A 3.5-million-share offering in May of 1983 netted Martin $42 million in additional cash-dollar shares, making the company almost as visible in the investor's marketplace as the old Purex line is now in the consumer marketplace.
GENEX CORP.
The products seem too prosaic for the glamorous label of "biotechnology": a drain cleaner for janitorial services, a feedstock for farmers, an enzyme for making cheese, the raw materials for an artificial sweetener for soft drinks and chewing gum. But by bringing those homely items to market -- or, to be exact, by promising to bring them to market -- Genex Corp. (#23), in Rockville, Md., has become the fourth largest biotech company in the world, with 1983 revenues of $11.1 million, a 4,253% increase over the past five years.
The strategy of avoiding the alluring drug-related products was set before the company's launch, according to CEO J. Leslie Glick. "To do the obvious, to develop pharmaceutical products, would take lots of years and lots of bucks, and we would face serious problems with governmental approval, so the risk factor was enormous," he explains. "Our route offered a lower total [research and development] cost and a faster timetable for bringing products to market."
So far, Genex, like its competitors, has earned most of its revenues from contract research. But 1983 also saw Genex sell more than $1 million of its first major product, phenylalanine, an amino acid used by G.D. Searle & Co. to make aspartame, a low-calorie sweetener being marketed as NutraSweet.
Genex is currently renovating a former Heublein Spirits Corp. bottling plant in Kentucky to produce 4 million pounds of phenylalanine annually, as well as 4 million pounds of aspartic acid, the other active ingredient in aspartame. And by the end of 1984, with its drain cleaner on the market, Glick expects to see revenues almost quadruple, to between $30 million and $40 million. The future looks sweet indeed.
CNEMFIX TECNNOLOGIES INC.
In the early '70s, Chemfix International Inc. (#90) was an interesting little Pittsburgh-based company with an interesting little method for handling hazardous wastes. The process consisted of treating the wastes in such a way that inorganic elements -- especially toxic metals like mercury and arsenic -- did not become water soluble and leach back into the ground soil.
Producing nonpolluting solids from toxic sludge should have made Chemfix a winner. Unfortunately, says Daniel N. Silverman III, current president of Chemfix, "the technology was way ahead of its time. It was six to eight times as expensive as off-site dumping, plus people weren't as aware of the [environmental] damage problem as they are now. It was a tough sell."
A tough sell but a great buy. Having worked with Chemfix on a joint venture in 1976, Silverman's company, National Environmental Controls Inc. (his father, Daniel Jr., is chairman of the board), saw the promise in the process and bought the rights to patents and equipment from the struggling company for about $500,000. Along came tightened Environmental Protection Agency regulations, soaring transportation costs, the horrors of Times Beach and Love Canal, and -- boom: Off-site dumping became bad news, and Chemfix became a hot property. It is already operating the first Chemfix processing municipal plant in the nation, at Blue Plains in Washington, D.C., processing 130,000 gallons of waste a day.
According to Silverman, taking Chemfix (now in Kenner, La.) public was really a marketing decision. "It was getting hard to market what's essentially a high-technology service company from the base of what is essentially a garbage company, which NEC [is]," he says. "Chemfix is a business based on chemists and PhDs, [NEC's] on truck drivers and mechanics. Plus we wanted seed money for new projects." Selling Chemfix stock to a group of private investors, Silverman raised approximately $1.2 million and began implementing a marketing scheme with three broad targets: industries (chemical plants, refineries), municipalities, and oil drillers. Overseas, Chemfix has opened a London branch, which is working on nuclear-waste treatment as well.
JP INDUSTRIES INC.
John Psarouthakis, chief executive officer of JP Industries Inc. (#50), in Ann Arbor, Mich., is a high-tech veteran with a low-tech vision. While others dream of the fortunes to be made in electronics or computers, Psarouthakis has built a $47.5-million-a-year business reclaiming aging midwestern industrial underachievers.
The 51-year-old Psarouthakis, a Massachusetts Institute of Technology engineering graduate who began his career in the U.S. space program, launched JPI in 1977. He had an "Acquisitions Wanted" ad in The Wall Street Journal, and he had a strategy. Psarouthakis's goal was to buy into countercyclical industries, durable-goods makers in which he could use his expertise in metal- and plastic-working to become the low-cost producer. The company went operational in 1979, buying a struggling Ohio metal-stamping plant; eight more marginal companies -- manufacturers of faucets, plumbing fixtures, strainers, drains, truck and tractor components, and cam shafts -- would follow. By narrowing product lines, selling off excess inventory, consolidating marketing and administrative functions, and replacing managers, he revived eight of the nine -- licensing the process and selling a filter manufacturer that he could not turn into a money-maker.
"A lot of people are missing the boat in Michigan, chasing high tech trying to duplicate [Massachusetts's] Route 128 and [California's] Silicon Valley " Psarouthakis argues. "They're missing the fact that there's a significant technology base here, not as glamorous, but one that can make money nonetheless."
KAYPRO CORP.
Back in the 1960s, when Kaypro Corp. (#42), in Solano Beach, Calif., was the family-owned Non-Linear Systems Inc., The Reader's Digest called it "one of the most revolutionary companies in America" for its personnel and marketing policies. Today, Kaypro is better known as the company that overthrew Adam Osborne's company as the fourth largest seller of small business computers.
Marketing has been the key to Kaypro's success. Consistently undercutting its competitors on price, the company treats its computers as a "commodity," says marketing vice-president (and the son of founder and CEO Andrew Kay) David Kay. Kaypro has avoided the distributors, representatives, and large retail chains as well, building instead a distribution system of more than 1,000 local dealers, who are kept loyal by weekly phone calls, monthly visits, a telephone hotline, and a 48-hour shipping turnaround.
