Spring 2003

Spin-Off Success


Mike Mussallem Helps Engineer Spin-Off Of Medical Technology Company As Chairman And Chief Executive Officer

Strategic analysis has led to some major life changes for Mike Mussallem. The first one came when he moved from making anti-freeze into the medical technology industry. Another major shift occurred three years ago when he helped engineer the spin-off of a company he now heads.

Mussallem, a 1974 chemical engineering alumnus, is chair-man and chief executive officer of Edwards Lifesciences Corp., a global leader in products and technologies to treat advanced cardiovascular disease and the world’s number-one heart valve company.

Edwards focuses on four main cardiovascular disease states: heart valve disease, coronary artery disease, peripheral vascular disease and congestive heart failure. Located in Irvine, Calif., Edwards was spun off from Baxter International in April of 2000.

Mussallem was a key player in that spin-off as head of the Baxter CardioVascular Group.

"Baxter was in a strategic planning process and we questioned why the cardiovascular group wasn’t growing faster. We found it to be a lack of investment specifically into that core area. We investigated various alternatives and a spin-off with a dedicated management team appeared to be a good solution."

The company went public with a listing on the New York Stock Exchange, but Mussallem attributes the spin-off’s success to the existing employees. "It all started with the employees," he explained. "Our goal was to get them engaged to behave like owners and this influence would carry over to our customers and impress shareholders." The employees themselves became shareholders under this philosophy.

In addition to engaging the employees, the new company did have to make some tough restructuring decisions to divest itself of businesses that did not fit into long-term growth plans for Edwards.

"The changes we made in the first several months of our spin-off have created huge benefits for all of our stakeholders," Mussallem reported. "Share-holders have seen their stock double in value, employees have a more exciting place to work, and our customers are seeing innovation." Today, Edwards has approximately 5,000 employees worldwide and reported sales of approximately $700 million in 2002. Edwards’ global brands sell in more than 80 countries.

To continue that progress, Mussallem sees one of his main priorities as CEO to "work hard to create an open and positive environment for our people to drive success." He stressed "high ethics and a culture of delivering results."

Another key component of the work day for Mussallem is serving as key spokesperson for the company. "I interact heavily with our investing base and customer groups sharing Edwards’ visions and aspirations."

A plaque on his desk guides Mussallem in his dealings. It reads: "It’s the patient, stupid." The message "is reflective of why we’re here and why I’m here," Mussallem said. "If we’re doing good things for patients, we are going to run a very successful company. The plaque is a very simple way of clarifying our decision-making process."

Innovation is a key element of that process, explained Mussallem. "The way our company succeeds is to apply technology to the unmet clinical needs of patients, and innovation is important to that process." New ideas come from within the Edwards research and development area and from sources outside of the company. "We go out of our way to establish nurturing relationships with doctors and other entrepreneurs who might have a new way of attacking cardiovascular disease."

Citing his engineering background, Mussallem noted that he has a high level of interest in the technological matters of Edwards. It helps as he deals with innovators in the field. His career takes him to one-on-one dialogues with medical practitioners and occasionally into hospital operating rooms.

Another benefit of his background came from the halls of Rose-Hulman where he acquired an analytical problem-solving back-ground. "A large number of problems we confront are relatively complex," Mussallem pointed out. "To be able to address them in quantifiable terms is a skill set I acquired at Rose."

The skill set applies itself in a very competitive and advancing field. Mussallem said. "There is an endless challenge to stay on top of rapidly developing technologies and approaches. We try to drive the approach in how best to serve the patient. We want to drill deeper on the causes of cardiovascular disease and understand what the patient is going through. We also strive to recognize differences between people in how the disease manifests itself and how the patients react to treatment."

Running a global corporation that strives to meet patients’ unmet clinical needs offers many challenges and opportunities, but one of the larger personal challenges for Mussallem is taking time to "reflect on what we’ve done and celebrate our successes. We have a culture of constantly raising the bar on how to achieve more, but many times we have to remind ourselves to reflect on our accomplishments."

Mussallem has weathered his recent major life change well. His current position had its roots in another major career shift in 1979. He had been out of Rose-Hulman for five years working for Union Carbide in that company’s Home and Automotive Products Division. He had held various manufacturing and engineering positions from production supervisor to plant engineer in Illinois and later in New Jersey. Anti-freeze production was a part of his responsibility during that time. During his time with Carbide, he was in a process of discovery as to what he really wanted to do with his career. "As I explored various options, I became intrigued with medical technology," Mussallem remembered.

To enter the medical technology world, Mussallem took a job as a senior engineer with Baxter. He progressed through a variety of increasingly responsible positions in manufacturing, engineering and product development. He was named president of Baxter’s Critical Care Division in 1993, and group vice president of Baxter’s Surgical Group in 1994. In 1995, he was put in charge of Baxter’s Cardio-Vascular business, and in 1998, he was appointed to lead the company’s Biopharmaceuticals business. Also, from 1996 through 1998, he chaired Baxter’s Asia-Pacific Board, which coordinated regional initiatives across all of Baxter’s businesses.

Edwards Lifesciences is named after Miles "Lowell" Edwards, an engineer and inventor who helped create the world’s first commercially available replacement heart valve. Through a series of acquisitions starting in the 1960s, Edwards’ initial company, Edwards Laboratories, eventually became part of Baxter in the 1980s. This is the unit that Mussallem helped spin out in 2000.

Outside of the corporate world, Mussallem enjoys fly-fishing, listening to music, physical fitness and sports. Originally from Gary, Ind., he remains a diehard fan of the Chicago professional sports teams, including the Cubs baseball team. That sounds like a another situation that could use some strategic analysis.