Orange County Business Journal

Newport Medical Sees Local, Global Growth With Ventilators

HEALTHCARE: Smaller model big offshore; low price helps here Vita Reed Sunday, May 8, 2011
HT70: mainly used by individuals here, hospitals overseas

HT70: mainly used by individuals here, hospitals overseas

Newport Medical Instruments Inc.’s ventilation devices help patients breathe easier.

Now it has some breathing room of its own after doubling its space with a recent lease of 34,886 square feet in an industrial building near its Costa Mesa headquarters.

The company plans to keep its executive offices, research and manufacturing at its main building on Sunflower Avenue and shift sales and most administrative work to the new space on Scenic Avenue.

Newport’s products help patients “have a better life, instead of laying in bed 24/7,” President Hong-Lin Du said.

The company is considered the largest privately held ventilator maker.

Du said he expects sales of about $50 million this year. The company has some 160 workers here.

Some of Newport’s ventilators, including its e360, are used by hospitals to help people with pneumonia or chronic obstructive pulmonary disease.

Smaller, portable models, such as Newport’s HT-50 and HT-70, are used by patients who receive them through home healthcare companies.

The company’s smaller ventilators help patients maintain normal activities and “go to the park, to Disneyland, to school,” Du said.

Smaller models also are used by hospitals, such as Massachusetts General Hospital and Children’s Hospital of Los Angeles, when transporting patients.

Government Use

Government agencies stockpile Newport’s ventilators for use in emergencies. The company recently signed a $6.7 million, three-year contract to provide advanced portable ventilators to the federal government’s Biomedical Advanced Research and Development Authority.

Newport sells its products through its own sales force as well as distributors and independent sales representatives.

The company also works with large hospital buying groups, including Irving, Texas-based Novation, Premier Inc. of Charlotte, N.C. and Atlanta-based MedAssets, among others.

As a smaller company, Newport has been able to get into the buying groups with relative ease because the cost-effectiveness of its machines is “very good,” Du said.

He said the company’s ventilators used in hospitals sell for about $16,000 on average, compared to the $30,000 range of competitors.

The lower price has helped Newport break through a field of several larger competitors, including Covidien Ltd., a diversified medical business that operates from Massachusetts with a tax-friendly headquarters in Bermuda, and CareFusion Corp., a San Diego company that was spun off from Dublin, Ohio-based Cardinal Health Inc. in 2009 and has an operation in Yorba Linda.

Newport also competes with two German ventilator makers—Drägerwerk AG and Maquet GMBH—and Philips Respironics, a unit of the Netherlands’ Royal Philips Electronics NV.

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