Soon, the tiny forest decorating the lobby of the Northbrook headquarters of International Minerals & Chemical Corp. will be the sole remaining link between the former commodities giant and the earth from which it long drew its bounty.
Upheavals in agriculture in the 1980s rocked the company; plummeting sales and profits have sparked a wrenching transformation from a business based on brawn and nature into one reliant on brain and marketing.
Gradually divesting itself of its world-leading fertilizer products business and of oil and gas interests, IMC in the last four years has become a major player in medical products, specialty chemicals and animal health.
The company`s board voted Thursday to change its name to Imcera Group Inc. The addition of ”era” to the initials of the 80-year-old firm signifies a new phase of its existence.
From now on, instead of using earthmovers to rip phosphate rock from quarries, Imcera will be engaged in such activities as filling bottles with an expensive patented liquid that radiologists use for making sickness in human bodies show up brightly on electronic screens.
Optiray, the company`s trade name for ioversol, which it started marketing last year, is one of a new generation of contrast media, or dyes, that are non-ionic. When dissolved, they do not produce electrically charged particles as ionic contrast media do.
Non-ionics have been found to cause fewer adverse reactions in patients, and therefore are becoming favored by physicians.
Kenneth Kulju, a vice president of Rothschild Inc., said that if Optiray can capture 9 percent of the projected $2 billion market for non-ionics, it will add $140 million to Imcera`s annual sales.
Results of a study published in the June issue of the journal Radiology showed that ionic dyes caused adverse reactions in 13 percent of patients, and non-ionics caused such reactions in only 3 percent.
The report is expected to prompt even more doctors to switch to non-ionics, said Dr. Ruth Ramsey, professor of radiology at the University of Chicago Hospitals and Clinics.
”We do a lot of CAT scans here,” she said. ”Patients who are injected with the imaging agents sometimes experience nausea, vomiting, loss of blood pressure, hives, chest pains, shivering or other reactions.
”We welcome a product that appreciably lowers the likelihood of these things,” she said.
The non-ionics cost more than the ionics, but that won`t prevent doctors from using them, said Ramsey.
”A CAT scan costs $800,” said Ramsey. ”If you use an ionic imaging agent, the cost of the dye might be $15. With non-ionic, the cost of dye might be $200 or $250. The non-ionics will win out, if the data keep coming in that they are truly safer.”
Dr. Gabriel Angres, a neuroradiologist who practices at St. Joseph Hospital in Elgin, says that he now uses ”a mix of non-ionics” but that he prefers Optiray over competing products.
”I think it gives you better images than the other available contrast materials, pound for pound,” said Angres. ”In most instances, I would specify Optiray.”
Optiray is part of the products arsenal of Imcera`s Mallinckrodt Inc. medical products division, which it bought in 1986 from Avon Products Inc. for $675 million.
Mallinckrodt is also the largest U.S. supplier of acetaminophen, the main ingredient in pain relievers such as Tylenol.
The company is a leader in the $350 million world market for radio-isotopes for use in medical diagnosis. It has three cyclotrons in which it produces Thallium 201 and other radiactive materials to be packaged in lead and delivered to hospitals and clinics overnight around the world.
Imcera`s Pitman-Moore animal products group has been pieced together through acquisitions of businesses from Johnson & Johnson, Glaxo Holdings PLC and the Coopers Animal Health Group.
In March Pitman-Moore completed its proposal to the Food and Drug Administration for permission to market porcine somatotropin, a synthetic hormone that makes pigs eat less and produce more meat and less fat.
The company has a head start on its competitors and could profit greatly if the product can avoid controversy such as that which has arisen over bovine somatotropin, which increases milk production in cows, said Kulju of Rothschild.
The FDA has delayed a decision on that hormone, and some farm and consumer groups are raising alarms over possible harmful effects on humans.
The transformation of Imcera was sparked by Chairman and Chief Executive George D. Kennedy.
Kennedy saw the carnage wrought on the company`s share price by depressed prices for fertilizer and other commodities, a downward economic trend, capricious weather, governmental policies, trade barriers and increasing competition from other countries.
”We had people in this organization who were doing a superhuman job, but the best we were doing was staying afloat,” said Kennedy. ”It seemed to me it was a good idea that we started doing something else. It doesn`t take a whole lot of courage, if what you are doing is that frustrating, to look around one day and say, `How can we do better?` ”
Kennedy noted that it cost a minimum of $350 million to build a potash mine, while doubling the manufacturing capacity for Optiray cost $45 million. Figures like that helped set the company`s direction.
”You decide what might be more rewarding,” Kennedy said.
Industry analysts have approved of Imcera`s moves.
”They`ve done a good job of successfully diversifying from cyclical products toward higher margin products with higher growth rates and higher profit margins,” said Charles LoCastro, an analyst with Donaldson, Lufkin & Jenrette Securities Corp.
Technology and research and development, he said, ”are much more important than they were five years ago. Then, it was who had the lowest production cost and who sold the most. Now, it`s going to depend on their ability to develop and commercialize new types of products.”
Imcera`s new efforts are in emerging, but by no means virgin, fields.
”There`s tough competition,” said LoCastro. ”In contrast mediums, they compete with Squibb and Winthrop (a division of Sterling Drug Co.)
”In animal health, they compete with most of the major pharmaceutical companies such as Merck, Lilly, Monsanto and American Cyanamid. These are companies that have been around for a while and are very successful in what they do. Specialty chemicals is so diversified, the competitor depends on the particular business.”
The company`s metamorphosis has sometimes been wrenching. Of its 9,800 employees, all but about 300 have been hired in the last five years.
Though sales this fiscal year, ending June 30, are up from last year`s $983 million, profits for the first nine months were off as the company continued to suffer from the fertilizer business in which it still has an interest.
Kennedy, 64, is new to the high-tech world, having spent all his working life in commodity businesses. He joined IMC in 1971 after being president of the Brown Paper Co.
He is aware of big remaining challenges.
”When we started this process, our shares were selling for $30. Now they are selling for about $60, and the bust-up value of the company is at $100 (a share). Our job at the corporate level is to get market value as close to bust-up value as we can.
”What we have put together so far is so new and so far unproven that the market is not willing to pay so much. If we improve performance, our shares will be more interesting and exciting. If we don`t, we deserve to be fired.”
