Monday, November 3, 2008

Establishing a presence.

Pyxis, now a part of Cardinal Health, is the leading provider of medication and supply dispensing systems to hospitals, nursing homes and other healthcare facilities. Its technology allows these institutions to streamline the medication and supply distribution process, thereby cutting costs, saving time, and providing benefits to pharmacy, central supply, nursing and administration. When the two-year old company won a Most Innovative New Product Award from UCSD’s CONNECT in 1989, it was just starting out. Sales were low, and the concept had been greeted with what company founder Tim Wollaeger describes as "yawns and disdain."

Former CEO Ron Taylor explains why. "We were just introducing our first product, the MedStation, which was an automated teller-like machine for nurses to access drugs in hospitals. Because what we had was unique - there was absolutely no competition - the nurses and pharmacists were very interested to know that we’d been evaluated by a panel of business professionals and had already won an award." Pyxis included a segment about their innovation award in their sales video and took the award with them to trade shows and displayed it in their booth. "When you’re a very new, small company you have to make a big deal out of everything you have!!" says Taylor.

Winning a “most innovative” new product award gave the company local and national credibility, provided good exposure and helped with recruitment. "When potential employees were looking at different companies, they wanted to know who was doing cool stuff," says Taylor, "and being recognized for innovation was very important in that regard."

Pyxis went public in 1992 and became a wholly owned subsidiary of Cardinal Health in 1996. By 2000, Pyxis had more than 3,300 customers and over 1,500 employees, most of them based in San Diego. Tim Wollaeger, now managing director of Sanderling Ventures, one of California's oldest venture investment firms dedicated to building new biomedical companies, laughs about the difficulties in getting funding for the Pyxis start-up. "Ron Taylor and I went up to Sand Hill Road in Palo Alto to try and raise money," he remembers. "A venture capitalist I knew waved me out of the room and told me the MedStation concept was the single worst idea he'd ever heard. That was really hard to take." Wollaeger is clear in his advice to entrepreneurs: "When you have a really innovative idea, don't just worry about protecting it ... worry about how you're going to have to ram it down people's throats to get them to pay attention."

Emerging technology companies have two major problems raising capital. First, getting the right audience to listen to their opportunity, and secondly, the amount of time it takes to reach the right audience. Clark Adams of Ablation Technologies, says, “CONNECT's Financial Forum gave us the opportunity to present to a large group from the investment community that have a focused interest in health care technology companies. Many of the attendees represented groups that we were unable to schedule a meeting with before the forum. The exposure and time-savings were extremely helpful to our efforts to raise capital. The preparations that CONNECT puts all of its presenters through are an added benefit that is unseen at first. Presenters are guided through the presentation process with a formal review by key individuals. Input from these practice sessions sharpens the presentations and presenters."

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