Diagnostic Products Corporation

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Diagnostic Products Corporation

5210 Pacific Concourse Drive
Los Angeles, California 90045
U.S.A.
Telephone: (310) 645-8200
Toll Free: (800) 372-1782
Fax: (310) 645-9999
Web site: http://www.dpcweb.com

Public Company
Incorporated: 1971
Employees: 2,406
Sales: $443.1 million (2004)
Stock Exchanges: New York
Ticker Symbol: DP
NAIC: 325131 Inorganic Dye and Pigment Manufacturing; 325413 In-Vitro Diagnostic Substance Manufacturing

Diagnostic Products Corporation (DPC) sells immunodiagnostic systems that provide information concerning diseases and medical conditions. The company's test kits diagnose thyroid, reproductive, and cardiac disorders, allergies, infectious diseases, anemia, and certain types of cancer by using samples of blood, urine, and other bodily fluids and tissues. DPC's tests are sold throughout the world to hospitals, physicians' office laboratories, and to veterinary, forensic, and research facilities. The company's test kits are manufactured in the United States, the United Kingdom, and China, marketed through a global distribution network covering more than 100 countries. DPC derives 70 percent of its annual revenue from foreign customers.

From Kassel to Los Angeles: Sigi Ziering's Epic Journey

For nearly all of its history, DPC was under the firm control of the Ziering family, whose patriarch, Sigi Ziering, took control of the company not long after its founding. In the years before Ziering took an interest in DPC, he achieved something far more remarkable than transforming a homespun business into a more than $200 million-in-sales company. Ziering's achievement was survival. Perseverance and luck, each exhibited to extraordinary degrees, enabled Ziering to endure the Holocaust and make a better life for himself after his harrowing teenage years. DPC, though trivial to the horrors of World War II, was a reflection of Ziering's determination, and, as such, the company drew its essence from its longtime leader, indelibly marked by the atrocities in Nazi Germany.

Ziering was born in 1928 in Kassel, Germany, one year after his brother Herman. The Ziering boys were the sons of a Polish citizen who made his living as a clothing merchant. In 1939, the father fled to England, leaving with the belief that his wife and two sons would join him as soon as they obtained their visas. Sigi, or Siegfried as he was then known, was 11 years old when his father left. The emigration restrictions for Jews tightened and then closed not long after Ziering's father left, leaving the family of three trapped in Germany to face the greatest crucible of their lives.

The Zierings managed to escape the attention of Hitler's SS for a while, but the family eventually became ensnared in Nazi Germany's pogrom against the Jews. In late 1941, the Zierings were among 1,000 Jews transported to Riga, Latvia, where a Jewish ghetto had been established. Once in the ghetto, the Ziering boys stopped attending school and began working, a decision made by their mother who believed her children's usefulness as workers might spare their lives. Of the original 1,000 Jews transported to Riga, Ziering later found 16 survivors, a group that included his brother and his mother.

The Zierings remained in the Riga ghetto until the approach of Russian troops near the war's end forced the Nazis to move the surviving Jews elsewhere. The Zierings were moved to a German prison, Fuhlsbuttel, on the outskirts of Hamburg that had been converted a decade earlier to a concentration camp. The struggle to survive became markedly more difficult at Fuhlsbuttel, as the Nazis stepped up their efforts to fulfill the mandate of Hitler's Total Solution pogrom "with German precision," as Ziering noted in an April 13, 1998 interview with Fortune. Every week, eight or ten Jews were transported to Bergen-Belsen for elimination, a systematic weeding out of the Fuhlsbuttel population that was conducted alphabetically. As the Nazis began with the beginning of the alphabet and worked their way toward "Z," the Ziering family was spared execution. British troops closed off the roads to Bergen-Belsen before the Nazis reached the end of the alphabet, leading to another relocation of the Zierings north to a concentration camp in Kiel.

The survival odds in Kiel did not improve. Between 40 and 50 of the camp's population died daily, either because of the grisly conditions or from execution. One day all the males in the camp were forced to run a kilometer while carrying a heavy piece of wood. The Ziering boys passed the test, but 35 of the camp's prisoners failed to reach the finish line and were shot. As the Nazi's cause grew more desperate and the chances for survival diminished, the Ziering family again found themselves separated into a group of 1,000 Jews. According to unconfirmed reports, a member of Sweden's royal family, Count Folke Bernadotte, offered Henrich Himmler $5 million for 1,000 Jews, a deal that ultimately led to the Zierings' freedom. On May 1, 1945, Red Cross workers arrived in Kiel to transport the 1,000 Jews to Sweden. While on his way to Sweden, Ziering learned of Hitler's death, ending his extraordinary fight for survival and the horror of his teenage years.

