by Gigi Wood
CORALVILLE – They’re building upward, outward and overseas.
The little company that started offering the building blocks of life 23 years ago in the University of Iowa’s business incubator is now the largest company of its kind in North America. Its new focus: global expansion.
Integrated DNA Technologies (IDT), 1710 Commercial Park in Coralville, is planning for additional local growth and is hiring at its recently opened Belgium facility. The company is the nation’s largest producer of custom short DNA strands, called oligonucleotides. Scientists use “oligos” in diagnostic tests for diseases, in new medication research and in producing agricultural products.
“The decision was made (in 2006) in the company, generally, to move overseas in a way that the company had not in the past,” said Damon Terrill, IDT’s senior vice president and general counsel of international legal and regulatory affairs. “From that time, we’ve gone from being a North American company to being a truly global company in many different perspectives.”
European market
IDT began operations in Belgium in August 2008 to expand its customer base in the world’s second largest DNA market, Europe. North America is the largest market by a considerable margin, he said, while Asia trails Europe as the third-largest market. Japan and South Korea make up most of the Asian market.
“It’s really a reflection of the resources devoted to research and very broadly speaking, biotechnology, and corresponds very closely to the research budgets of governments in that region and to biopharmaceutical companies,” Mr. Terrill said of the company’s European operation.
The company’s footprint at the Belgium site and in Europe continues to grow.
“The focus, really, in terms of growing the business, was on Europe as an initial matter, and that’s very part and parcel or a consequence of IDT’s success in North America,” he said. “We’re by far the largest company of our kind in North America, such that, to achieve ongoing growth, requires access to new markets.”
Exporting
IDT was already shipping overseas but needed more of a presence to become competitive in other regions of the world. The company sets itself apart in two ways, by creating a quality product and by getting that product to the customer quickly, he said. Overseas shipping was slowing down the latter and making it difficult to compete in international markets.
“You can only achieve so much integration as a pure exporter. The turnaround time in respect to the core product, the turnaround time is very important,” Mr. Terrill said. “As an exporter, you’re two to three days behind the local supplier even if you have a quality advantage… The expectation by researchers to be able to order a custom-designed short strand of DNA and have it delivered in 48 hours, I think it’s safe to say that IDT had a lot to do with creating that expectation.”
Now, IDT is working to create that same reputation overseas.
“So not having that ability, because of the oceans, to be able to compete in that way, in the second-largest market in the world, was something that we realized that if we wanted to keep growing in the long term, we had to become local, we had to become European,” he said.
Entering European market
IDT started by buying RNA-TEC, a niche producer of RNA compounds at a business incubator on a university campus in Belgium.
“We bought RNA-TEC and used that platform on which to build a facility and really to build our new company, which is Integrated DNA Technologies, BVBA,” he said. “Really for a number of reasons that are sort of corporate in nature, the method of becoming Belgium and becoming European was chosen really with significant measure with a green-field project because RNA-TEC was housed in the equivalent of a double-wide trailer.”
IDT bought a warehouse in Leuven, Belgium, gutted it and converted it into a biotech production building with customer service and sales space. It took two years to build the clean rooms and incorporate all the necessary safety and scientific processes necessary to create a custom nucleic acid supply facility.
“It has the ability to meet the oglio needs of the entire European community,” Mr. Terrill said. “Not only Western Europe but Eastern Europe, Russia, North Africa, Israel, South Africa and most of Asia.”
Market integration
The facility is similar in size and operation to IDT’s San Diego location, a business model that worked well and that the company is now using in Europe.
“It’s important for people to understand the difference from selling overseas and outsourcing,” he said. “It’s a steep learning curve. First, we became Californian, then we became European. Each community has its own idiosyncrasies and way of doing things.”
Another reason why IDT located in San Diego and Europe is to create relationships with local researchers.
“Researchers like to interact with other technical experts who speak their language and who can answer their questions during their working hours, not at 3 a.m.,” Mr. Terrill said. “We have local sales support with local language (abilities) and knowledge and expertise of those academic and corporate communities. Oftentimes, those overlap a great deal and understanding that is fundamental. So our sales reps we have now are in France, Germany, Austria, Switzerland, Benelux and the United Kingdom, and each of them are Ph.D-level researchers who understand not only the product and technology, they understand the research our customers do. So we get critical input from our sales reps and they are able to be there for our customers and that would be next to impossible to do here.”
Improving shipping times was an important part of the decision to locate in San Diego and Belgium, but is unnecessary for the company’s client base on the East Coast in the United States because of the shipping routes of carriers like UPS and FedEx.
The method works. In 2006, IDT shipped to about a dozen countries; now that number is 50. The company works with international distributors to create region-specific web sites for ordering. Those orders are directly transmitted to IDT to prevent delays in shipping.
“This is vastly different from 10 years ago, from five years ago, when orders were largely faxed in,” he said.
Iowa connection
Sales reps are able to expand IDT’s portfolio in Europe, starting with the basic products, then introducing customers to more niche and specialty products, which are only produced in Iowa.
“Our international growth is very complementary to the growth of our Iowa business,” he said. “IDT is not off-shoring or outsourcing. We’re not leaving Iowa. The fact that we have a Belgian synthetic facility, it will grow the numbers for everything else (all non-core products), all of which originate in Coralville.”
IDT’s product line is now growing, with the addition of full strands of DNA and other forms of DNA synthesis.
“What IDT has been doing for the past 25 years is custom DNA synthesis,” he said. “The fact that it’s double stranded versus single stranded is a technical hurdle that we have to overcome, but it’s something that we’re very good at, creating custom chemical products. It’s a business model we know very well.”
The company is one of the founding members of the International Gene Synthesis Consortium to help improve biosecurity in the use of DNA in research, to make sure the member companies’ products are not used for dangerous purposes.
The industry, which provides genetic supplies to scientific researchers around the globe, has remained steady despite the economy and cuts to government funding during the past decade. Federal stimulus funds research levels return to normal and are now stable, he said.
“Business is very strong right now,” he said. “We didn’t have a significant dip during any of our fiscal quarters (during the down economy). That’s not to say certain segments haven’t retracted, but others sped up.”
Since the company was founded in 1987 by Joseph Walder, it has achieved double-digit growth during the past decade and in recent years completed a $10 million expansion of its Coralville facility and will likely need more space as its customer base and product lines grow.
“We haven’t outgrown our (Coralville) facility yet but we can foresee that happening (again) in the not too distant future,” he said. “We have to design our space around the fact that this is a manufacturing facility. The chemistry can only go in so many places and the people can only be in so many rooms where the chemistry is, it’s very complex.”
