Konica Minolta Inc., best known as a maker of printers and cameras, about a decade ago decided to pivot into the medical industry.
Hence, in 2017, the Tokyo-based company bought Ambry Genetics, an Aliso Viejo-based testing firm, for about $1 billion.
Kiyotake Fujii, who has been a chief executive in Japan at famous multinationals like SAP and Louis Vuitton, became chairman of the new venture and one of his first acts was to hire Tom Schoenherr.
“He walked me through his vision of creating this integrated diagnostics company that would be a major global healthcare entity,” Ambry CEO Schoenherr told the Business Journal during a recent interview at the company’s headquarters on Ambry Way in Aliso Viejo.
“The line that I’ll never forget is he said he wanted to take precision medicine from a buzzword to a reality and that this would be his legacy before he retired.
“I very much bought into the vision.”
Ambry Genetics ranks No. 3 on the Business Journal’s annual list of Medical Diagnostics and Testing Companies based in Orange County with about 384 local employees (see list, page 32).
Ambry Genetics was founded in 1999 by Charles Dunlop with $500,000 from friends and relatives. It became known for several innovations, such as the first lab to offer full gene sequencing of the cystic fibrosis gene, multi-gene panels for intellectual disability and hereditary cancer, as well as diagnostic exome sequencing on a clinical basis.
In 2014, Dunlop won a famous case involving breast cancer tests where competitor Myriad Genetics claimed it could patent genes. After Dunlop sold his firm in 2017, the Business Journal named him as its Businessperson of the Year in the healthcare space.
Schoenherr, a native of Michigan, has more than two decades of experience in the industry, including prior stints at major international firms like Abbot Diagnostics, Siemens Healthcare and Quest Diagnostics.
In 2011, he arrived in California by joining a small Redwood City-based company called Counsyl Inc., which conducted tests for women like expectant mothers. He was employee No. 26 and built the company from $1 million in annual sales to $100 million.
“It was a fun ride,” Schoenherr said. “I got the startup bug, so I started dabbling and investing in looking at companies that were the diagnostic space on the West Coast.”
In 2017, he joined Ambry as chief commercial officer after it became part of Konica Minolta Precision Medicine.
“Ambry was well known as a high-quality innovative organization, but it wasn’t known as an aggressive commercial entity, so I was brought in to revamp people and protocols.”
In his role, Schoenherr “more than doubled Ambry’s business and test volumes,” Konica said in a 2021 statement announcing his promotion to CEO.
The industry has about 75,000 genetic tests representing 10,000 different test types.
Schoenherr said there are three types of genetic testing companies, including those that provide recreational testing such as Ancestry.com and then firms that generally just test DNA.
Ambry is in the category of “the highest clinical grade testing” utilized by academic centers and cancer institutions, he said.
While a typical DNA test will analyze five to 25 base pairs of genes, Ambry compares the DNA test with RNA that provide a much wider variety of abnormalities among thousands of pairs.
Ambry’s “secret sauce” is its interpretation of the results. The company touted a study last year that said its testing detected elusive pathogenic variants in one of every 950 patients that were missed by DNA testing alone.
“We will find abnormalities or mutations that no other lab can find,” Schoenherr said.
About half of Ambry’s tests are for patients who have cancer while the remaining 50% are in a high-risk category, such as patients with relatives who have cancer.
Ambry currently provides the majority of the $350 million in annual sales of Konica’s Precision Medicine unit, which also includes Needham, Mass.-based radiology and pathology firm Invicro LLC.
Ambry is expanding into areas like women’s health, large health systems and international work, where there is a lack of standardization. In January, it announced an agreement with Geneva based Unilabs to provide genetic testing services for government-sponsored and biopharma companies conducting international clinical trials and research in Europe, Latin America and the Middle East.
In 2021, Konica Minolta’s Precision Health unit announced a five-year collaboration with Amazon to support the advancement and rollout of its precision diagnostics network.
That year, Ambry’s parent changed the unit’s name from Precision Medicine to Realm IDx Inc. to better reflect its focus on “integrated diagnostics,” a field that brings together genomics, radiology, pathology and artificial intelligence to help doctors predict, diagnose and treat diseases in a manner that hasn’t been available. The total addressable market could be anywhere from $30 billion to $75 billion, he said.
“We’re a major part of their overall strategic vision and what they see for the future of the company,” Schoenherr said. Konica Minolta “wants to be a major player in the healthcare space and wants to approach it through precision medicine. We are the genetic arm pillar of their strategy.”