SALT LAKE CITY — Utah’s recently flourishing life sciences sector weathered the Great Recession virtually unharmed, but in the face of COVID-19 impacts, a panorama of outcomes are currently playing out with some companies in full crisis mode while others are struggling to keep up with unexpected boons.
Thirty years ago, Fred Lampropoulos launched Merit Medical with a single device innovation that has since become a global operation with annual revenues approaching the $1 billion mark and standing among the largest private sector employers in the state.
With a business primarily driven by the need for devices and supplies used mostly in elective medical procedures, Lampropoulos said the company has seen a massive slowdown that’s led to furloughs for 600 of Merit’s 6,000-strong global workforce, about 2,300 of whom are Utah-based.
Strategies to navigate the slowdown have kept Merit profitable, Lampropoulos said, which, in addition to layoffs, have also included adopting voluntary, companywide wage reductions and slashing the budgets of discretionary spending areas like sales and marketing.
Lampropoulos said the fallout from the housing crisis over a decade ago was mostly felt in the publicly traded company’s fluctuating stock value — a marketwide phenomena at the time — but by comparison, “it was nothing” compared to the ongoing economic repercussions of the novel coronavirus pandemic.
Fred P. Lampropoulos, chairman and CEO of Merit Medical, holds up a COVID-19 test kit developed by his company during a press conference at the company’s headquarters in West Jordan on Tuesday, April 21, 2020.
Spenser Heaps, Deseret News
“We’ve decided to mutually share the pain,” Lampropoulos, the company’s board chairman and CEO, said. “Our situation isn’t as dire as hospital operations, but it is deeply impacting our business.”
One effort helping to offset declines at Merit has been the company’s development of a test swab and transport kit that is in dire need globally for the expanding effort to test for the novel coronavirus. That project, which Lampropoulos said is ramping up to full production capacity, has helped keep 100 employees from joining furloughed colleagues and could drive the need to bring 100 additional staffers back to work.
Before the onset of the economic upheaval precipitated by COVID-19 restrictions, Utah’s life sciences/biotech industries were flying high and even outpacing the hyperbolic growth of the state’s information technology/software business sector.
A comprehensive 2018 report by the University of Utah’s Kem C. Gardner Policy Institute took a deep look at the economic impact of the state’s life sciences industry and unveiled data revealing the sector as one of the prime current drivers of Utah’s economy.
Gardner reported companies engaged in developing products and services, mostly related to health care such as medical devices, pharmaceuticals, lab testing and diagnostics employ, directly and indirectly, over 130,000 in the state and pay out some $7.6 billion in wages and compensation each year.
And, the industry accounts for almost 8% of the state’s GDP, or about $13 billion annually.
How much of that revenue has been wiped off the books so far by COVID-19 remains to be tabulated, but Kelvyn Cullimore, president/CEO of nonprofit Utah life sciences advocacy group BioUtah, said he expects the slowdown to continue well past the end of 2020.
“There have been many of our companies that are seeing a significant decline in sales for the moment,” Cullimore said. “And part of the current challenge is for them to figure out how to get through this without damaging their manufacturing capabilities.
“In the long run, they know the procedures ... are still going to be done. But, they’re also waiting for the restoration of patient confidence to go into the hospital. I think we’re probably at least a year away from being back in the full swing on the procedure front.”
Cullimore said many Utah life sciences companies have been able to access federal emergency assistance via the stimulus-backed Paycheck Protection Program and/or Economic Injury Disaster Loan programs. But some larger companies have not been able to access emergency funds due to eligibility requirements.
Still, Cullimore cited a long list of Utah companies that have ramped up their operations, and in some cases their workforces, as their areas of specialty put them on the front lines of pandemic response efforts.
Right now, BioUtah is reporting nine Utah companies are participating in the manufacture and/or distribution of personal protective equipment; nine companies are working in the molecular diagnostic testing/genomic realm; five companies are involved in developing serology, or antibody detection testing; and two private Utah companies are operating diagnostics laboratories that are processing COVID-19 tests.
Co-Diagnostics lab analyst Madison Stark works with samples as the company produces COVID-19 testing kits in Salt Lake City on Tuesday, March 17, 2020.
Jeffrey D. Allred, Deseret News
One Utah company is playing a major — and worldwide — role in ensuring that the flood of new personal protective equipment now being manufactured is resulting in products that do, in fact, keep the wearers’ safe.
Taylorsville-based Nelson Labs was founded in 1985 by the parents of current company President Jeff Nelson and specializes in microbiological testing of medical devices, pharmaceuticals and tissues.
One area of the lab’s operations, focused on evaluating the effectiveness of personal protective gear like masks, gowns and respirators, has exploded with the onset of the COVID-19 pandemic. Nelson said staffing for the materials testing has increased nearly 500% and the workflow that was once accommodated by 14 people working regular business hours is now a three-shift, 24-hour enterprise.
Nelson said the avalanche of need for critical supplies like protective masks, gowns and respirators has drawn many new players into the world of medical equipment and supplies manufacturing, including some from unexpected quarters.
“We’re seeing a lot of innovation, especially in an environment like this,” Nelson said. “It takes on several forms but one thing we’re seeing a lot of is companies that previously have had no particular presence in masks or respirators pivoting to the space to help meet the need.
“Clothing, automobile manufacturers, tech component makers ... if you are a manufacturer and you can make masks, you’re probably doing that or working on making it happen.”
One division of Taylorsville-based medical equipment testing operation Nelson Labs is operating 24 hours a day in order to keep up with demand for testing personal safety equipment like face masks. The COVID-19 pandemic has led to increased demand for some Utah biotech companies but others are suffering.
Nelson Labs
The amount of work it takes to ensure an item like a disposable face mask is up to standards is expansive and goes far beyond just checking its ability to filter out potential biohazards.
Nelson said the company’s labs test for flammability, the relative sterility of a mask as it ships from the manufacturer, its breathability, it’s resistance to blood and other bodily fluids and even its bio-compatibility with the wearer, making sure the mask material isn’t itself a skin irritant and can be worn comfortably for extended periods.
A mask’s efficiency at keeping out viral and/or bacterial hazards is determined, Nelson said, through a process that bombards the material from one side with tiny droplets containing a catalyst and, on the other side, a petri dish with a growth medium. The amount, if any, of the catalyst that passes through the mask later shows in a bacterial growth pattern that appears in the dish.
Nelson said that the company has seen previous spikes in the need for the personal protective gear it certifies in previous situations, like the SARS outbreaks in the early 2000s, but nothing at the levels that have been created by the novel coronavirus.
Nelson said the company, which is now a holding of Ohio-based Sotera Health, employs about 600 people in Utah and 1,000 worldwide.