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Monday, Dec 5, 2022

Heart of Steel

Edwards Lifesciences CEO Mike Mussallem Builds A $60B Medtech Giant & Helps Chart OC's Future

On a weekday afternoon in May, Mike Mussallem stood at a podium at the Irvine headquarters of Edwards Lifesciences Corp., addressing several hundred people attending an event co-hosted by the CEO Leadership Alliance Orange County (CLAOC) and local business accelerator Octane.

The groups, whose goals are to build both a competitive business ecosystem and a higher quality of life in OC, includes some of the area’s most influential executives.

Mussallem was later asked why he would take out time from running one of the world’s most prominent medical device makers (NYSE: EW) to address decidedly local issues.

“We’re just deep believers that we should be givers to our community,” Mussallem told the Business Journal in an exclusive interview at the company’s campus.

“You see some companies that are kind of selfish, really taking care of themselves. When you’re young and fragile, there are a lot of reasons to be like that.

“We’re fortunate to be a successful company. The idea of being recognized as somebody that truly helps the community is something that we aspire to.

“Those are the kind of things you learn growing up.”

Wall Street Darling

Mussallem, who has been at the helm of Edwards since 2000 when it spun off from Baxter International Inc., has built it from under $1 billion in annual sales to almost $6 billion this year.

Wall Street has bought the story, sending its shares up almost a hundredfold in the past 22 years to a market cap at one point this year topping $70 billion, and currently running around $60 billion, making it the most valuable publicly traded company headquartered in Orange County.

His company remains in growth mode, having increased sales last year 19% to $5.2 billion.
Net income accelerated at an even faster pace, up 83% to $1.5 billion.

Edwards is one of the 50 area companies highlighted on this year’s iteration of the Business Journal’s OC50, which profiles executives overseeing fast-growth at their companies.
The OC50: Fast 50 special report starts on page 33.

Paperboy Start

It wasn’t a sure thing that Mussallem would end up as one of the county’s most influential executives.

Born and raised to a working-class family in Gary, Ind., Mussallem began his business career delivering 72 newspapers daily for the Gary Post Tribune, learning to collect 35 cents from each subscriber every two weeks.

“It was a diverse climate and I learned to respect all,” he said.

“I had very loving parents who didn’t have a lot and their whole purpose in life was to give their kids a better life. They were very engaged in the community.”

His older brother, George, was born with Down Syndrome, which put many things into context for Mussallem at a young age.

“My brother learned to read and write and handle money. Those accomplishments parallel anything that I’ve ever done.”

Steel Mill Worker

At the age of 18, Mussallem went to work at a local steel mill, so he could pay for his chemical engineering degree at the Rose-Hulman Institute of Technology, which he noted has been ranked the nation’s best undergraduate engineering school for 23 straight years by US News & World Report.

He started his career by making Prestone antifreeze for Union Carbide.

“I saved some engine blocks in those years, but it was nothing as meaningful as medical technology,” he quipped.

In 1979, he joined Baxter as an engineer.

“It was the kind of climate where if you got something done, they gave you more to do.”

He eventually transferred to Orange County in 1988, rising through the ranks where he “fell in love with the cardiovascular business because of the connections with patients.”

The cardiovascular unit, which he said made highly respected products for people who were very ill, was underperforming during the 1990s because innovation “had come to a halt.”

Baxter decided to exit the cardiovascular business with a spinoff named in honor of Miles “Lowell” Edwards, who built the world’s first mitral valve successfully placed in a patient.Baxter had acquired Edwards Laboratories in 1985.

“I raised my hand and said ‘I’d love to do that.’ On April 3, 2000, we rang the bell in New York,” Mussallem said. “We started, ready to tackle the world.”

The Breakthrough

At that time, Edwards’ breakthrough product had yet to be invented.

In 2004, it paid $155 million to acquire PVT, a company experimenting with a catheter to replace aortic heart valves. Instead of performing open heart surgeries, a catheter could be introduced in a small hole in the upper thigh and then make its way to a diseased heart valve. The replacement valve would inflate like a balloon, pushing aside the diseased valve.

“We’d been advised that it was a fool’s errand, would never work,” Mussallem recalled. “It was a bet-the-company investment because of the promise. We didn’t know if it was going to work.”

There was no eureka moment.

“There were some very good cases and then not so good. We had to stop the first trial because early patients didn’t live. We had to do a revamp of the procedure. It was not a straight line.”

Eventually, the European Union in 2007 approved the procedure, followed by the U.S. in 2011.

