Tapping Into The Spine Market Springfield’s Blackstone Medical Has A Solid Backbone

Bill Lyons says he and his brothers had hired a marketing firm to come up with a name for their new entrepreneurial venture — but they wound up finding one themselves, pretty much by accident.

They were driving back to Western Mass. from a meeting in Boston and, while approaching the Worcester area on the turnpike, saw a sign welcoming them to the Blackstone Valley.

“That’s where the industrial revolution got started around here, and it’s a symbol of innovation,” said Lyons, adding that he and brothers Mike and Matt eventually attached that name to a business that is now staging a different kind of manufacturing revolution — in medical implants and instruments, specifically those for the emerging field of spine surgery.

And it’s a name that is becoming increasingly well-known within what Lyons, the company’s chairman of the board, calls the “spine community.”

Indeed, Blackstone Medical Inc., which has facilities in Springfield, Wayne, N.J., and overseas, has developed dozens of products used by spinal surgeons, from rods and screws to something called the 3° anterior cervical plate system — and more are being added every year.

The goal, said Lyons, is to become what he described as a ‘soup to nuts’ spinal surgery products firm.

“We want to broaden our portfolio,” he said of new-product-development efforts. “Our goal is to reach a point where, when the surgeon enters the operating room, all he needs is Blackstone — we’ll provide all the products he needs. And we’re really close to being there.”

In so doing, Blackstone has become one of the better, more unique business success stories in Springfield and the Pioneer Valley. In fact, in late 2003, it was named a ‘model’ business by the Romney administration for its success in creating new high-tech jobs.

The company now employs roughly 60 people locally (and another 50 in New Jersey) and sales have soared past the $70 million mark. But the company, which outsources all production to area precision manufacturers, has also provided a significant boost for several companies, including Marox in Holyoke and Accellent in Brimfield, which, in a way, is where this story began.

That business, actually a division of a larger corporation, is essentially the same company that Lyons’ father, William G. Lyons Jr., started in 1967. Then named Brimfield Precision, the firm specialized first in designing prototypes for the aerospace and defense industries, and later segued into medical device manufacturing when the elder Lyons was asked to develop the world’s first surgical stapler.

Brimfield Precision gave members of the next generation of the Lyons family— specifically, brothers Bill, Mark, and Matt — a solid introduction to the medical device field, and eventually inspired them to start a new venture devoted to the emerging spine market.

Their success has made their company a model for other small, privately held businesses looking to penetrate the spinal field and others within the broad health care realm. And it has also made the venture’s name into a common noun.

“Everyone says we need more Blackstones,” said Bill Lyons, referring to the company’s track record for innovation, job-creation, and displaying the promise of medical-device manufacturing. “We’re setting a standard.”

The Healthcare News looks this issue at how the three brothers made the transition from product manufacturers to product developers, and how Blackstone looks to stay ahead of the curve — in both a literal and figurative sense — in what is becoming an increasingly challenging and competitive spinal field.

Back to the Future

It’s called the ‘NewBridge Laminoplasty Fixation System,’ and it provides “superior reinforcement while expanding the spinal canal and preserving the posterior elements.” At least that’s what it says in the brochure.

The system, designed to stabilize the lamina, or spinal columns, is one of 11 new products introduced by Blackstone in 2005 as part of those portfolio-broadening efforts that Lyons described. And it’s part of a wave of innovation sweeping over the spine community, one that will soon include disc-replacement surgery — Blackstone is currently testing a product that could be ready for the market by the end of the decade.

That wave represents change, said Lyons, who told The Healthcare News that the spinal market has seen tremendous growth over the past 10 to 15 years through advancements in technology and technique.

“This is perhaps the fastest-growing area of surgery, and it’s due to new products, new procedures, and a higher level of acceptance,” he explained. “Years ago, spine surgery was really taboo — people didn’t really understand it and they were fearful of it. There was also a lot of litigation surrounding spine surgery in the early ’90s.

“Now, that’s been cleared up,” he continued, “and there’s generally more acceptance of spine surgery as a treatment modality.”

Blackstone has ridden this wave of innovation and acceptance to steady growth, averaging roughly 30{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} over the past several years, and status as the largest privately held player in the global spine market, which Lyons projects to be a nearly $5 billion industry.

Three large players — Johnson & Johnson, Medtronic, and Swiss-based Synthes-Stratec — control roughly 75{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of that market, while a number of companies, Blackstone being the largest, fight for what remains.

And while Blackstone owes a good deal of its success to quality products, said Lyons, the real key is building relationships with the spine surgeons who use the products and, in many cases, help in their development.

“The surgeons are our customers,” said Lyons, adding that they are members of teams that develop new products, sell and distribute them, and build the Blackstone brand. “Surgeon input remains central to the way we do business; we hear and see first-hand the concerns and obstacles surgeons encounter.”

