Medical market key to PolyOne's growth

Mike Verespej ERJ staff (Plastics News)

New York -- In less than four years, PolyOne Corp. has established itself as a key materials supplier, compounder and distributor to the healthcare market -- a market that is close to recession-proof and still growing at a double-digit rate.

It's the culmination of a dedicated focus, several strategic acquisitions and a number of internal moves that have beefed up the company's commitment to that market.

“Four years ago, most people knew the PolyOne name, but not too many people associated us with health care and medical,” said Larry Johnson, director of marketing for health care for the Avon Lake, Ohio-based company. “Now, they see us as in the business for the long-run. We are totally dedicated to healthcare on a global basis from the top to the bottom of the company.”

Specifically, PolyOne has added a number of materials aimed at healthcare to its distribution network, acquired two specialty chemical companies geared toward that market, and late last year dedicated 11 sales representatives to focus only on the healthcare business.

“If you look at what we are doing on the specialisation side, it is an expansion we have created for ourselves through innovation, expertise, technology and acquisition,” said Craig Nikrant, president of the global specialty engineering material business at PolyOne and a senior vice president of the company.

PolyOne has further established its healthcare business as an organisation that can extend the reach of its customers through marketing and its global distribution network.

“For suppliers, our distribution network is becoming a marketing arm that can help them reach a certain market segment and get their products on the market faster,” Johnson said. “And they can develop products with us in North America, Europe and Asia. We can pretty much supply any need.

“Last year, we purposely went after new partnerships,” Johnson said. “That puts us in very good shape for the future. We have put the tactical pieces together and developed the vision of where we want to be in healthcare.

“Now we want to continue to move up the technology ladder and have an even more extensive portfolio of product offerings that healthcare OEMS find attractive.”

The acquisition six months ago of New England Urethanes Inc. - now the NEU business of PolyOne - underscores that strategy and gives them another strong specialty resin group to pair with GLS Corp., which it acquired in November 2007.

“It gets us involved in the catheter business and instruments for minimally invasive surgical procedures,” Johnson said. “It gives us access to higher technology” - thermoplastic polyurethane alloys. “And it gives us access to healthcare companies we have not been involved with before and the opportunity to sell additional materials to those companies.”

Johnson also said NEU has “less cyclicality” than some other portions of the PolyOne's healthcare business.

Equally as important, Johnson said the NEU acquisition “opens our eyes to other areas we need to go into in the future. We are investigating other merger and acquisition opportunities … to further our interest in medical and critical care operations. We are looking at things like coatings for pharmaceuticals.”

“NEU was another piece of the solutions package with its high-end specialty chemicals and its extrusion grade TPUs for catheters,” Nikrant said. “It has helped us expand our array of solutions and expand our focus into healthcare.”

That expansion also extends to the distribution side.

In mid-June, PolyOne reached an agreement with Dow Corning Corp. to distribute - within North America - Dow Corning's silicone elastomers that are used in numerous medical devices, including electrocardiogram tabs, catheters and angioplasty balloons.

The silicone products - which include liquid silicone rubber, solid silicone products and silicone tubing - are the first non-thermoplastic product carried by PolyOne's distribution unit.

“We are now able to offer thermoplastics as well as Dow Corning silicones,” said Michael Rademacher, president of PolyOne Distribution. “It fits our strategy of growth and expanding more into the healthcare market. It makes it easier for our customers when they can buy more from one supplier.”

Since 2008, PolyOne Distribution has added healthcare grades of resin from DuPont Co., BASF Corp., Dow Chemical Co., LyondellBasell Industries AF SCA and Arkema Group. Health-care related sales accounted for 20 percent of sales for PolyOne's distribution unit last year.

“Our breadth of products in health care is much greater now,” said Rademacher, which is one of the reasons that PolyOne dedicated 11 sales representatives to the healthcare market late last year.

“That is a natural evolution of our growth into healthcare. It is a changing evolving marketplace and you have to help customers create additional value in their service offering. A dedicated health care sales force can do that through their understanding of health care regulations and requirements.”

“Having our own dedicated and trained healthcare sales force is what is important to healthcare accounts because they know you have a team that understands their problems,” Johnson added. “If healthcare OEMS find that you deliver on promises, they depend on you to come in and solve problems. It definitely opens doors and enhances your brand in the market.”

Nikrant said the acquisition of NEU gave PolyOne technologies it can use to grow the healthcare business, as well as technologies it can transfer to its other business similar to when PolyOne acquired GLS in 2007.

“There are a lot of synergies and cross-opportunities that will allow us to use that technology outside of medical,” he said.

In addition, PolyOne's much larger sales force and global reach will be able to grow the NEU business faster, Nikrant said.

“NEU had a very limited sales staff and all of it in North America,” Nikrant said. “We have a sales team across the world that can drive the NEU product line across the globe. We can rapidly expand their reach to the customer.”

“Medical is growing very rapidly for us,” Nikrant said. “I see real good strength driven a lot by GLS and our specialty engineered materials. The products we offer are picking up steam in the health care and sustainability areas. There is an increased focus on patient safety. Hospitals and consumers are asking whether there is anything in products that are harmful.”

Nikrant said the key for PolyOne now is to identify the right applications to continue to expand the medical business.

Johnson agreed: “Partnering is critical to our future at PolyOne. We have the commercial muscle and that makes us attractive to companies looking to get product to market.”

“We can add take costs out and increase the value of what our customers offer,” he said. “We can help them understand where the market demands are taking the industry, uncover the needs they have.”

From Plastics News (A Crain publication)