Most new businesses go through a progression of growth stages, starting with "existence," advancing to "survival," and culminating in "success," according to a classic case study on small business growth published in Harvard Business Review in the 1980s.
Many small businesses never progress beyond the survival stage, earning marginal returns on invested time and capital and closing up shop when the owner retires or simply pulls the plug. Those businesses that do progress to the success stage enter into a whole new world of opportunities, but it’s one accompanied by significant challenges and tough choices.
At this point in their existence, companies often face the prospect of revenues and profits from their initial customer base that are insufficient to support further growth. Businesses must expand their universe of customers, which means entering unchartered territory in terms of new markets, new channels, new products/services, new types of customers, or some combination of those elements.
Partnering with another successful company is often the best way for a fast-growing “gazelle”— company—one that grows at an annual rate of 20% or more—to achieve the next level of performance, and that’s just what Diagnostic HYBRIDS, Inc. (DHI) did. Like most biotechnology startups, Athens, Ohio-based DHI had a long gestation period. Founded in 1983, the company was in existence for 10 years before it launched its first marketable product. It was able to survive as a fledgling enterprise with about a dozen employees during that early period thanks to the care, nurturing and support it received as part of the Ohio University community where it was founded, president David Scholl said in a 2009 interview with hiVelocityMedia.com, an online magazine focused on Ohio’s transitioning economy.
Its relationship with Ohio University continued to play an important role through DHI’s first two decades of existence. In 2000, for example, the company partnered with the university on a $1 million grant from the Ohio Third Frontier’s Action Fund, helping to lure a prominent scientist to the team. DHI really began to hit its growth stride about five years ago; it was named one of the 500 fastest-growing companies in America by Inc. magazine in 2004 and 2005 and it posted a 75% increase in jobs—to about 225 employees—between 2005 and 2009. Ultimately, it developed into a market leader in manufacturing and commercializing direct fluorescent in vitro diagnostic assays used in medical laboratories for a variety of diseases, including viral respiratory infections, herpes and thyroid diseases.
With 2009 sales of $51 million, up 34% over the previous year, it became clear that the company needed a new strategy to support its burgeoning growth. It had all the elements of a true gazelle enterprise in place, including control of its overhead cost structure and historical sales performance to support projections of future demand for its products. DHI’s leadership team decided merging with an appropriate partner was the most efficient way to go, and it found one in Quidel Corporation, a San Diego-based company that is a market leader in rapid point-of-care diagnostic tests. Quidel completed its acquisition of DHI in January, 2010, for about $130 million in cash. DHI continues to operate as a separate subsidiary of Quidel, with Scholl remaining as president.
“Quidel is a synergistic and cultural fit for Diagnostic HYBRIDS, and this transaction presents us with an excellent opportunity to have a larger presence in our markets and to leverage key aspects of our research and development teams to accelerate product development,” Scholl said in a February 19, 2010, joint press release with Quidel announcing the deal. “Our combined organization will have greater channel strength, and together we will provide our customers a full-service offering of best-in-class diagnostic products.”
Most new businesses go through a progression of growth stages, starting with "existence," advancing to "survival," and culminating in "success," according to a classic case study on small business growth published in Harvard Business Review in the 1980s.
Many small businesses never progress beyond the survival stage, earning marginal returns on invested time and capital and closing up shop when the owner retires or simply pulls the plug. Those businesses that do progress to the success stage enter into a whole new world of opportunities, but it’s one accompanied by significant challenges and tough choices.
At this point in their existence, companies often face the prospect of revenues and profits from their initial customer base that are insufficient to support further growth. Businesses must expand their universe of customers, which means entering unchartered territory in terms of new markets, new channels, new products/services, new types of customers, or some combination of those elements.
Partnering with another successful company is often the best way for a fast-growing “gazelle”— company—one that grows at an annual rate of 20% or more—to achieve the next level of performance, and that’s just what Diagnostic HYBRIDS, Inc. (DHI) did. Like most biotechnology startups, Athens, Ohio-based DHI had a long gestation period. Founded in 1983, the company was in existence for 10 years before it launched its first marketable product. It was able to survive as a fledgling enterprise with about a dozen employees during that early period thanks to the care, nurturing and support it received as part of the Ohio University community where it was founded, president David Scholl said in a 2009 interview with hiVelocityMedia.com, an online magazine focused on Ohio’s transitioning economy.
Its relationship with Ohio University continued to play an important role through DHI’s first two decades of existence. In 2000, for example, the company partnered with the university on a $1 million grant from the Ohio Third Frontier’s Action Fund, helping to lure a prominent scientist to the team. DHI really began to hit its growth stride about five years ago; it was named one of the 500 fastest-growing companies in America
by Inc. magazine in 2004 and 2005 and it posted a 75% increase in jobs—to about 225 employees—between 2005 and 2009. Ultimately, it developed into a market leader in manufacturing and commercializing direct fluorescent in vitro diagnostic assays used in medical laboratories for a variety of diseases, including viral respiratory infections, herpes and thyroid diseases.
