Miles Lowell Edwards was not the most obvious guy to start a medical technology business. A hydraulics engineer in the paper and pulp industry in the United States, he patented a fuel pump for high-altitude aircraft, using the cash earned to start what is now Edwards Lifesciences in 1958.
"Because he had rheumatic fever himself and there was also some heart disease in his family, he had a fascination with making an artificial heart," explains Mike Mussallem, the US company's chief executive. Edwards joined forces with a young cardiac surgeon, Albert Starr, who convinced him instead to start with heart valves. These are critical to circulation, as they move blood around the heart's four chambers.
So they created the Starr Edwards valve. It was a small ball kept in place by a miniature cage of stainless steel struts. Blood moving from the chamber opened and closed it. Simple, but effective, surgeons sewed the first one into a patient’s heart two years after the pair conceived it, beginning a new era in cardiac medicine.
Edwards Lifesciences is spending €80 million on a plant in Castletroy, Co Limerick, which will make this technology's successors. The California-based company recently broke ground on the project. This will double its original proposed investment here to €160 million and bring employment to 600 people, all high-tech jobs, Mussallem predicts.
Nowadays Edwards makes valves sewn from tiny leaves cut from cows’ pericardiums – the sac that goes around the animal’s heart – which is a particularly durable material. Instead of cutting open your chest and heart to fit them, surgeons slip the valves through an entry in the upper thigh up the aorta, your biggest artery, slotting them into place with a catheter, a procedure that’s far less invasive or risky for patients.
“They are more and more sophisticated, it’s one of the things that distinguishes the company,” Mussallem says. “The ability to make these things very small, to be able to have them quite visible under imaging, those are the kind of things that become so important.”
The company’s systems primarily treat the aortic valve, prone in later life to hardening from calcium build-up, which inhibits blood flow through the heart, leaving patients fatigued. Medical imaging makes the condition and valve easy to spot.
Edwards is developing similar techniques to treat the heart’s other three valves, but Mussallem notes that they present engineering complexities: they are harder to reach and are tied to groups of muscles, also less straightforward conditions than calcification affect them. The mitral and tricuspid valves often leak as people age and treatment often requires surgery.
Despite the challenges, Edwards has brought some catheter-based treatments, including the Pascal system for mitral valve problems, to the clinical trial stage, where they are being used for the first time on people. It is studying the feasibility of other mitral and tricuspid valve replacements. In a recent update for investors, it estimated the potential value of the market for these treatments to be $1 billion by 2021 and $3 billion by 2024.
The company likes bold innovations. “We don’t like to just take little steps, but to really do some of these transformational steps that change the way medicine is practised, that no-one has ever done before. And obviously those are difficult to do, but nothing is quite so rewarding as to get that right, fully knowing that what goes along with that is generating a tremendous amount of evidence to demonstrate that your solutions are safe, are effective, are cost-effective.”
Some innovations come through acquisition. Edwards does not buy other businesses to get bigger, but will bet on new technology it believes it can develop. Two bigger deals, Cardiaq and Valtech Cardio, both for more than $300 million, were developing therapies for mitral and tricuspid valve problems. CAS Medical Systems, a $100 million purchase in February, will merge with Edwards’ critical care business, which provides monitoring for intensive care patients.
While acquisitions must bring “brilliant ideas”, plenty must come from within. This year, Edwards will spend $700 million on research and development (R&D), 17 per cent of sales. Rivals’ outlay is generally around half that share of turnover, although some may top 10 per cent. Investors get a return for this. The stock traded for around $4 when Edwards launched on the market 19 years ago, these days it is closer to $190.
It was not always so. Known initially for innovation, Edwards sailed into the doldrums as bigger organisations absorbed it. American Hospital Supplies bought the company and in turn became part of healthcare giant Baxter – which has a big presence in Ireland – in the 1980s.
By the beginning of the century, Edwards was Baxter’s worst performer, generating less than 10 per cent of sales.
“Big company stuff happened,” Mussallem observes. “We were probably spending 5 per cent of our sales or less on R&D. Some of this was trying to be a good corporate citizen, trying to contribute good earnings growth to the mothership, and if things weren’t going well, you try to cut the discretionary spending, which was often things like R&D, so that had its own vicious cycle.”
Baxter’s options were to invest in Edwards, but at the expense of other businesses, or buy another cardio-vascular-related company and bolt the two together, “but the CEO wasn’t necessarily excited about that”. So in 2000, the group spun it out.
Mussallem volunteered for the top job at the newly-independent Edwards Lifesciences. He says it did not look “super exciting” but it had big ambitions. Meeting them meant innovation and this meant creating a culture tolerant of failure.
“If you have to go through a lab or process to get things approved, often when you’re taking big steps, things don’t go just the way you planned. The ability to get people to say ‘I made a mistake but I think I know what we should do next because I’ve got an idea’ and be able to embrace that, rather than have people quit or have people feel punished because things didn’t go well or mistakes were made, was really important.
“So during these early development processes, when you aren’t certain of what is going to work, the ability to be able to try a number of things and learn quickly and fail fast, if you will, and then move on to your solutions is so important.
