Lake Forest-based medical device maker eVent Medical Inc. is aiming entirely overseas for its growth for now, with plans to get back into the U.S. market by year-end.
The company makes ventilation devices that help severely ill hospital patients breathe easier.
“I terminated all the U.S. sales,” said Kirk Inoue, the company’s chief executive and chairman, when asked about eVent’s strategy. “U.S. sales [were costing] too much—you had to have a base of salespeople all over the country, and you have to have [a] certain volume of business to keep it profitable.”
The move left eVent to maintain some existing accounts that now account for 5% of sales.
The privately held company expects revenue of $15 million to $18 million this year, up from $12 million in 2013, and is “reasonably profitable,” according to Inoue.
eVent has 45 workers, the majority in Orange County, where the company makes all of its ventilators.
Its product lineup, which includes the Inspiration 7i and 5i ventilators, is primarily used in hospitals’ intensive care units rather than in home healthcare settings.
“We are concentrated in the hospital—no product for the homecare market,” Inoue said. “We’re [aiming our] product more to the seriously ill patient.”
The company uses distributors rather than a sales force.
Inoue hopes to carry the same system and other savings he’s realized in recent months when eVent resumes domestic sales, a goal he’d like to reach by the end of this year.
eVent was established in 2000 in a spinoff from Nellcor Puritan Bennett, which is now part of diversified medical device maker Covidien PLC The company was then sold to Kobayashi Pharmaceutical Co., a Japan-based drug maker, at the end of 2006.
Inoue founded Costa Mesa-based Newport Medical Instruments Inc., which now is part of Covidien. He bought eVent from Kobayashi in 2011 and moved its headquarters from San Clemente to Lake Forest about six months ago.
“I did a crazy thing,” Inoue said. “I brought the manufacturing facility from Ireland to here. We’re now making 100% of the product in Lake Forest.”
Inoue’s restructuring of eVent included job cuts.
“The expense was too high—that’s very simple,” he said. “The company was making the product in Ireland and also had a big sales force and operated like a big company.”
Inoue emphasized that eVent’s job cuts did not come from quality assurance or regulatory affairs.
“In this industry, we need a huge number of QA people, quality assurance, because it’s regulated by [the Food and Drug Administration] very tightly,” he said. “That’s why it is a very difficult business for [a] small company to be in.”
There was still room for savings, he said.
“There was too [much] fat. … I thought we could turn it around very quickly by just making it bone and meat,” Inoue said.
The company might attempt to go public in a few years—Inoue said he wants its revenue to reach at least $50 million a year before considering such a move.
eVent competes in a field that features more than a few large companies.
Those include San Diego-based CareFusion Corp. and former owner Covidien, which operates from Massachusetts and has a tax-friendly headquarters in Ireland.
Other ventilator makers include Dragerwerk AG and Maquet GMBH, both in Germany; Switzerland-based Hamilton Medical AG; and Philips Respironics, a unit of Royal Philips Electronics NV in the Netherlands.
“Generally speaking, this is a big company’s business,” Inoue said.
He said that eVent tries to differentiate itself through “much faster speed of research and development,” among other things.
Research and development “is very important—we’re constantly developing hardware and software,” Inoue said. “We do use a lot of good software engineers.”