The Zierings, who remarkably had remained together throughout the Holocaust, were reunited in London. Ziering was 17 years old when he was reunited with his father, who had spent the war years building a successful career as a diamond merchant. Ziering, who had only five years of elementary education, made up for lost time by pursuing his education with zeal. After entering a tutorial school, he enrolled at the University of London. He wanted to become a doctor, but his hopes were dashed when he learned nearly all medical school spots were reserved for war veterans. Ziering resumed his academic career after his family moved to the United States in 1949 and settled in Brooklyn, where he worked part-time while attending Brooklyn College. In 1953, the same year he married Marilyn Brisman, Ziering received his undergraduate degree in physics. In 1955, ten years after leaving the Kiel concentration camp, he earned his master's degree from Syracuse University, where his academic career culminated two years later with the completion of his doctoral studies.

Ziering's professional career began in Boston, where he would remain for a decade before moving to the West Coast. He joined Raytheon Co. the year he left Syracuse University, using his doctorate degree to land a job as a senior scientist. He spent two years working on research related to nuclear reactors, leaving in 1959 to become department head of space projects at another Boston company, Allied Research. After another two-year stint, Ziering struck out on his own, forming his own company, Space Sciences, located in the Boston suburb of Waltham, to perform work for the federal government. Space Sciences proved to be enough of a success to attract the attention of a larger conglomerate, Whittaker Corp., which purchased Ziering's company in 1968 for $1.8 million. The deal gave Ziering considerable financial security, but it led to a change in his working environment that he found unappealing. After the acquisition of his company, Ziering moved to Los Angeles to serve as a research executive for Whittaker, placing him in a corporate culture he disliked. He left Whittaker in 1970, but remained in Los Angeles, joining a company named Dynascis, where he spent a year serving as the vice-president of the company's medical group. Next, Ziering became an entrepreneur again, starting a company that made fishmeal. The business failed, but his next venture became the focus of his professional career for the rest of his life.

Taking Control of Diagnostic Products: 1970s

Ziering was 45 years old when he first heard of Diagnostic Products Corporation. Either through a friend or through an advertisement in a trade publication, Ziering learned of a chemist who had developed radioimmunoassay (RIA) diagnostic kits. The chemist, Robert Ban, had developed tests, or assays, that permitted the measurement of infinitesimally low concentrations of substances, such as drugs and hormones, in bodily fluids. He had formed DPC in 1971, but two years later, when Ziering first heard of his work, Ban was operating DPC out of his kitchen. He had advertised in a professional journal, claiming he had 30 different RIA kits, which produced a steady stream of orders. Ziering discovered Ban had far fewer than 30 RIA kits, but he was interested in DPC nevertheless, investing $50,000 in the business.

Once production was focused primarily on one kit of commercial value, the business began to record meaningful growth. DPC fared well, but the relationship between Ziering and Ban became strained, prompting Ziering to buy out Ban for $25,000 and hire his wife as a replacement. The company recorded robust growth during its first decade, establishing early on a presence overseas, where eventually DPC would generate nearly three-quarters of its annual sales. During the 1970s, the company's European expansion began in Switzerland, Italy, Germany, and the Netherlands. Domestically, the company moved its headquarters from a storefront on Venice Boulevard to a 5,000-square-foot facility in West Los Angeles. In 1978, demand from its domestic and European customers—hospitals and clinical laboratories—made the company the global leader in the fertility immunoassays market. Its growing business required its West Los Angeles facility to be expanded to 9,600 square feet before ever increasing growth demanded a move to a new location. In 1981, DPC established its headquarters near Los Angeles International Airport, occupying a 20,000-square-foot building. The following year Ziering took his company public, presenting to Wall Street the company he had developed into a more than $10 million-in-sales diagnostic concern. At the time, the company offered 52 different tests capable of detecting thyroid disorders, anemia, and other conditions.

Company Perspectives:

DPC has been helping laboratories to solve their challenges for more than thirty years. By providing a "best of breed" system and immunoassay menu, along with premier service and support, DPC partners with laboratories to ensure timely and effective solutions for their evolving needs. Because of this commitment to a real partnership with our customers, DPC has shown remarkable growth and continues to find success in the market as the leading provider of dedicated immunoassay systems.

During the 1980s, the company's expansion continued, producing impressive growth, particularly late in the decade. The company established a presence in Asia in 1986, organizing a joint-venture company named Nippon DPC Corporation. That same year, the company opened a combined research and manufacturing facility in the United Kingdom. The year also marked the arrival of Ziering's son Michael, who left his job as a public defender in Orange County, California, to become DPC's legal counsel. DPC's market value grew more than sevenfold during the late 1980s, swelling from $35 million to $429 million. Ziering presided over a company whose financial performance was impressive but otherwise attracted little attention. DPC, according to the September 16, 1991 issue of the Los Angeles Business Journal, was "both sexy and boring," a company "full of unsurprising moves." The "sexy" quality of the company was its financial success: DPC earned 22 cents profit for each $1 of sales. The "boring" aspect of the company was its unwillingness to initiate dramatic changes; the stuff of excitement for industry onlookers. Ziering chose not to diversify, deciding instead to chip away at the more than $10 billion diagnostics market by introducing assays to identify thyroid disease, fertility, illicit drug use, anemia, and prostate cancer, among a number of other conditions.

