VP of sales and marketing, said he pushed the company to better brand itself and actively pursued customers.
“We used to wait for customers to call,” he said.
Because of the changes the company made, he said it has done well in 2008, even though many firms are declining.
Based on client surveys, he predicted the economy will be in difficult straits for another year to 18 months before rebounding.
“It’s a long way away, so the activities we are doing are important now for companies,” he said. “But really, all times are challenging and you never know what could happen.”
Bjella said DDN is having a good year in part because it launched two new services he expects to grow.
“One is medical information and the other is trade services, both of which have contributed a bit to our revenue and are starting to produce how we expect them to produce, so that has been a nice boost,” he said.
Bjella said he expects the company to grow even more, even as the economy staggers because firms will need to control costs by outsourcing.
“We also plan to expand into the medical device area, especially here in Wisconsin,” he said. “But also internationally, replicating our business model in Europe and focusing on ... specialty and biological products.
“About 30 percent of my revenue comes from India-based companies, so we are in India about every six months working with companies there to enter the U.S. marketplace.”