Louisville, Colorado (HQ: Essex, U.K.)
Employees: 150 (50 in Colorado)
Industry: Bioscience & Medical; Industrial & Equipment
Products: Carbon dioxide absorbers, oxygen generators, and activated carbon
CEO Troy Rhudy has diversified the company into the defense market with a game-changing innovation on the way.
At Molecular Products, it's all about breathing.
The company's flagship line of carbon dioxide absorbers is used by half of anaesthesiologists. "Our carbon dioxide absorbers remove the carbon dioxide that's exhaled by the patient," says Rhudy. "We're globally number one in that category today."
In recent years, the company has seen growth in creating other products for industrial and military customers. Its line of chemical oxygen generators focuses on a niche market: submarines. "Most of the world's navies use our oxygen generators as a backup," says Rhudy.
A third product group stems from the U.K.-based company's acquisition of Colorado-based C*Chem in 2002: impregnated activated carbon and catalysts. "It is activated carbon that's been chemically treated to remove gases," says Rhudy. "It's a specialty version of a commodity product."
The commodity version might be used in gas masks for industrial applications; Molecular Products is focused on premium products for military applications. "We're a new entry in the defense industry," says Rhudy. "That's the driver of our growth in Colorado."
That's predicated by a $12 million expansion co-funded by the Department of Defense under the Defense Production Act Title III program in 2016. The program aims to diversify suppliers to mitigate security risks.
The annual market for impregnated activated carbon for military use is about $50 million. The industrial market is bigger, but there's a lot more competition. "That's a space we won 20 years ago," says Rhudy, "Every year, it's more competitive as low-cost overseas producers get better."
He adds, "We still supply the industrial base. The capacity we built under the Title III program is suitable for other markets."
The company's continued diversification is decades in the making. Rhudy says it's all about focusing on core competencies for a broad market. "The oxygen generators and carbon dioxide absorbents are very good for closed-circuit environments," he says, calling activated carbon "was a complementary technology for open circuits."
About half of the sales are carbon dioxide absorbents for the medical market; 35 percent comes from activated carbon; and oxygen generators are the remaining 15 percent.
Molecular Products has two manufacturing plants: one in the U.K., the other in Louisville. Each facility manufactures about 1 million carbon dioxide absorbers annually. The U.K. operation makes oxygen generators, and the carbon operation is centered in the U.S.
Arlington Capital Partners bought the company in late 2016. Revenue has grown from 22 million British pounds (GBP) in 2015 to 27 million GBP in 2017. "We're going to be at 30 million [about $40 million] this year," says Rhudy.
The company moved from the Gunbarrel area in Boulder to its new 63,000-square-foot facility in Louisville in summer 2018. About 45,000 square feet is production and warehouse space.
Rhudy touts the 2,000-square-foot test lab, with a standalone HVAC system and eight hoods. "We built a world-class lab here to test the military carbons. It's very well planned and well engineered. . . . We're able to test for the same kind of toxic gases the government labs test for."
Challenges: "We've got the same kind of challenges a lot of growth companies have," says Rhudy.
In Molecular Products' carbon dioxide absorber business, the market is guided by cost. "There's so much cost pressure in healthcare, it's difficult to differentiate through performance," says Rhudy. "We're focused on investing in automation and cost reduction, because we're not able to sell the benefits of higher performance."
Opportunities: "We have a revolutionary new product that's going to change the paradigm on medical oxygen," says Rhudy. Dubber ROG (Ruggedized Oxygen Generator), it's based on the same concept that undergirds the company's oxygen generators for submarines. "We've taken that technology and miniaturized it," he explains, for "handheld, safe, emergency oxygen."
The chemical reaction produces oxygen from sodium chlorate, plus plenty of heat, Managing the latter was the key innovation. "We've put in a thermal management system," says Rhudy.
He sees military medics as early adopters, followed by first responders. The reason: Compressed oxygen is a safety risk in war zones. If a stray bullet or shrapnel hits a cylinder, "It'll explode and take the medic out with it," says Rhudy.
Another benefit: "It's the only form of oxygen you can stockpile. It'll store for 10 years, and you can't do that with liquid oxygen or gas cylinders."
In trials with U.S. and U.K. units, ROG will launch to the broader military market in 2019, followed by civil defense and other markets in 2020. Rhudy thinks the total market for it could be more than $100 million. "It's game-changing technology."
"Our objective is to build our company to $150 million U.S. in annual sales with organic growth and acquisitions," says Rhudy, noting that the launch of ROG and growth in carbon can take it to about $60 million by 2021. "The rest we're going to have to get through M&A activity."
Needs: "Good people," says Rhudy. "That goes above and beyond everything else. . . . That's the number one driver of our success."
But Molecular Products has a built-in recruiting edge: "Our products are protecting lives and impacting people all over the world. One out of two people going into surgery are breathing through our device."