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Integra's Incremental Profitability Strategy

Executive Summary

As a small company selling into the fragmented wound care markets, Integra was spending as much as it was making. As a platform biomaterials company, Integra faced partnership risk and stood to only get a cut of end-user revenues. It needed a source of direct revenues. A year ago, the company's new CEO began building a neurosurgery business through acquisitions, initially based on mature, revenue-producing products. The strategy seems to be working; the company reached profitability in the last quarter and now holds the third position in a fragmented neurosurgery market. But the incremental strategy that has brought Integra to profitability inherently has its limitations. Now that it has created a growth expectation, it needs to achieve critical mass, through increasingly larger acquisitions or home-run products.

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Integra LifeSciences: Mid-Sized Company in Big Company Clothing

Founded in 1989 Integra avoided the sad fates of its peers in tissue engineering (which went bankrupt) by adopting an acquisition strategy that took it into surgical product markets. Integra has enjoyed a compound annual revenue growth rate of 36% since it first embarked on its acquisition strategy in 1999. Its secret of success has been to consolidate fragmented niche markets into which it can create additional value by selling its internally-developed tissue-engineered products. Now, with six operating divisions covering four surgical specialties with a multiplicity of call points, it looks and acts like a large, diversified medical device company. But it's not-with $650 million in revenues, it's a mid-sized company. Can it now, as a mid-sized company with a complicated business, sustain its high level of growth through a combination of acquisitions and organic growth?

Integra LifeSciences: Mid-Sized Company in Big Company Clothing

Founded in 1989 Integra avoided the sad fates of its peers in tissue engineering (which went bankrupt) by adopting an acquisition strategy that took it into surgical product markets. Integra has enjoyed a compound annual revenue growth rate of 36% since it first embarked on its acquisition strategy in 1999. Its secret of success has been to consolidate fragmented niche markets into which it can create additional value by selling its internally-developed tissue-engineered products. Now, with six operating divisions covering four surgical specialties with a multiplicity of call points, it looks and acts like a large, diversified medical device company. But it's not-with $650 million in revenues, it's a mid-sized company. Can it now, as a mid-sized company with a complicated business, sustain its high level of growth through a combination of acquisitions and organic growth?

Point Biomedical: Planning for Uncertainty

Point Biomedical is developing a third-generation ultrasound contrast agent before second-generation agents have been successfully adopted. But as a small company, it must make choices about what it can realistically handle and what it can't--thus it is purusing a second business in acoustic drug delivery, but passing on urological and surgical applications of its biomaterials technology.

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