“As you can imagine, with something like a heart valve, there’s no tolerance for anything being less than perfect, so we have incredible quality systems. But there’s a difference between what you do in your early development process and what you do once you have a design that you have proven.”
Doing the right thing for patients is central to the Edwards approach, Mussallem emphasises. Its valves are traceable, so people who have had them fitted can meet those who made them. The company regularly holds events where this happens. “It’s powerful stuff. And I don’t know who gets more emotionally impacted, the patient or our employees, but there’s tears on both sides. The patient will say ‘you’re the reason I’m alive’, so you can imagine any speech I might have made about quality kind of pales by comparison.”
Mussallem started as a chemical engineer, making anti-freeze for Union Carbide, "saving engine blocks instead of patients". He discovered medical technology while doing an MBA and consequently joined Baxter as a manufacturing engineer.
Moves to R&D and management followed. “I learned by doing and Baxter was one of those climates where if you got something done they gave you more to do. So that was my career for 20 years until the spin-off of Edwards. So I really grew up with Baxter.”
That included stints at Baxter plants in Co Mayo during the early 1980s. The recession-gripped Republic of those days seems a universe away now, largely he thinks because of the dedication he saw then. "People worked hard, they were very serious about their work and they drove a lot of success."
Originally from Gary, Indiana, close to Chicago, Mussallem was "always a kid who worked". He spent holidays and some weekends in the town's steel mill, paying for his own education.
He’s a music lover, particularly the blues, no surprise given the windy city’s proximity to his hometown.
His older brother had Down syndrome. Thanks to their mother’s dedication, he learned to read, write and handle money. “He did more with his God-given ability than I ever did with mine,” Mussallem says.
This sparked another interest. Mussallem and his wife are heavily involved in Down syndrome philanthropy. That is purely personal, but Edwards Lifesciences has a foundation, which contributes to heart and stroke charity Croí, and the GAA, and encourages staff to do voluntary work.
Patients
The proximity of patients keeps Mussallem in the cardio-vascular business. “You get a lot of feedback when you’ve done good things, or when you have opportunities for improvement, and I love that impact.”
Similarly, Edwards has partnerships with specialists who lead the clinical research. It has relationships with hospitals in Europe and the US. Here, it has worked with Dr Martin Quinn of Blackrock Clinic and St Vincent's hospital in Dublin, and Dr Peter Crean also of Blackrock and St James's Hospital. Meanwhile, St James's and the Mater hospital are doing trials on a new aortic valve.
Castletroy will be one of two plants in the world making the catheter-fitted valves used to treat heart diseases. The other is in the US. That will allow Edwards serve this part of the world while having back-up should either of its facilities encounter a problem. The company originally took a building in the Shannon Free Zone and now has 50 staff. The new one should be fully functioning in 2021.
Was the Republic’s 12.5 per cent corporate tax rate a factor in bringing Edwards here?
“Cost is an issue,” Mussallem agrees, “but probably a bigger issue for us is people. There’s a great track record of medical technology in Ireland and so we already have a level of confidence that the talent exists to be able to have a successful operation.
“Our early experience has been great, I think we only brought three people here from our global operations, all the rest of those employees, the other 47 I would guess, are all local.” That allowed Edwards to recruit senior staff quickly. But how will he fare in a country said to be short of workers in science and engineering when trying to hire 600 people?
"As we scale this is going to be important, but we will look at doing some partnerships with Limerick Institute of Technology and we might be able to do that with the university here and get that to be a feeder for us. We will be ramping up over time. It's not all going to happen in one moment. We think we're going be able to make it work, all indications are positive right now."
Castletroy will innovate, focussing on how Edwards does things. “We’re certainly planning on this being a place where we develop much more sophisticated processes for what we do, so I expect process engineering and more sophisticated process to be one of the things that gets added from our Irish operation.”
Europe is important to Edwards as it often introduces new products here first. Mussallem explains that some jurisdictions’ regulations are more conducive to this. However, he notes that not every EU state’s approach to paying for medicine copes well with something new.
One health service that could pose a different challenge is the UK’s, an important customer that is set to leave the EU. “It’s probably changed since I got on the flight,” he jokes about the Brexit saga. “Our primary concern is to be able to deliver. What we do is important. We have to be able to get it into the hands of doctors, into the hospitals, to patients. And when we have uncertainty about orders and all that, then it creates some chaos for us.”
Clarity, if it comes, will be a gift. In the meantime, Edwards has contingency plans. “We’ll figure it out,” he says confidently. He does not expect Brexit to pose problems for Castletroy.
Overall, Mussallem is optimistic that Edwards Lifesciences’s immediate horizon looks clear. “We have a wonderful pipeline of innovations that are going to be very important for patients in the future.”
Fact file: Mike Mussallem
Job: Global chief executive, Edwards Lifesciences
Why is he in the news? Edwards recently announced plans to employ 600 people in Limerick making replacement heart valves
Family: Married and living in southern California
Hobbies: Blues music and working for Down syndrome charities
Something you might expect: He's an engineer
Something that might surprise: He owns a few Van Morrison albums
