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Indiana Business's Industrialist of the Year.

Indiana Business's INDUSTRIALIST of the YEAR

Dane Miller is in a hurry a lot these days.

So it is not surprising that he decided against going to medical school because it would have taken too much time to complete his education.

Instead, Miller, 43, channeled his energy into a field related to medicine. And thousands of arthritis sufferers are glad he did. Miller is the president, chief executive officer and largest individual investor in the Warsaw-based Biomet, Inc., a major manufacturer of artificial hips, knees and other orthopedic implant devices.

Biomet is the fastest-growing company in one of the most dynamic segments of medical science.

The residents of Warsaw, a city of 12,000 located 40 miles west of Fort Wayne, are among those who have benefited from the expansion of the orthopedic implants business during the past 10 years. And clearly, Miller and the three other Biomet founders played key roles in transforming Warsaw into the world center for orthopedic implant manufacturing, a distinction it appears in no danger of losing.

What is most impressive is that Biomet is not a subsidiary of a multi-billion dollar pharmaceutical or healthcare products company, but it is an independent company started by Miller and three friends in a garage south of Warsaw 12 years ago.

Since then, Biomet grew to have almost $136 million in sales during the fiscal year ending May 31. The company employs approximately 600 people, including 500 at its corporate headquarters and manufacturing plant along U.S. 30 on Warsaw's north side.

Now, Biomet is a multinational corporation in its own right, with foreign sales accounting for almost one-fifth of its business. Most of Biomet's international business comes from its manufacturing and sales operations in the United Kingdom.

Miller was overseas during much of October, trying to land a really big foreign customer: the Soviet Union. He returned with a licensing agreement that could lead to the sale of Biomet products in Russia.

Biomet's rapid growth and bright prospects are the reasons why Miller has been selected "Industrialist of the Year" by Indiana Business magazine.

However, praise makes Miller a little uncomfortable because, he says, personality cults are not part of the Biomet management style. "I'm a little uncomfortable with it," he says. "I don't think I deserve all the credit, or even a substantial part of it.

"We try to avoid a lot of structure at Biomet," says Miller. "Whoever is there to make a decision makes it. We've had only one organizational chart." The chart was prepared 10 years ago when Biomet was looking for venture capital financing.

An informal, entrepreneurial management style is not a passing fad as far as Miller is concerned. Biomet was founded on the premise that creativity and risk-taking are essential to a bio-technology company's success.

Miller and the three other Biomet founders, Jerry Ferguson, Ray Haroff and Niles Noblitt, all resigned from comfortable positions at other orthopedic products companies because they felt that large corporations couldn't respond fast enough to the technical changes occurring in the orthopedic implants field.

On the surface, it seems Miller, a Springfield, Ohio, native, made an abrupt change after he earned a bachelor's degree in material science from the General Motors Institute in Dayton. He says his career goals were clear, but why would someone planning to enter a field related to medicine choose to attend GMI? "The purpose of GMI was to train GM's new management," says Miller. "It was a general engineering education. They didn't teach us much about cars."

Instead of going on after graduation to learn more about cars and trucks, Miller enrolled at the University of Cincinnati, where he earned both master's and doctoral degrees in biomedical engineering.

He moved to Warsaw to become the director of surgical product development at Zimmer USA, the Bristol-Myers Co. subsidiary that has the largest sales of any company in the orthopedic implants business.

While at Zimmer, Miller met Ferguson. He also met Noblitt and Haroff, who worked at the Orthopedic Equipment Co., another Warsaw area firm. "Ray (Haroff) was in manufacturing, Niles (Noblitt) was in product development and Jerry (Ferguson) was in marketing," says Miller. Eventually, the four men realized they could build upon the strengths of one another.

Initial discussions about forming Biomet began in the fall of 1975, shortly before Miller moved to San Diego to become the head of research and development at Cutter Laboratories (now a unit of Bayer AG, a West German chemical and pharmaceutical products company).

However, Miller stayed in contact with his friends in Warsaw because their frustrations with corporate bureaucracy did not subside. Near the end of 1977, the foursome began "intensive planning" to form their own company, says Miller. In January 1978, the four quit their jobs to go into business for themselves.

They ranged from 26 to 31 years of age at the time. They were able to put up $130,000 of their own money to get a $500,000 Small Business Administration loan and a $100,000 line of bank credit to get started.

Essentially, they believed they could take suggestions from orthopedic surgeons and come out with improved implants faster than their larger competitors, says Miller.

Artificial hip implant operations have been performed since the early 1960s. But in the late 1970s, many in the orthopedic products field believed new federal product safety regulations made the implant business too risky an investment.

The medical device amendments to the Food and Cosmetics Act made many large pharmaceutical companies leery about entering the implant business. "People laughed at us for starting up a new company after the new device legislation went into effect," says Miller. "You have to make the right decision, but timing is equally important."

Of course, the hard part is transforming an opportunity into a viable business, and Miller says it was not easy. "It was traumatic. In restrospect, it was a lot more traumatic than it seemed at the time."

