Nineteen-year-old Ronnie Pickard was heading down Brooks Road in Memphis, Tennessee, in a 1966 VW Beetle (which he’d purchased new for $1,700 plus tax and was paying $49 on the monthly note) looking for work. He’d quit his $1.85 an hour packing job at the Memphis RCA plant and was driving around an industrial park near Memphis’ airport to see what he could find.
The year was 1967, Pickard was both recently married (to his high school sweetheart, Linda McPeak) and a graduate of Munford High School. Ronnie and Linda were still living in Munford, about 34 miles north of Memphis in Tipton County—named, incidentally, after Captain Jacob Tipton, who was killed while leading a charge of his troops against a force of Indians in 1791 near Fort Wayne, Indiana.
Munford, Tennessee (population 100, on a busy day), originally Mt. Zion, was in the rich. loamy Mississippi River delta where settlers from North Carolina, Virginia, Kentucky, Alabama, and Eastern Tennessee had come in the 1830s. Pickard was the grandson of a tenant farmer, son of a tile setter and whose early work life included chopping and picking cotton and working the cornfields.
“I had graduated from High School. I had but two pennies in my pocket and I needed a job,” Pickard remembers. “I was driving down the road, saw a sign out front of this building that said “Hiring,” pulled in and it happened to be Richards.”
“Richards” was Richards Manufacturing, founded in 1934 by J. Don Richards, the former DePuy (Warsaw, Indiana) salesperson who’d been assigned the Kentucky and Tennessee territory. Richards originally made medical soft goods (sewn or molded items like cervical collars, rib belts, slings, and splints) Shea’s stapes ear implants and compression hip screws (the start of Richard’s Orthopedic business).
Don Richards passed away in 1964. Three years later, when Pickard arrived, the company was booking about $3.6 million in sales, growing 25% annually and its two most senior managers were Harry Treace and Leander Dallas Beard, better known as LD Beard.
Walking into Richards that day, Pickard remembers meeting “A lady at the front desk. I will never forget her. Miss Alma Fife. I walked in and told her I wanted to apply for a job, and she was a really nice lady. She directed me all the way back, and there was this guy sitting in a metal cage with all these supplies. A tool room type of thing.”
“He was J.W. Torrey, who ran the maintenance department. Little guy, probably didn’t weigh 100 lbs., mean as a snake. He was sitting there doing paperwork and I stood there and stood there and stood there.”
After several minutes, “He says to me: “turn around boy!” So, I turned around and he says, “You don’t have an ass, do you?’. I probably didn’t weigh much over 100 lbs. myself. So, he says ‘Do you see that big die up there on the top shelf?’ I said ‘yes, sir’. ‘Do you think you could get that down and clean it and put it back?’ I said, ‘Yes, sir.’ And he said, ‘alright, I’ll give you a try. You get one week. I’ll let you know after that if I’m going to keep you.”
E. Ronald Pickard would stay 24 years, eventually becoming President before leaving Richards to join a struggling little company named Biotechnology in 1990.
1967
The same year Pickard became the 84th employee of Richards, the Scoliosis Research Society (John Moe, President) had wrapped up its first year. Paul Harrington, Professor of Orthopaedic Surgery at Houston’s Baylor College of Medicine, had sketched out the concept of a lag screw to be used in the pedicles of the spine, performed two spondylolisthesis cases with the screws and written a paper about it, which was presented in 1967 at the Southern Medical Association’s 61st annual meeting.
In England, Sir John Charnley’s new hip prosthesis and reconstruction surgical procedure had demonstrated that hip replacement surgery was viable, reproducible and could, for the first time, give elderly and arthritic patients sustainable pain relief and a return to a functional life.
In Switzerland, Maurice Edmond Müller, M.D., professor at the University of Bern and head of orthopedic surgery at the Inselspital in Bern founded Protek AG, to manufacture and market the Charnley-Müller hip prostheses. Müller was also one of the principal founders of the AO Foundation.
Pretty much the only spinal implant on the market was Zimmer Corporation’s (Warsaw, Indiana) Harrington Rod.
