Oregon firm aims for profit on bandages for soldiers
Wednesday, June 23, 2004 7:52 AM PDT
By Associated Press
Printable version
E-mail this articleTIGARD, Ore. -- A Tigard company's bandages have stopped the bleeding of thousands of U.S. soldiers abroad, but HemCon Inc. loses money on each wound dressing.
Now, the Tigard biotechnology startup is hoping to turn a profit within the next year, thanks to the U.S. military's quick acceptance of the bandage.
The bandage, which is made with a material derived from recycled shrimp shells, has "proven its effectiveness" in the wars in Afghanistan and Iraq, said U.S. Rep. David Wu, D-Ore.
The HemCon bandage is designed to stick tightly to wounds. Its' blood-clotting ingredients help stop massive blood loss within a couple of minutes.
HemCon expects to receive a grant of $8 million to $9 million this month from the Defense Department, The Oregonian newspaper reported. Wu hopes to secure an additional $12 million in military contracts for HemCon next year.
Developed by scientists at Providence St. Vincent Medical Center in Portland, the bandage received an expedited review by federal regulators, winning clearance in fall 2002. Providence Health System licensed the technology to HemCon in exchange for an equity stake in the privately held company and royalties on sales, worth a maximum of $25 million.
The Pentagon rushed thousands of the bandages to U.S. armed forces preparing for war in Iraq. Now, the U.S. military is considering a new dress code that would put two of the bandages in each soldier's uniform, HemCon executives said.
Most of this year's defense money would go toward ramping up production at the company's headquarters. HemCon plans to add a second production shift in mid-July that would keep the assembly line running until as late as midnight.
As a result, company executives expect to triple manufacturing capacity next year, reach profitability within six to nine months, and consider making an initial public stock offering or selling out to another company soon thereafter. The expansion is expected to double HemCon's employment to about 70 by year's end.
The added production is expected to reduce the nearly two weeks it takes to produce, test and ship one batch of about 1,500 to 2,000 bandages. Later, HemCon expects enhanced production capacity and quality to help reduce the cost of making the bandages about fourfold, John Morgan, HemCon's president and chief executive, told The Oregonian.
For now, the company still has only one customer: the U.S. military. HemCon next will try to sell its bandages to militaries of nations friendly to the United States, such as those belonging to NATO, said Bill Wiesmann, HemCon's co-founder. Combined, the market would be just as large as the U.S. military, he said.
Such military markets require little or no marketing, making them more desirable customers than civilians. "We don't even have a marketing department," said co-founder Ken Gregory.
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