The name Biomet was selected to imply the company is an "orthopedic products company in the metals area." But they did not plan on becoming a manufacturing company, according to Miller.

At the outset, they thought it would be "a marketing and development company" that would contract with independent "job-shops" to actually make the implants. "But we found out we were teaching people (job-shop operators) how to make products to sell to our competition," says Miller. "So we started making soft goods (such as elastic orthopedic support bandages) and our own implants to protect our implant technology."

Miller and the others had doubts about whether they could raise the money needed to become manufacturers, and they considered selling out. However, Biomet was saved by Kenneth and Jerry Miller, brothers from Kalamazoo, Mich., who are not related to Dane Miller.

The Miller brothers, both of whom are attorneys, were looking for investment opportunities during the late 1970s. "We stumbled into each other," remembers Dane Miller.

"They (the Miller brothers) fancied themselves as venture capitalists and we needed venture capital," Miller says. "Back then, not many people had heard of venture capital, and that was a good thing, because neither of us knew how to take advantage of each other. We (at Biomet) were so naive we could have been taken advantage of easily."

The Miller brothers bought one-third of Biomet for $500,000 after being impressed with the company's business plan.

In the early years, there were no detailed job descriptions, impressive sounding titles or corner offices. "In the beginning, we all made a product or two (in the machine shop)," says Miller.

Their determination paid off as the company grew from $63,500 in sales and a $17,300 loss during its 1978 fiscal year, to $10.6 million in sales and earnings of $1.6 million in fiscal 1984. Biomet grew 300 percent in fiscal 1985 when it acquired Orthopedic Equipment, the former employer of Noblitt and Haroff, which had more than $20 million in sales.

The $8.4 million Orthopedic Equipment acquisition gives Biomet access to the European market because of the company's British operations.

Since then, Biomet consolidated its Indiana operations into a 162,000-square-foot complex in Warsaw. In 1988, the company completed a hostile takeover of a New Jersey company, Electro-Biology, Inc.

EBI makes electrical devices which stimulate bone growth to treat severe fractures that will not heal naturally. Its product line complements Biomet's implant product lines. Noblitt, Biomet's chairman, moved to New Jersey to get EBI on the right track. The company contributed almost one-third of Biomet's $135.8 million in fiscal 1989 sales.

Biomet made an unsolicited tender offer to EBI shareholders because EBI's managment was giving too much attention to "complicated legal issues" and haggling with the U.S. Food and Drug Administration, according to Miller.

Aside from the acquisitions, "there have been problems and complications every year," Miller admits. However, Biomet's accomplishments are impressive. It was the first company to substitute titanium alloy for stainless steel to make implants that are more flexible. It also developed a reinforced, metal-backed hip socket.

In 1983, it introduced a knee implant system that allows the surgeon to align the ligaments precisely so the joint works properly. The difficulties in getting the ligaments to work with the implant device held back the knee implant product for years. Now, knee implants have more growth potential than hip implants.

Recently, Biomet technicians began using an enhanced computer-design system that creates three-dimensional images of a diseased or damaged joint. The system allows Biomet to custom design an implant to satisfy a patient's particular needs.

Additionally, Biomet is involved in joint venture research efforts in the following areas: using the bone-growth protein to improve the connection between the implant and the patient's bones; developing a more flexible carbon fiber material for implants; and using the naturally occurring soft tissue lubricant for a variety of orthopedic and surgical uses.

The worldwide implant market is expected to expand at an annual rate of 20 percent to 25 percent during the 1990s because of the growing number of elderly people living in industrial nations.

However, Miller wants Biomet to do more than just follow along. He wants the company to gain market share, and he does not rule out growing larger than Zimmer, which is more than five times larger than Biomet. "We'd like to continue to grow and move up the ladder in the orthopedic industry," says Miller. "I hope we move up towards number one someday."

Will Biomet have to change as it grows? Miller does not think so. "Being small and entrepreneurial is a state of mind, not a function of size," he says. "You don't have to become bureaucratic and non-progressive if you work at it."

Two of Biomet's founders, Ferguson and Haroff, have left day-to-day managment to pursue other business interests. Ferguson opened a classic car dealership in Warsaw, and Haroff bought a golf course.

But you are going to see Miller at Biomet for a long time. "My father retired a year ago at age 80," he says. "That scares a lot of people around here.

"I can't see myself doing anything else because I can't imagine anything being more fun."

PHOTO : The hip bone's connected: Dane Miller started Biomet 12 years ago in a garage. Sound familiar? The Warsaw-based firm is a major manufacturer of artificial hip, knee and other orthopedic implant devices. Forbes magazine ranked Biomet 103rd on its list of 1989's "200 Best Companies in America."
COPYRIGHT 1989 Curtis Magazine Group, Inc.
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Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Dane Miller, CEO of Biomet
Author:Kurowski, Jeff
Publication:Indiana Business Magazine
Article Type:company profile
Date:Dec 1, 1989
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