In Memphis, the Campbell Clinic dominated regional orthopedic care and was among the top five orthopedic teaching hospitals in the United States. It’s founder, Willis C. Campbell, M.D., was the first president of the American Academy of Orthopedic Surgeons. No coincidence, Richards Manufacturing’s first location was directly across the street from the Campbell Clinic.
Just outside of Memphis, Frank Wright, a former Richards Manufacturing salesperson, had started Wright Medical to fabricate and sell a rubber walking heel for patients in leg casts. At the time, patients in leg casts were complaining of chronic back pain due to the hard steel heel built into the foot of their casts.
Harry Treace, LD Beard and the Future Danek Team
Two men ran Richards Manufacturing: Harry Tillson Treace and LD Beard.
Treace’s two sons, Jim and John, also worked at the company.
Harry Treace was born in Leesville, Ohio, just south of Canton and about 80 miles due west of Pittsburgh and, as a young man, became the principal engineer and designing partner for a Kalamazoo, Michigan, orthopedist named Homer Stryker. In 1948, Homer Stryker founded the Orthopedic Frame Company, the predecessor firm to Stryker Corporation. Harry Treace was Dr. Stryker’s principal product designer and a significant shareholder. The two men invented and patented numerous medical devices together.
By 1954, the relationship between Dr. Stryker and Treace had begun to sour. When it became obvious that Lee Stryker, Dr. Stryker’s son, would likely succeed him as president, Treace sold his Stryker stock back to the company and headed south to Memphis where he purchased a 40% stake in Don Richards’ company.
Treace’s effect on Richards Manufacturing was profound. Within two years, he had engineered two significant medical device innovations—a stapes implant to treat one of the major causes of deafness and a compression hip screw.
After Don Richards passed away, Treace became the sole owner and president of the company. In 1964, he asked LD Beard to be his #2 with the title: Executive Vice President of Richards Manufacturing.
Leander Dallas Beard was born in Dallas, Texas, in 1932. Growing up, LD lived in both Texas and Tennessee. By the time he was 22 years old, LD had more than a decade of work experience, including a stint in the Air Force, with Sears Roebuck, and in Firestone Tire’s shipping department and later in the cost accounting department. A friend, Johnny Dean, one of Richards Manufacturing’s salesmen, asked LD if he’d be interested in becoming Richards’ shipping department supervisor.
LD was doing well at Firestone, he’d been promoted and had he stayed, it was likely he would eventually be asked to move to the company’s headquarters in Akron, Ohio. Which his wife Betty, who’d just given birth to their first child, Murray, was not interested in doing. Memphis was about as far north as she wanted to go.
So, in 1983, LD Beard gave his notice to Firestone and joined the Richards Manufacturing Company.
Richards had never had someone quite like LD. Soft spoken. Down to earth. Organized, smart and a uniquely talented manager. In short order, he had Richards’ shipping department running, well, like Sears, Firestone, and the U.S. Air Force.
But it was LD Beard’s style with his staff and co-workers that had the greatest impact.
Ron Pickard recalls, “LD Beard was always my mentor. He gave me challenging opportunities along the way and fortunately I was able to complete them. As a result, one task from LD led to another.”
“I learned from LD, number one—ever bring a problem to management unless you have a solution and, number two—most problems, once you break them down into their various components, you find that the answer is pretty obvious. If you think you have a problem, sit down, think about it, analyze it, determine what led to the problem, what are the possible solutions…as you think through it, most of the time, the answer comes to you.”
One of LD’s famous quotes was: “You’re not going to be right all the time, you’re going to make mistakes, you’ll never be held in a bad way for making a mistake as long as you thought through it. As long as you sat down and analyzed it, looking at all the various avenues, and you made a decision and if it works out, that’s great, but if it didn’t, well, that happens. But always recognize when you make a mistake, don’t try to live with it, recognize it, change it and move on.”
Selling Richards Manufacturing
In 1967, Harry Treace decided to find a buyer for Richards Manufacturing. He’d hoped to sell the company for about $5 million, which LD thought was probably too cheap. The Pennsylvania manufacturer of Maalox, Rorer Group, was looking for a business to invest in and the WT Grimm company of Chicago connected them to Harry Treace. Five million seemed affordable to Rorer’s CEO John Eckman and the deal was struck with funds changing hands in June 1968.
