Healthcare
Medical Equipment & Supplies
NASD: ZOLL
ZOLL MEDICAL CORP.
32 Second Avenue
Burlington, MA 01803
Phone: 781-229-0020
Richard A. Packer
President and
Chief Executive Officer
Interview conducted by:
Walter Banks
Co-Publisher
CEOCFOinterviews,com
April 2001
BIO OF CEO
Mr.
Packer joined the Company in 1992 and in November 1999, was appointed Chairman of the
Board of Directors and Chief Executive Officer. Mr.
Packer served as President, Chief Operating Officer and Director from May 1996 to his
appointment as CEO. Since 1992 he has served
as Chief Financial Officer and Vice President of Operations of the Company. From 1987 to 1992, Mr. Packer served as Vice
President of various functions for Whistler Corporation, a consumer electronics Company. Prior to this, Mr. Packer was a manager with the
consulting firm of PRTM/KPMG, specializing in operations of high technology companies. Mr. Packer is a director of Lifecor, Inc. Mr. Packer received B.S. and M. Eng. degrees from
the Rensselaer Polytechnic Institute and an M.B.A. from the Harvard Graduate School of
Business Administration.
About
ZOLL MEDICAL CORP.
ZOLL
Medical Corporation designs, manufactures and markets an integrated line of proprietary
non-invasive resuscitation devices and disposable electrodes. Used by health care professionals to provide both
types of cardiac resuscitation – pacing and defibrillation – these products are
essential in the emergency treatment of cardiac arrest victims both inside and outside the
hospital. ZOLL also designs and markets
software, which automates collection and management of both clinical and non-clinical data
for emergency medical service providers.
Products
include:
ZOLL Medical Corporation designs, manufactures, and markets a
complete line of easy-to-use defibrillators, noninvasive external pacemakers, and
defibrillation electrodes for hospital and pre-hospital applications. ZOLL’s Rectilinear Biphasic technology has
been demonstrated to be clinically superior for both defibrillating difficult (high
impedance) patients and cardioverting atrial fibrillation.
The comprehensive defibrillator family includes manual, advisory and semi-automatic
defibrillators. ZOLL also offers a complete
line of Multi-Function Electrodes with products optimized for emergency situations,
special procedures and pediatrics. ZOLL’s
unique liquid gel Multi-Function Electrodes help to virtually eliminate dermal damage
during resuscitation procedures.
CEOCFOinterviews - Mr.
Packer, can you give us a brief history of Zoll Medical?
Mr. Packer: "Zoll
Medical was started in the early eighties on the basis of new technology invented by Dr.
Paul Zoll who was a practicing cardiologist here in Boston. Dr. Zoll invented a new way to
do an external pacing which is to pace the heart from the electrodes that are placed on
the skin on the outside of the body. We started the company primarily making pacemakers
and then moved into the world of defibrillation, which is the ability to revive the heart
after a cardiac arrest to get the heart beating again. Thus, in the late eighties we moved
into defibrillation and we have grown the business to about 110 million dollars so
far."
CEOCFOinterviews - What is your most exciting news at this time?
Mr. Packer: "I believe, that what is really exciting in our
marketplace in cardiac resuscitation is the new waveform technology that Zoll Medical,
along with the rest of the industry, is moving to. It is called Biphasic waveform and
replaces the waveform used since the early nineteen sixties to fibrillate the heart.
Waveform is the amount of current, which flows from the device into the patient. This new
Biphasic waveform has the potential of using significantly less current and energy,
therefore doing less damage while at the same time providing better resuscitation than in
the old waveform. That is, I think, very good news and a very exciting one."
CEOCFOinterviews – What is your competitive edge?
Mr. Packer: "Our major competitors all have a version of
Biphasic technology. However, Zoll Medical is the only one that has this technology on the
market, where clinical testing is showing that it is actually superior to the old
technology. We are the only ones that have the clinical research to back it up."
CEOCFOinterviews - What is your current market share?
Mr. Packer: "The marketplace is about 550 million dollars and
we are just over 100 million dollars, therefore approaching about 20% worldwide. The
market shares vary very dramatically from market segment. For example, you have the
hospital market, where we are very close to being the market leader. In the US
pre-hospital market, like the ambulance or the fire trucks, we are number two, having
probably a third of the market right now. Internationally we are a little bit behind our
competitors, our market share is under 10%."
CEOCFOinterviews - What do you think you need to do to increase the
market share?