With 2009 sales of $51 million, up 34% over the previous year, it became clear that the company needed a new strategy to support its burgeoning growth. It had all the elements of a true gazelle enterprise in place, including control of its overhead cost structure and historical sales performance to support projections of future demand for its products. DHI’s leadership team decided merging with an appropriate partner was the most efficient way to go, and it found one in Quidel Corporation, a San Diego-based company that is a market leader in rapid point-of-care diagnostic tests. Quidel completed its acquisition of DHI in January, 2010, for about $130 million in cash. DHI continues to operate as a separate subsidiary of Quidel, with Scholl remaining as president.
“Quidel is a synergistic and cultural fit for Diagnostic HYBRIDS, and this transaction presents us with an excellent opportunity to have a larger presence in our markets and to leverage key aspects of our research and development teams to accelerate product development,” Scholl said in a February 19, 2010, joint press release with Quidel announcing the deal. “Our combined organization will have greater channel strength, and together we will provide our customers a full-service offering of best-in-class diagnostic products.”
As a small business owner, what can you find in Ohio? In 2010, Enterprise Appalachia and Inc. magazine introduced Enterprise Benchmarks, a series of white papers highlighting the diverse array of entrepreneurial resources the state offers: access to funding, a considerable knowledge base, supply chain resources, and much more. Our latest entry, "Enterprise Appalachia in Action: Real Results for Real Entrepreneurs," takes it to the next level, showing you how business owners put those resources to work for their companies. Read it and learn how:
Leonard Kohn, a founder, president, and chairman of Interthyr Corporation, grew his firm with help from the Ohio University Innovation Center in Athens and TechGROWTH Ohio.
Butech Bliss successfully leveraged the new multimodal rail/truck/barge facility developed on the Ohio River at the Wellsville Intermodal Industrial Park to gain access to both domestic and international markets.
A $1 million grant from the Ohio Third Frontier's Action Fund Biotechnology put Diagnostic Hybrids, Inc., on a path to 20% growth for five consecutive years before being acquired by a larger competitor, Quidel Corporation.
The more you read, the more entrepreneurial opportunities you'll find in Ohio. Learn more about all the resources Enterprise Appalachia offers Ohio's business community.
Southeastern Ohio is a viable location for high-tech industry due to the location of eight higher education institutions throughout the region including Marietta College and Athens' main Ohio University campus.
"At our Ohio headquarters, our working culture thrives in a unique and collegial setting that embraces the best balance of professional growth and community living," says David Scholl, CEO of Athens-based Diagnostic Hybrids, Inc. Launched in the university community in 1983 in partnership with a pair of its leading researchers, the company continues to take advantage of support offered by university resources, ready access to technology and R&D in a small-town setting.
Diagnostic HYBRIDS invents, develops, manufactures and sells innovative diagnostic and analytical products for a wide range of viral respiratory diseases, herpes virus infections, and other specific viral and thyroid diseases. The company also develops and commercializes innovative and genetically engineered cell-based detection products for the pharmaceutical and biotechnology industry, with an initial focus on pharmacology assays and products that measure drug clearance and anti-viral interventions with drugs and vaccines.
David discusses the strength of Ohio's bioscience community and the perfect work-life balance he and his employees are able to find in the State of Ohio.
Diagnostic HYBRIDS invents, develops, manufactures and sells innovative diagnostic and analytical products for a wide range of viral respiratory diseases, herpes virus infections, and other specific viral and thyroid diseases. The company also develops and commercializes innovative and genetically engineered cell-based detection products for the pharmaceutical and biotechnology industry, with an initial focus on pharmacology assays and products that measure drug clearance and anti-viral interventions with drugs and vaccines.
Diagnostic HYBRIDSrecently announced the FDA clearance, for marketing under 510(k) pre-notification process, of Thyretain TSI Reporter BioAssay. Thyretain is the first FDA-cleared test that specifically detects thyroid stimulating immunoglobulins (TSI) and is to be used as an aid in the differential diagnosis of Graves’ disease, an autoimmune thyroid disorder.
Dr. Scholl believes Ohio’s promise is authentic: You can achieve professional success within the context of a fulfilling life. Short commutes allow him to have quality time with his family and enjoy the beauty of the outdoors. It’s the perfect work-life balance.
For Dr. Scholl, operating a business in Ohio means being competitive in the global marketplace. He takes pride in working at a world-class company right here in Ohio.
Check out the interview with Dr. Scholl to find out more about Ohio’s global leadership in the health careindustry and his thoughts on work-life balance.
