Hand stand: Maxwell Lee's Adenna Inc. has found a good fit by bringing protective gloves from Asia for distribution in the United States.

MAXWELL Lee didn't intend to become a glove distributor.

The native Singaporean was raised in Malaysia and came to the United States to study industrial engineering at Iowa State University. Soon after graduation, he got a job in computer sales.

But during a visit to Kuala Lumpur, he ran into some relatives who manufactured latex surgical gloves, and they asked Lee to help them expand their distribution in the United States. He returned to this country with a couple boxes of the gloves and before long, Lee had formed Adenna Inc.

"I realized that if I could do well in the computer business, a lot of people would love to buy from me again," said Lee, now 36.

Last year, about 500 million gloves--made from latex and other materials--moved through Adenna's warehouses in Atlanta, Chicago and Santa Fe Springs on their way to hospitals, laboratories, dentists' offices, restaurants and auto body shops. The company landed on Inc. magazine's list of fastest-growing privately held companies.

No one is more surprised than Lee, who founded Adenna in 1997. "When we first started, I thought we would be happy if we sold 2 million products," he said. "But we exceeded that in the first year."

Adenna now works with about 200 suppliers, and the company has grown from a two-man operation to a 20-person business.

Over the past several years, Adenna has broadened from the medical market to sell latex and synthetic gloves used in other industries as well.

But it's a tough market because prices keep going down. Lee said that he is forced to distribute more gloves each year just to keep revenues at levels of recent years.

"Even if we have the same 12 distributors in the United States, we have 10 more factories trying to sell to us." The same 100-glove box that Lee sold for $4 wholesale in 1998, he sells for about $3 today.

While results from last year haven't been finalized, the company didn't generate the rapid revenue growth that it did in 2003, when revenues rose 75 percent, to $14.2 million. Lee's goal is to keep Adenna's revenues growing by about 20 percent to 25 percent annually for the next couple of years.

Falling prices

It's not just an abundance of production that keeps prices down. Mike Gamble, owner of San Francisco-based Pacific Latex Products, said prices often fall when glove manufacturers identify new sources of raw materials. For example, he said, China has built up its stocks of nitrile, a manmade, rubber-like material that is driving down prices.

"Gloves themselves are considered to be a commodity, a disposable item," he said. "Some people aren't as concerned with quality as they are with price."

To stay competitive, Lee searches for new products to distribute and new markets to enter. Adenna has an exclusive deal with Dow Reichhold Specialty Latex LLC to distribute gloves made out of Dow's recently invented synthetic blends.

Lee estimated that latex allergies affect 8 percent to 10 percent of medical professionals, so half the gloves Adenna distributes are latex, and the other half are made out of synthetic materials.

Developing new products

Adenna is also distributing gloves coated in vitamins that are supposed to cut down on the irritation Caused by powder that coats traditional gloves. "It is kind of like putting lotion on your face when you go to sleep," said Evangelene Cheng, Adenna's marketing manager. "It's so you don't dry out."

All the gloves distributed by Adenna are manufactured in Malaysia, Taiwan and China. Each factory specializes in different materials. For instance, Lee goes to Malaysia for his latex, while he contracts with China to get vinyl gloves.

Lee had to alter Adenna's strategy almost immediately after starting out. As a result of the AIDS endemic, medical professionals became aware of the need to sanitize the workplace, and glove producers and distributors had flooded the medical market to fill AIDS-driven demand.

Lee realized that Adenna couldn't distribute low-quality gloves; instead, it would have to focus on affordable, high-quality products at a mid-range price. "By positioning our products in between, we tell (customers) that we will give them a very good price and support it with high quality," said Lee.

Gamble said that Adenna created a stir when it entered the market. "When they were the new kid on the block, and they were doing a lot of advertising, people were talking about them a lot," he said.

To push his product in the beginning, Lee spent hours at trade shows, working seven days a week for many months. Adenna became profitable around 2000, after the company secured a deal to supply Bergen Brunswig Medical Corp., the medical products distributor that was later purchased by Ohio-based Cardinal Health.

These days, Adenna gloves wind up on workers whose hands previously went unsheathed. Airport and restaurant workers, for example, are increasingly required to put on gloves to protect their health and the health of their customers.

Cheng said she doesn't go a day without slipping on a pair of gloves and using them for chores such as pumping gas. "The uses of gloves are going up," added Lee. "And, overall, I think the demand for gloves will continue to grow."

PROFILE

Adenna Inc.

Year Founded: 1997

Core Business: Distributing medical and general-purpose protective gloves

Revenues in 2002: About $8 million

Revenues in 2003: $14.2 million

Employees in 2002: 16

Employees in 2003:20

Goal: To grow at an annual rate of 20 to 25 percent for the next couple of years

Driving Force: To distribute high-quality medical and general-purpose gloves at affordable prices