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

“We are the new kid in that hospital segment,” Du said. “We are fighting uphill.”

Much of the fight comes in global markets, where Newport gets 80% of its revenue through sales in more than 100 countries.

Most of the international sales stem from smaller, portable ventilators going to hospitals. “Internationally, home care is not as popular, especially in developing countries—there’s no concept of home care,” Du said.

Research and development is big at Newport, according to Du.

On average, the company takes about three years to develop a ventilator, compared to five to eight years for most medical devices.

“We have very seasoned engineers, and our clinical team is very strong,” he said.

Du said he spends about 30% of his daily time working with a research and development team of about 30.

Newport recently has drawn engineers from information technology and video game software, he said.

Local Production

The company assembles its ventilators at its Sunflower Avenue facility with components from subcontractors.

“I always like to have manufacturing and R&D stay together,” Du said.

Quality control is easier when the two are together, according to Du. That’s a chief reason the device maker never has thought of moving production overseas, he said.

Newport has “people knocking (on) our door all the time” about possible deals but isn’t interested in selling because being private allows the company greater leeway to act strategically, Du said.

“We enjoy this way,” he said. “Wall Street doesn’t like to hear ‘every three years’—they like to hear ‘every three months.’ Staying private, we can afford to invest our money for three years later, not for next quarter.”

A doctor by training, Du became Newport’s director of clinical research in 1997. In 2000, he became vice president of medical affairs and was promoted to president in 2001.

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