If you’re lucky, you’ll never need the wound-clotting gauze, bandages or pads produced by Wallingford manufacturer Z-Medica. But in a dire situation, the company’s QuikClot products just might save your life or someone else’s.
That’s the message Stephen Fanning, Z-Medica’s new CEO, is bringing to potential customers around the world.
Hired in April, the 62-year-old longtime health industry executive’s charge is to get Z-Medica’s traumatic wound products that stop high volume blood loss in as many places as possible.
But the task won’t be easy.
Fanning arrives as Z-Medica’s orders from the U.S. military — once the company’s core customer — are shrinking due to the end of the Iraq War and winding down of U.S. troop levels in Afghanistan. The customer base is moving towards hospitals, police and fire departments, schools, and retail buyers, requiring a shift in focus and strategy.
So far, Fanning’s tenure has been marked by the acquisition of a European hemostatic product called Novacol and a deal announced last week, in which the company will equip approximately 30,000 New York police officers with trauma belt kits containing QuikClot Combat Gauze. Just prior Fanning’s arrival, Z-Medica also inked a deal in January with Tennessee purchasing consortium HealthTrust, which will offer QuikClot to its 1,400 member acute-care facilities.
Fanning said he believes in Z-Medica’s products, but he admits the company, which has 55 employees, has work to do when it comes to growing its new customer base.
“We’re still a neophyte in terms of driving our business into the hospitals,” Fanning said.
Fanning, who was previously CEO of two publicly traded health-product companies and spent 25 years at Johnson & Johnson earlier in his career, said he will continue to reside in California and travel to Z-Medica’s Wallingford offices a few times a week. He plans to spend the rest of his time working remotely and visiting distributors, customers and prospects. Traveling by plane is something Fanning said he got used to when he led medical device manufacturer Solta Medical and contact lens producer Ocular Sciences, both based in California. “I hit the ground running by not relocating,” Fanning said. “I’m a big believer that the way you learn about your products is speaking to your customers.”
Fanning succeeds Larry Hicks, who departed earlier this year after being installed CEO by Z-Medica’s primary investor, DW Healthcare Partners, in 2012.
The company said Hicks departed to pursue other career opportunities and would not make a board member available for comment.
Sharing a bit of strategy
Since Hicks’ January departure, Z-Medica has changed direction on several fronts. It closed its Boston office, which it opened last summer and decided to decline a $1.7 million economic development loan from the state, originally intended to finance the purchase of new equipment.
Z-Medica said it canceled the loan “in light of certain strategic matters and initiatives that the company is currently focusing on.”
Indeed, the privately held company keeps much about its business close to the vest. Fanning would not disclose revenue — only saying that its commercial sales overtook its military sales in the past few years.
He was also reluctant to disclose the identity of customers.
But Fanning did say that, in addition to Z-Medica’s sales push into new or largely untapped markets, the company is actively looking to acquire other products, or even companies, if they’re the right fit.
A potential acquisition would have to be within the same “call point” as QuikClot — meaning that the same hospital department that purchases QuikClot would also purchase the new product, he said.
Novacol, which Z-Medica acquired from Dutch manufacturer Taureon, is similar to QuikClot in that it promotes blood clotting. The difference is that Novacol is resorbable, meaning the body can dissolve and assimilate it. Conversely, QuikClot can leave behind some residual material that a doctor or surgeon must rinse out.
Novacol is approved for use in Europe and South Korea. Fanning said he hopes to grow sales of Z-Medica’s other products as a result of the sales networks gained from the transaction.
The company set up a sales team geared specifically toward hospitals about 18 months ago, Fanning said.
“We position the product as the first line of defense in hospitals to stop any bleeding,” he said.
That could include a trauma wound or a leak in a catheter line in a patient who is on blood thinners, he added.
Cut-throat competition
As Z-Medica tries to expand its customer base, Fanning said he wants QuikClot next to every defibrillator cabinet, and in every first aid kit and glove compartment. The company has even introduced an iteration of its product specifically for nosebleeds.
But in addition to figuring out a new customer base, Z-Medica also faces stiff competition.
Rivals include Oregon’s HemCon, owned by Westport’s TriStar Wellness Solutions, which sells bandages, patches and dressings as well as ChitoGauze, which uses a clotting agent harvested from shrimp shells.
Other competitors include United Kingdom’s MedTrade Products and Oregon’s OreMedix, both of which make products that contain the shrimp shell clotting agent under the name Celox and TraumaStat, respectively.
Z-Medica has also sued several of its competitors and their resellers.
In 2008, it sued MedTrade for using “QuikClot” keyword tags in its website metadata, which Z-Medica alleged was meant to boost Internet search rankings. Two years prior, it sued a website called AlphaNet that sold Celox for a similar reason.
QuikClot’s active ingredient is a type of clay called kaolin that quickens the body’s clotting process.
There are many studies about the effectiveness of various blood-stopping agents, and each industry competitor seems to prefer one that points to their product as high performing. For Z-Medica, a 2009 military study performed on anesthetized pigs in Texas found that QuikClot was the most effective dressing for stopping arterial hemorrhage compared to Celox and HemCon.
Another factor that distinguishes Z-Medica from its competitors is its history of military use in combat situations.
Combat Gauze remains the sole blood-clotting product recommended for life-threatening hemorrhages by the U.S. Department of Defense’s Committee on Tactical Combat Casualty Care (CoTCCC), which sets military medical standards.
“It’s literally combat tested,” Fanning said.
Celox’s distributor announced earlier this year that the CoTCCC decided to include Celox in its recommendations as well, but the newest version of the document won’t be released until later this year.
With many challenges ahead, Fanning is about to receive a corporate battle testing of his own.
Correction: In our June 2, 2014 print edition, this story gave an inaccurate financial value of Z-Medica’s contract with the New York State Division of Homeland Security and Emergency Services to supply QuikClot for 30,000 trauma belt kits. The kits, which also contain other medical products, are valued at $2.7 million. But DHSES said it could not break out Z-Medica’s specific payment.
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