Minority suppliers diversifying into life sciences

July 6, 2009

As one of the city's most prominent minority business owners, Bill Mays built his chemical distributorship largely on the backs of domestic automakers.

In1980,when he founded Mays Chemical Co. Inc., the Big Three accounted for nearly 75 percent of all new-car sales. But that number has dwindled to less than half of all new vehicles.

Mays concluded it was time to switch gears, so to speak.

"I don't know if we were smart or just lucky," he said of his decision roughly three years ago to all but abandon automotive.

So instead of furnishing General Motors Corp. with coolants, oils and fluids, he's turned much of his attention to supplying Eli Lilly and Co. and other pharmaceutical firms with solvents and ingredients used to make medicines.

In fact, Mays Chemical does so much business with the Indianapolis-based drugmaker that he keeps a handful of employees on site to coordinate daily shipments.

His company is reaping the benefits of his decision. Revenue last year topped $200 million for the first time in its 30-year existence.

"We're never going to see manufacturing return to where it was five years ago, or earlier," Mays said.

The impact on Indiana of downsized Chrysler and General Motors operations remains to be seen. Still, shrinking market share of Detroit automakers, along with rising technology and mechanization in factories, and outsourcing to other countries, has resulted in the state's shedding roughly 175,000 manufacturing jobs in the past 10 years, according to the U.S. Bureau of Labor Statistics.

Mays was motivated to diversify his customer base by the dark cloud hanging over domestic automakers, but now a local organization that assists minority-owned companies is reaching out to help others follow in his footsteps.

Efforts under way
The Indiana Minority Supplier Development Council has made life sciences companies its latest target.

The council's annual Supplier Diversity Conference in April at the Indiana Convention Center gives minorities a chance to schmooze with some of the largest companies in the state in the hope of landing business.

But at this year's event, organizers added a panel discussion to provide minority suppliers guidance on how they might tap into the growing life sciences sector.

Representatives were on hand from BioCrossroads, Lilly and Community Hospitals in Indianapolis, as well as Depuy Orthopaedics Inc. in Warsaw and Texas-based VHA Inc., a group-purchasing organization for health care providers.

The panel is just the council's first undertaking to help members diversify from auto manufacturers, said Michele Howell, the organization's president and CEO.

"Right now, with everything going on, that's a very shaky industry to be in," she said. "Even to sustain the business, you've definitely got to look at other markets."

An even larger effort to attract minorities to the burgeoning life sciences industry is under way on a national scale.

Leah Brown, president and CEO of a North Carolina-based clinical trial consultancy, helped found Diversity Alliance for Science two years ago after feeling overwhelmed at a minority supplier conference. So many companies attended that she had trouble zeroing in on those who could help her most.

"It was like trying to find a needle in a haystack," Brown said. "So we wanted to pluck out this subset of [minority] suppliers, and take these decision-makers from large pharma, and put them in the same room."

The alliance held its first Life Sciences Diversity Conference in May in Newark, N.J., and plans to make it an annual event. About 300 suppliers and companies are members.

Challenges abound

No one suggests that simply attending a conference will result in attracting the fawning attention of mega life-sciences and pharmaceutical firms. To the contrary, getting a foot in the door has proven problematic for several minority business owners in Indianapolis.

Take Sam Kwon, who founded Vesta Pharmaceuticals Inc., near East 30th Street and Post Road, in 1996, and has grown it to nearly $10 million in annual revenue by manufacturing and distributing ingredients for dietary supplements.

But the Korean native is convinced the 20-employee company could become much larger if only it could land a contract with a multibillion-dollar corporation.

"We've been singing and dancing with Lilly almost going on 10 years," he lamented. "There were a lot of meetings and discussions, but there was no business."

Repeated calls to Lilly for comment on minority-supplier issues in general were not returned.

Kwon now hopes to manufacture ingredients for generic drugmakers, but needs a $2 million infusion to help make it happen, he said. Applying for a grant from the state's 21st Century Research and Technology Fund is a possibility.

Francis Jones spent 34 years at Lilly conducting and managing clinical trials before founding Innovative Clinical Concepts LLC on East 86th Street in 2003.

Jones aims to recruit minority patients for human trials, which would provide a more diverse test population and, quite possibly, more accurate results. However, convincing large pharmaceutical makers of that need has been difficult. Moreover, most drug companies contract with much larger competitors to conduct trials.

"Being a minority in health care, where there is some perception of our capability as to actually doing that type of work, that is a problem," Jones said.

Asked whether she's had nibbles from Lilly, Jones would only say, "It's been very difficult across the board."

'Tremendous opportunity' exists

Compounding the problem is the fact that there just aren't many minority businesses equipped to supply large corporations. Brown at the Diversity Alliance for Science said it's much easier to start a janitorial service, for example, because the capital investment is smaller.

Teresa Keller, purchasing program manager and supplier diversity coordinator at Roche Diagnostics Corp. in Indianapolis, acknowledged most of its minority suppliers provide indirect services such as printing and safety products.

Roche is a member of the council and supports efforts under way to help minorities generate business from the life sciences and health care sectors.

So does Debra Simmons Wilson, a principal of Indianapolis-based Engaging Solutions LLC.

Wilson's firm was hired by the Indiana Stadium and Convention Building Authority to facilitate minority and women hiring on construction of Lucas Oil Stadium and the Indiana Convention Center expansion.

"Any time there is a chance for small businesses to diversify into areas where there is a gap, where there are no minorities or women-owned businesses," she said, "I think that is a tremendous opportunity for everybody."

Meanwhile, Mays at Mays Chemical said he is keeping a watchful eye on the city's fledgling life sciences firms. If they should grow large enough to seek his services, he said, "we'll be ready."

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