Building relationships — and teams — has been the primary mission for the Lyons brothers since they divested themselves of Brimfield Precision nearly a decade ago and created Blackstone; Matt currently serves as president and CEO, and Mike as COO. The three, who gained experience in the medical device field through work for and with such companies as U.S. Surgical, Johnson & Johnson, Smith & Nephew Orthopedics, and Stryker Corporation, saw tremendous potential in the spine market and created a company that focused not on contract manufacturing but rather new-product development, sales, and distribution.

And over the past decade, Blackstone has introduced a wide variety of products, from implants ranging from screws, cross-connectors, hooks, staples, and washers, to a bone graft containing viable stem cells.

The goal with each new development is to anticipate the needs of the surgeons, and then work with them to meet those needs, said Lyons, noting that the company expects to introduce at least another eight new products in the coming year in its ongoing efforts to build its portfolio and be a one-stop center for spine needs.
Implants and instruments come in three main categories — biologics (such as stem cell developments), non-fusion, including artificial discs, and fusion, the largest part of the spinal market, he continued, noting that products are now distributed nationwide and to 22 foreign countries, with international sales accounting for roughly 5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the total volume.

The Lyons brothers decided early on to outsource all manufacturing, and currently send large volumes of work to Accellent and also Marox, a firm that relocated from Springfield to Holyoke several years ago and specializes in a broad range of precision manufacturing, especially for the medical device industry.

Solid Backing

By spreading the wealth in the Pioneer Valley, Blackstone has been able to earn some recognition — and a few awards — from state and local economic development leaders, while also making a name for itself in the spine community.

Blackstone set up shop in Springfield because its principals are from the area, said Lyons, but also because area leaders recognized its potential and encouraged it to grow in this region. Indeed, MassDevelopment, a state-wide agency that promotes economic development, recently provided a $500,000 construction loan to the Springfield Business Development Corp., which owns the building on Brookdale Drive that Blackstone currently leases.

That loan financed renovations to accommodate Blackstone’s expansion, he said, adding that tremendous growth in sales over the past several years has led to the need to expand operations and, in the process, add to the workforce.

These job-creation efforts earned the company accolades from the Romney administration, which identified it as a model business for the governor’s Jobs First Program, which provides companies in the biotechnology, life sciences, and medical device industries with a tax rebate for each new manufacturing job created.
Still, while Springfield hosts most of the operational aspects of the venture, from sales to customer service to shipping, most research and development work is carried out at the facility in New Jersey, which has a critical mass of medical implant and instrument companies, and also a large supply of professionals known as medical device engineers.

“There’s a large nucleus of medical device companies in that area — that’s where the jobs are and why we need to be there,” said Lyons. “But we have a strong commitment to Springfield and this region; we’re going to continue to grow here.”

Looking forward, said Lyons, Blackstone is eyeing continued new-product development, more relationship-building efforts, and, in general, protecting its market share from a host of new competitors.

“Before, we basically had to look at the guys ahead of us and try to catch up to what they were doing,” he explained. “Now, we have to look back and see that the people behind us don’t come up and eat our lunch.”

To that end, the company is determined to solidify the relationships it has made and create new ones. Meanwhile, it will continue to limit its focus to the spine market — rather than diversify into other areas of the broad medical device industry — but, at the same time, extend its reach in that realm.
In other words, Blackstone wants to move beyond the ‘workhorse’ products, as Lyons called them, and into specific niche markets, and there are many in the spinal community.

“We’re moving steadily toward our goal of being the only name that surgeons will need in the operating room … we’ll have a product for about 95{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the spine surgeons out there,” he said. “It’s like the old ‘80-20 rule’; 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the products are responsible for 80{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the surgeries, and then you’re filling in the gaps.”

While filling gaps, Blackstone will continue with research and development of its artificial disc, said Lyons, noting that one competitor’s product is already on the market, and others are close to getting there. It will cost roughly $20 million to develop the disc product, he said, adding that the current timeline calls for a 2009 release.

Meanwhile, the company will explore options to go public, but will likely remain a private, family owned venture, said Lyons.

“Right now, I think an IPO would be the last thing we’d want to do,” he explained, noting that the cost and logistics of doing so would be prohibitive for a company Blackstone’s size. “There’s enough private equity money that we can bring to the table ourselves to grow the business.”

And while there have been some offers from larger firms looking to acquire Blackstone, the three partners do not consider that route likely, either.

“We’re pragmatic businessmen,” Lyons explained. “We know the first thing you need to do is make a profit — and we are profitable — and not find a buyer.”

Down to a Science

As he talked about the spine landscape, at least from a business perspective, Lyons used his company’s name in a different way, this time as an adjective.

“There are a number of companies trying to enter this market,” he explained. “In 1996, there were maybe four or five key players — now, every Tom, Dick, and Harry is trying to the ‘Blackstone thing.’

By that, he meant artful penetration of the spine market through quality products, attention to detail, and, perhaps most importantly, working relationships with the surgeons who perform procedures not possible years ago.

That’s the Blackstone thing, and, like its namesake valley in the center of the state, it is synonymous with innovation and progress.

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