Business Monday

Erba Diagnostics manufactures medical testing equipment for underserved markets in the U.S. and overseas

Workers at the Erba Diagnostics plant in Miami Lakes on Monday, Feb. 23, 2015. The plant employs more than 80 people in a variety of technical, scientific, and engineering roles to produce diagnostic machines, test kits and chemical reagents.
Workers at the Erba Diagnostics plant in Miami Lakes on Monday, Feb. 23, 2015. The plant employs more than 80 people in a variety of technical, scientific, and engineering roles to produce diagnostic machines, test kits and chemical reagents. FOR THE MIAMI HERALD

ERBA Diagnostics, which makes a range of medical diagnostic testing equipment and chemical reagents at its Miami Lakes headquarters, is a key part of the German-based multinational company, ERBA Mannheim.

Through its five subsidiaries — four in the U.S. and one in Italy — ERBA Diagnostics develops, manufactures and sells sophisticated devices and reagents used to perform chemical analyses of blood and to test patients for diabetes as well as autoimmune and infectious diseases.

The company’s strategy is clear: “To serve an underserved medical market with quality products at an affordable price,” said Mohan Gopalkrishnan, who started at ERBA Diagnostics in 2012 and was named CEO last year.

There are about 4,000 hospitals in the U.S. and about 60 percent have 200 beds or less, noted Gopalkrishnan, who has more than 30 years of experience in the diagnostics and medical devices sector.

These smaller hospitals, as well as small labs, clinics and doctors’ groups can’t afford the costly high-volume testing equipment used by large hospitals and large laboratories that perform many thousands of tests daily.

“That sector is underserved and represents a significant market for our products,” said Gopalkrishnan, who is from New Delhi and received a master’s degree in chemistry from India’s Birla Institute of Technology and Science.

ERBA Diagnostics’ devices can perform up to several hundred individual blood tests simultaneously and are well suited for smaller hospitals and labs, costing from about $25,000 to $70,000 for clinical chemistry and immunological test equipment. Equipment made by competitors for high-volume use at large hospitals can cost many times more.

ERBA Diagnostics sells FDA approved equipment with names like the XL2280/Drew D3 for hematology, the Mago4S, which tests for autoimmune and infectious diseases and the XL200, which performs clinical chemistry analysis.

The company has 118 employees in total, with 85 in Miami Lakes. Aside from management, these employees include electronic and mechanical engineers, quality control specialists, customer service staff in the field, sales and marketing personnel, technicians as well as production and shipping workers.

Components for testing devices and reagents arrive in Miami Lakes from about 50 suppliers in the U.S. and overseas. Reagents are made in special, limited-access, temperature-controlled laboratories, while testing devices are assembled in other parts of the building. All of ERBA Diagnostics’ products are subject to U.S. Food and Drug Administration standards, as well as regulation by other government authorities. All products undergo rigorous quality control testing.

The company competes with several firms, including Bio-Rad Laboratories, DiaSorin, INOVA, Alere and Meridian Bioscience.

ERBA Diagnostics’ business strategy stems from the philosophy of its founder, Suresh Vazirani, an electrical engineer-turned-entrepreneur from Mumbai. Vazirani, with $5 of his own capital and a loan, started a company to build diagnostic equipment in his country, where foreign suppliers dominated the market and low-income families could not afford medical tests.

Vazirani’s company — Transasia — today is a leading player in India’s in vitro diagnostic testing market. He also set up ERBA Mannhiem in Germany, which includes Transasia, ERBA Diagnostics and other subsidiaries with plants and operations in the Czech Republic, Turkey, France and Russia.

In 2010, Vazirani took over IVAX Diagnostics and changed its name to ERBA Diagnostics.

ERBA Diagnostics has five subsidiaries, three of which are in Miami Lakes. They are Diamedix Corp., which makes autoimmune and infectious disease test kits: JAS Diagnostics Inc., a manufacturer of clinical chemistry reagents, and Drew Scientific, which makes products for clinical chemistry, diabetes testing and hematology.

It also owns and operates ImmunoVision Inc., in Arkansas, which makes antibodies and antigens for use in diagnostic reagents, and Delta Biologicals s.r.l. in Italy, which manufactures ERBA’s Mago testing equipment.

ERBA Diagnostics trades on the New York Stock Exchange, but 82 percent of its shares are held by ERBA Mannheim, a company owned by the Vazirani family.

ERBA Diagnostics shares, which traded at $0.57 a share at the end of 2010 recently sold for just over $3.40 per share.

For the first three quarters of 2014, ERBA Diagnostics posted net revenue of nearly $20.4 million, and net income of $743,944.

Over the last two years, Gopalkrishnan explained, the company invested substantial sums in consolidating its U.S. operations and moving most of its subsidiaries to Miami Lakes. It also expanded its Miami Lakes facilities, from 20,000 square feet when it started to 60,000 square feet today.

The company expects future growth to come from sales to customers in the U.S., where hospitals and labs are seeing more demand for testing as Baby Boomers continue to age, and as healthcare providers look for more economical alternatives in testing equipment.

Emerging markets, especially Latin America, also offer new growth opportunities, Gopalkrishnan said. About 53 percent of sales today go to customers in the U.S., while the remainder go to Latin America, the Middle East, Africa and Asia.

Test kits for infectious diseases — like the ones ERBA Diagnostics makes for measles, mumps and rubella — are useful as local and regional health authorities try to identify outbreaks, and could be in greater demand due to current concerns over measles

“No other single company has the range of high-quality products we offer,” Gopalkrishnan said.

“We develop and manufacture reasonably priced equipment, provide tech and engineering support and all the services our customers need in the U.S. and emerging markets.

“We are a one-stop-shop for an important and underserved segment of the medical community.”

The writer can be reached at josephmannjr@gmail.com.

ERBA Diagnostics Inc.

Business: Designs, manufactures and sells in-vitro diagnostic testing equipment, reagents and clinical test kits to clients in the U.S. and overseas. Part of the German-based ERBA Mannheim global group, Miami Lakes-based ERBA Diagnostics owns and operates five subsidiaries: Diamedix Corp., ImmunoVision Inc., JAS Diagnostics Inc. and Drew Scientific (all in the U.S.), plus Delta Biologicals s.r.l. in Italy. The company makes a wide range of products used in blood chemistry and hematology, specializing in tests for autoimmune and infectious diseases and diabetes.

Headquarters: 14100 NW 57th Ct., Miami Lakes

CEO: Mohan Gopalkrishnan

Founded: In 2010 when Indian entrepreneur Suresh Vazirani bought control of IVAX Diagnostics.

Founder: Suresh Vazirani, from Mumbai, was trained as an electrical engineer but decided to start a diagnostic testing company — Transasia — in India, and later established ERBA.

Employees: 85 in Miami Lakes, 118 total.

Plant: 60,000 square feet

Customers: Small hospitals (200 beds or less), labs, clinics and doctors’ offices in the U.S. and emerging markets.

Sales: In the first three quarters of 2014, ERBAlogged net revenues of nearly $20.4 million.

Ownership: Publicly traded on the NYSE (symbol: ERB). Eighty-two percent of outstanding shares are held by family owned ERBA Mannheim, a German-based in-vitro diagnostic company set up by Vazirani.

Website: www.erbadiagnostics.com

Source: ERBA Diagnostics

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