“Adoption never came overnight. It’s been steady and constant. We’ve been a double-digit grower for more than a decade.

“It now happens under an hour, no anesthesia. Patients go home within a day,” he said of the current procedure. “It’s a spectacular change in technology.”

The company’s stock, which began trading at a split adjusted $1.15 in 2000, hovered below $10 for most of the 2000s. Since 2012, it began rising until its current level today at just under $100. Mussallem himself own 5.4 million shares worth about $525 million at press time.

Heart Focus

Edwards is staying focused on cardiovascular disease, which continues to be the No. 1 killer in the U.S. and the world, well ahead of cancer and other deadly conditions.

“These patients are so underserved,” Mussallem said. “We purposely stay focused on the heart. It’s tempting and we get encouraged by people saying go elsewhere.”

The company is spending almost $1 billion a year on research, which Mussallem calls “mind-boggling.”

“Part of it is our commitment is to be innovative. Even our best ideas may not work.”

Among its research is developing algorithms to predict events that may occur in a heart so that the proper doctors can be alerted.

Edwards’ next big breakthrough may come from using catheters to treat mitral and tricuspid valve diseases, which traditionally require open heart surgery.

Its Transcatheter Mitral and Tricuspid Therapies unit is on track later this year for U.S. approval of its PASCAL Precision platform for patients with degenerative mitral regurgitation. In addition, Edwards continues to expect a late 2022 approval for the EVOQUE tricuspid valve replacement system in Europe.

Edwards anticipates that this industrywide opportunity will reach $5 billion globally by 2028.

“The first of those technologies is just getting approved,” he said. “This could be another game changer for these patients.”

The 69-year-old has no plans to retire, even though he’s been at his current job for 22 years, “beyond the half-life of a CEO.”

“I’m supported by wonderful people. This is a spectacular job.”

Working Together

About 4,700 of Edwards’ nearly 17,000 employees work at its expansive Irvine campus, which has been undergoing numerous expansions and renovations over the past few years, adding several hundred thousand square feet of space. The company is looking to hire hundreds of people for the Irvine campus, according to its jobs site.

Even though the state government sometimes makes it difficult to do business here, Mussallem said he’s bullish on the future of Orange County.

“When compared to some other cities in decline, Orange County is a standout. But when you compare Orange County to what it could be or areas [that] are thriving more, we know it could do better.”

He’s interested in creating jobs for the future, such as in artificial intelligence, and yes, medical devices. He said it’s a pleasure for him to work with high-level executives like those at CLAOC (see Leader Board, page 75).

“The idea of working together as opposed to individually is something that I try to encourage. When we combine our forces, we think big things can happen.

“I get inspired by what exists in this county, by our nonprofits, by our businesses, by our universities. It’s something to be proud of. It’s remarkable.”

Where Patients Meet the Heart Valve Makers

After Joy Smith retired from her job at Amtrak where she worked for 41 years, she was walking down a street in Chicago where she lived when she noticed “a hot pain right down the middle of my chest.

“It was like someone lit a match and was burning my insides,” she said. “I was a walking time bomb and didn’t know it.”

Her doctor informed her it was a bad heart valve and told her about a relatively new procedure that could fix it without open heart surgery.

“I went into the hospital on a Wednesday. I was in intensive care for one day. I was walking on that Thursday. Then I was home Friday afternoon. Sunday, I drove my sisters to the airport and drove myself back home even though they told me not to drive,” the 80-year-old Smith said.

That product, called a transcatheter aortic valve replacement (TAVR), was built by Irvine-based Edwards Lifesciences Corp.

Tracking Info

By tracking each device’s serial number, Edwards knows the name of every employee who worked on each valve in every one of its patients.

Smith and another patient, Leslie Moore, a South County resident, recently went to Edwards’ campus in Irvine to meet the Edwards employees that made the valves now inside their hearts, as well as personnel from other departments like human resources, accounts receivables, patient support and supply chains.

“TAVR saved my life, literally,” Moore told a gathering in a session with Edwards CEO Mike Mussallem. “I was floating on air from meeting everybody.”

Such encounters are a way for Edwards to emphasize to their employees the importance of their work, Mussallem said.

“These patients are our inspiration,” Mussallem said. “This is why I come to work is knowing that we have impact and can change patients’ lives. That’s everything to us.”

Smith and Moore hugged several of the Edwards employees, some of whom had tears in their eyes.

“Remember there are people like Leslie and me who are here and enjoying our lives because of what you’ve done here,” Smith told the audience members.

“I’m glad to say I’m a walking miracle.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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