The TandemHeart pump helps alleviate that dilemma, taking over the pumping function of a patient’s heart and buying time for physicians make better diagnoses. But CardiacAssist Inc., the company that developed and markets it, found time running short to satisfy investors looking for a clear exit strategy.
As an R&D company that hadn’t produced any revenue in the six years since it was founded, the board of the 50-employee company decided in 2002 that a change of direction was in order.
Enter Michael Garippa, a lifelong health care industry professional who was hired by TandemHeart as CEO to turn the company around by shifting its focus from the laboratory to the shop floor and sales team. Garippa’s approach was simple but direct: Pare operations, focus on its single most-promising product idea and get FDA approval, then find and convince the right customers physicians at major medical centers to buy it, use it and talk it up.
Hospitals using CardiacAssist are on track to triple their use of the device this year, and Garippa anticipates engineering a 10-fold increase in production capability by 2008 to meet demand.
Smart Business spoke with Garippa about how he turned the company around and revved up sales.
What was the biggest challenge you encountered at CardiacAssist?
The company mindset was originally to do research and development engineering. Now we have to be a production company. The company never had a sales force, never had a price list.
The biggest challenge is to become commercially viable and then profitable when your first eight years in existence were designed as a research and development company to lose money and burn money.
When you came on board, what changes did you make to turn CardiacAssist around?
We had to turn over some staff, bring in some people who had worked at bigger companies, understood the growing pains and improve our financial systems, improve our supply chain, make pump improvements so it could be more easily manufactured, take it from 80 steps to 40 steps.
We made the decision to outsource the control device that runs the pump and have that built somewhere else, and made decisions to outsource cannula manufacture with a company that does a half a billion dollars a year in cannulas. We made decisions about what we could do internally. So the board, along with management, helped make decisions about the easiest way to grow the company rapidly with the least risk.
How did you get the revenue engine started?
In ’04, I spent a lot of time on the road with the biggest hospitals in the country, and when they agreed to buy it, we then started a sales force that produced $3.5 million in sales in 2005. That same sales force is now bigger and will do $8 million or $9 million this year.
The tipping point for that was when 10 or 15 hospitals, who were not heretofore part of any of our clinical trial efforts in one year, agreed to bring it in. They just said, ‘We believe what you’re saying, we’re going to buy it, we’re going to use it.’ They created the next 50 customers.
How are you keeping the revenue stream flowing?
By spending time with the industry leaders, like Texas Heart Institute and the Mayo Clinic and the Cleveland Clinic, I found a paradigm for promoting the product that could easily be translated to good salesmen, and the good salesmen are able to do now exactly what I learned how to do.
We had to find ways to bridge ‘We’ve never seen anything like this before.’ Once we figured that out and some safe, clear ways to make a presentation, I’ve literally been places and in five minutes, I’ve been stopped and someone says, ‘Get him a purchase order, we have to have this.’
What’s the challenge as you continue to grow?
We have shareholder obligations, we have shareholders who have been with us for 10 years and we have to do the right thing for them. Now that we’re successful, there are more opportunities than there ever were, and finding the right one for the employees, the shareholders, the product is not always clear. It’s a good problem to have.
How to reach: CardiacAssist Inc., www.cardiacassist.com