Mr. Packer: "Our market share in the last few years has been
growing rapidly based on two things. One is, we have always had better products and we
have believed that direct distribution is critical in selling against our competitors.
Towards that end, we have increased our US sales force about 30% per year for the past 3
years, and it is now quite sizeable. In addition, internationally, we are in the process
of starting direct sales subsidiaries in the major European countries. Last year we opened
our sales subsidiary in Germany and in the Netherlands. This year we are starting our
direct subsidiaries in France."
CEOCFOinterviews - How do you go about setting up your
subsidiaries?
Mr. Packer: "When we want to move to direct sales subsidiaries
we go out and recruit, trying to find a local person who is entrepreneurial, is used to
contesting the competitors and have more resources than he or she does. We start with the
leader of that company and that person goes from there, hiring sales people and starting
to build an organization.
CEOCFOinterviews – Can you tell us about your entry into the
market for defibrillators made for the non-professional to operate?
Mr. Packer: “Right now, the defibrillators are
professional devices sold to hospitals and pre-hospitals. There is, however a new class of
defibrillator, called a public-access defibrillator or first respondent defibrillator,
which are a much simpler and less expensive device. We will have our product in that
segment of marketplace toward the later part of this year. In that segment of the
marketplace, these devices are beginning to be sold in many non-traditional ways. Many are
still sold through distributors, yet if you went on CVS.com for example, one of the
largest drugstore chains, and you have a prescription from a doctor and a credit card, you
can actually buy a defibrillator over the net.
CEOCFOinterviews - Are those defibrillators as effective as those
that the paramedics carry are?
Mr. Packer: "They do fewer things. The public-access
defibrillator, for example, cannot be a pacemaker. With the cardiac arrest you not only
need to get the heart beating, you need to do other things as well to keep the patient
viable. Those public access defibrillators
only do the basic defibrillation, which is a very time critical phase. When a person has a
cardiac arrest, the chances of survival decrease by about 10% for every minute that they
are in cardiac arrest. Therefore, if you have a heart attack in an office building and it
took 10 minutes for the paramedics to show up with the defibrillator, your chances of
survival would be very low indeed. However, if in that office building were a security
guard who had one of these devices and he can get to the person who has the heart attack
within three minutes, your chances of survival will be in the excess of about 50%. Time,
therefore, is very critical, and you need to have a lot of those defibrillators out there
and that is why they are showing up in very untraditional locations. It is going to be a
very large market, which already is growing very, very rapidly. People envision that there
will be a defibrillator next to every fire escape and fire extinguisher, and almost in
every home. Right now, the most viable markets are the security guards and the police who
have some responsibility for public safety. Doing the defibrillation with one of those
devices is very effective and very rapid. Ultimately, if we want to solve the problem of
heart attacks, which is the number one cause of death in the United States, there should
be a large amount of these defibrillators out there."
CEOCFOinterviews - What is you current cash and credit position?
Mr. Packer: "We are very strong on balance sheets, we
currently have no debt and about 50 million dollars in cash in the bank."
CEOCFOinterviews – Where do you stand in the military market?
Mr. Packer: "Pretty good and getting stronger. For example,
last quarter we shipped the last of a large contract we had with the Navy. Virtually every
ship that belongs to the US Navy, whether it is an air carrier or their smallest tender,
is equipped with our defibrillator."
CEOCFOinterviews - What are the prices on your defibrillators?
Mr. Packer: "It can go from mid twenties to as low as four
thousand dollars, depending on what kind of features set you have on your
defibrillator."
CEOCFOinterviews -Do you have any partnerships?
Mr. Packer: "We believe, that when you build a defibrillator,
you realize that other people may know some things better. Therefore we have gone out and
have partnerships with a number of the leading suppliers of monitoring parameters we use
within our defibrillators. One of our prime
partnerships is GE Medical, one of the largest medical device companies in the world. We
use their technology in our product, yet we also have licensed our Biphasic to them. They
recognize that it is the best waveform and have paid us to get it. There is also a company
called Masimo, a new, emerging leader in pulse oximetry."
CEOCFOinterviews - In closing, are there any thoughts that you
would like to leave with your shareholders or potential investors.
Mr. Packer: "One question is how do we get Zoll Medical to the
next level, and I believe that our strategy is to focus on what we are good at. We are
decent guys and the decent market is very robust now. People have finally figured out a
way to conquer cardiac arrest and it is a good place to be. In Zoll, you have a company
that has the best technology, and has built a vast distribution system in the last couple
of years. I believe these two things coming together make for a great business
opportunity."
