Drugmakers Eager to Diversify Suppliers Help A10 Soar

In 1987, Leah Brown lost an uncle to AIDS. His death left Brown, then a law student at Rutgers University, frustrated and deeply disappointed that drugs to treat the deadly disease were not yet available. The stinging memory of losing her “very best friend” stuck with Brown, inspiring the contract research company she founded 18 years later, in 2005, to assist in medical research and the development of new drugs.

With 13 years in sales in IT consulting within the health-care industry, Brown launched A10 Clinical Solutions using around $25,000 in savings, a $150,000 home equity line of credit, and a $25,000 loan from her mom. (Brown eventually paid her mom back at 8 percent interest.) In four years, Brown took the Cary (N.C.) company from $300,000 in revenue to $8.3 million in 2009. By yearend, she plans to increase headcount to 300 and says revenue will more than double, to $20 million, and hit $30 million in 2011. Even better, as far as Brown, a 46-year-old black woman, is concerned: She founded the company herself without any venture capital. “It’s pretty rare,” she says.

While Brown is a rarity in the industry, her company is also unique because it brings its customers a diversity of races through A10’s clinical researchers and staff. This is important in human drug trials, because it helps make other minorities feel comfortable and therefore more likely to complete trials, Brown says. While she does not have exact numbers, no race dominates A10’s staff, which is 70 percent women. In general, a large portion of A10’s work involves monitoring drug trials and overseeing the interaction between physicians and patients to make sure the trials are not compromised.

From Paper to Electronics

A10 got its first big break in 2006 when Brown landed a contract with Talecris Biotherapeutics, a company in Research Triangle Park, N.C., that develops medical treatments based on blood plasma. The job of taking paperwork from clinical drug trials and transferring it into electronic format was supposed to last three weeks. Instead, the project went on for a year and brought in $100,000. The next break came later that year when drugmaker Merck agreed to list A10 as a preferred supplier, which made it possible for Brown to bid for jobs.

Brown’s entry into Merck and Talecris came through programs in which the companies were actively looking for minority-owned businesses to diversify their service suppliers. “It opened the door, but it did not close the business,” she says. Brown met representatives from the companies at separate conferences designed to connect large corporations with minority-run companies. She met Merck’s director of supplier diversity, Jackie La Joie, at a conference sponsored by the National Minority Supplier Development Council. They became friends and in 2008 started the Diversity Alliance for Science, a nonprofit group dedicated to mentoring and helping women and minorities build businesses in the life sciences. The group’s membership includes 300 companies run by women, minorities, disabled veterans, and gays.

Today, running drug trials for such clients as GlaxoSmithKline, Johnson & Johnson Services, and Amgen makes up roughly 80 percent of A10’s business. The rest involves mostly contract research for government agencies, such as the National Institutes of Health and the Centers for Disease Control. A10 recently won a 12-year CDC contract to monitor the health of children who lived in government-issued trailers following Hurricane Katrina in 2005. (The temporary housing was later found to have high levels of formaldehyde, which pending lawsuits claim was responsible for respiratory and other health problems.)

Avoiding Science Minutiae

While Brown’s researchers and staff handle customers’ projects, she spends most of her time setting strategy, managing growth, and bringing in new business. “The most important thing is to get out there selling,” she says. “That’s the reason our company has been successful. I never got caught up in the minutiae of the science.”

Among contract research businesses, A10 is tiny compared with Covance, Pharmaceutical Product Development, and Quintiles, which have thousands of employees, as much as $2 billion in revenue, and resources to manage all phases of a drug trial or research project. Last month, Covance reached a 10-year, $2.2 billion deal with Sanofi-Aventis, France’s biggest pharmaceutical company. Such deals are likely to make it harder for A10 and other small companies, says David Windley, financial analyst for Jefferies & Co. “I have a pretty hard time understanding how an A10 stays in the game.”

That’s why Brown is expanding into other businesses. A10 recently entered a partnership with a small health-care company to run in-house clinics for technology companies. The clinic-operating business is small, just five clinics so far, making up less than 5 percent of A10’s revenue. With rising health-care costs pushing companies toward programs for preventive medicine, however, Brown expects the market to grow. Windley agrees that supplying such services could become a substantial business for companies like A10.

Whether A10 can continue to grow at such a torrid pace will depend on Brown’s success in starting new ventures and grabbing projects that complement the work of large contract research businesses. Meantime, Brown is content knowing she’s making a contribution in medicine. “I believe I’m doing something real, and I think Uncle Allen would be really proud of me. I know he would,” she says.

To contact the reporter on this story: Antone Gonsalves at antoneg@pacbell.net

To contact the editor responsible for this story: Nick Leiber at nleiber@bloomberg.net

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