During the 1990s, DPC continued to sparkle unspectacularly, but for those pundits who clamored for more excitement, the decade included at least one event of significance. In 1992, DPC acquired Cirrus Diagnostics Inc., a purchase that included Cirrus's IMMULITE technology. IMMULITE became the central component of DPC's product portfolio in the years ahead, beginning in 1993 with the introduction of the first IMMULITE system, a computer-driven diagnostic device capable of measurements at exceptionally low concentrations that could process up to 120 samples per hour. By the following year, DPC, through its IMMULITE system, could claim to offer the most complete panel of thyroid, fertility, cancer, and allergy screening panels for any automated immunoassay system.

DPC in the New Millennium

As DPC prepared for its 30th anniversary and the beginning of a new century, the company offered more than 400 diagnostic tests to its customers. Ziering witnessed the company eclipse the $200 million-in-sales mark for the first time in 1999 during his last days in charge of the company he had transformed from kitchen-run operation. Ziering was diagnosed with brain cancer in December 1999, forcing him to hand the reins of command to his son Michael, who was promoted from the posts of chief operating officer and president to become the company's chief executive officer. In November 2000, Ziering passed away, losing his last battle for survival.

Under Michael Ziering's control, DPC demonstrated vigorous financial growth and incurred one of the most threatening blows to its vitality since its formation. Sales shot upward during the early years of the century, spurred by advances in IMMULITE technology that spawned the IMMULITE 1000, the IMMULITE 2000, and in 2004 the IMMULITE 2500. By 2004, sales reached nearly $450 million, virtually doubling during the first years of the decade. In early 2004, however, a serious threat to its future financial growth arrived in the form of a letter from the U.S. Food and Drug Administration (FDA). The FDA placed DPC on its Application Integrity Policy (AIP) violations list—among the most serious offenses issued by the FDA—meaning the FDA could suspend the review of all pending products submitted by DPC. The problems stemmed from inspectional findings related to the company's diagnostic test application for Chaga's disease. Specifically, the problems included failure to report false negative and false positive study results, failure to report adverse precision studies from four clinical sites, misrepresenting data, and failing to monitor clinical studies. The FDA's findings did not affect the company's business overseas, where it derived 71 percent of its revenue in 2004. Although the FDA's actions represented a potentially significant impediment to DPC's progress in the future, Michael Ziering was confident that DPC would deal with the problems and move forward successfully. "We have initiated a process to identify and correct the causes of these issues," he explained in a March 2004 interview with Bioresearch Monitoring Alert. "Our understanding is that a reasonable time for the resolutions of these types of issues is approximately 12 months…. Our new instrument, the IMMULITE 2500, and 74 assays which run on it, have already been cleared by the FDA."

Principal Subsidiaries

DPC Cirrus, Inc.; EURO/DPC Limited (U.K.); Diagnostic Products International Inc. (Barbados); DPC Analytic (Slovenia); DPC Holding GmbH (Germany); DPC Biermann GmbH (Germany); DPC Czech s.r.o. (Czech Republic); DPC d.o.o. Zagreb (Croatia; 50%); DPC Polska sp.z.o.o. (Poland); DPC Slovensko (Slovakia); DPC Benelux B.V. (Netherlands); DPC Nederland B.V. (Netherlands); DPC Belgium b.v.b.A./s.p.r.l.; DPC Finland OY; Bio-Mediq DPC Pty. Ltd. (Australia); DPC Dipesa S.A. (Spain); DPC France SAS; Tianjin De Pu (DPC) Biotechnological and Medical Products Inc. (China); Diagnostic Products DPC Norway A/S; DPC Medlab (Bolivia; 28%); DPC Medlab Productos Medico Hospitalares Ltda. (Brazil; 56%); DPC MEDLAB BRAZIL (56%); DPC Medlab Productos Medico Hospitalares Ltda. (Dominican Republic; 56%); DPC Venezuela C.A. (Venezuela; 56%); DPC Medlab de Uruguay S.A. (56%); DPC Medlab Panama, S.A. (29%); DPC Medlab Guatemala (29%); DPC Medlab Centroamerica S.A. (Costa Rica; 29%); Nippon DPC Corporation (50%); DPC Skafte AB (Sweden); DPC Scandinavia AB (Sweden); DPC Baltic Estonia OU (Sweden); DPC Baltic Latvia SIA (Sweden); DPC Baltic UAB Lithuania (Sweden); D.P.C.-N. Tsakiris S.A. (Greece) (50%); Medical Systems S.p.A. (Italy; 45%); DPC Amerlab Lda. (Portugal; 47.5%); Lumigen, Inc. (10%).

Key Dates:

1971:: Diagnostic Products Corporation (DPC) is founded.
1973:: Sigi Ziering invests $50,000 in DPC, eventually taking control of the company.
1982:: DPC completes its initial public offering of stock.
1992:: DPC acquires Cirrus Diagnostics Inc.
1999:: Michael Ziering is appointed chief executive officer.
2004:: The U.S. Food and Drug Administration finds serious problems with the way DPC's clinical studies are conducted.