Between 1968 and 1986, Richards grew dramatically. Medicare had been passed into law in 1965, which gave 19 million senior citizens the ability to afford a hip or knee implant. Richards added the Bechtol hip, later the Illizarov external frame and by 1986 was booking approximately $100 million in revenues.
In 1986 Rorer sold Richards Manufacturing to Parker Montgomery and CooperVision for $350 million. A few years later, London based Smith & Nephew bought the firm and operates the facility on Brooks Road to this day.
All of those managerial changes took a toll on the Richards’ management team. At one point, one of the owners asked for each senior manager’s curriculum vitae, you know, to judge the capabilities of the people they had working for them.
First Harry Treace left. And his sons. Then LD Beard in 1983.
Ron Pickard, who became president of the Orthopedic division, reporting to Jack Blair who was president of Richards in 1984, hung in for quite a while. “I had a pretty strong commitment to Richards. Even through the CooperVision, even through Smith & Nephew. A lot of people left Richards during that time.”
Medtronic Spine Is Born
Dr. George F. Rapp, an Indianapolis orthopedic surgeon, Miles Igo, owner of Warsaw Orthopedics and Charles Davis, an Indianapolis based developer had a vision for an orthopedic holding company which would, over time, acquire innovative products or, even, companies.
Its key advantage was a first-class manufacturing capability which, at the time, produced pins, wires, screws, intermedullary nails and generic soft goods—Igo’s Warsaw Orthopedics.
The missing ingredient was an operations manager with experience managing a large fast growing orthopedics company. LD Beard, by way of the former Richards salesman, Lew Bennett, heard about the Biotechnology project.
LD was already eyeing the exit at Richards and met with Bennett, Dr. Rapp, Miles Igo and Charles Davis. Despite having to take a 60% pay cut, LD agreed, in 1983, to resign from Richards to join the new venture, now named Biotechnology, Inc., whose operating business was Warsaw Orthopedics.
As LD would later recall, “The company was doing, I think, somewhere between two and three million dollars a year in sales and barely breaking even. We had a little over a million dollars borrowed. That was at high interest rates. About eighteen and a half percent, I think. But we were generating enough money to keep the note current.”
LD realized pretty quickly that he needed to build a salesforce, expand the product line and much more. On top of that, he was commuting from Memphis to Warsaw, Indiana—a 585-mile, 12-hour one-way drive.
Then came the fire.
The Fire
Biotechnology, this little manufacturing company in Warsaw, Indiana, would eventually be bought by Medtronic for $3.7 billion and today, if it were an independent public company, would be worth north of $14 billion. The story of how it grew from a burned-out shell to the #1 supplier of spinal implants, instruments and systems in the world is nothing short of remarkable.
In May 1984, just nine months after LD joined Biotechnology, a fire of unknown origin nearly destroyed what is today, Medtronic Spine.
Miles Igo called LD in Memphis and told him that there’d been a fire at the plant. How bad was it, LD asked. “Pretty bad,” said Igo, “Bring whatever inventory you have down there up with you because we don’t have anything.”
When LD arrived, he found that one entire section of one building and the entire production facilities for manufacturing soft goods, all the inventory, was destroyed. The machine shop, luckily, which was in another building and had avoided the fire, though not the smoke.
Biotechnology could still make metal parts.
There was no business interruption insurance. Just coverage for building contents.
And there was that million-dollar bank note.
Hard Choices
“The bankers were getting very anxious, as you can well imagine they might be.” Recalls LD, “And I came up with the idea that each of us would put in, on an as-needed and when-needed basis, each of the three of us—$75,000 apiece until we got the insurance settlement for the contents of the plant.”
Miles Igo, Dr. Rapp, and L. D. presented the plan to the bank. No sale. The bankers wanted the $75,000 from the three investors ($225,000 total) in the bank, up front.
Unfortunately, the company needed those funds for working capital and, as LD explained, each individual would not have to contribute money except on an as-needed, when-needed basis. Miles, Dr. Rapp and LD said “no.” And the bankers wouldn’t budge either.
LD looked over at Miles. “Do you have a key to the place?” Miles did. So, he pulled the key out of his pocket and laid it on the banker’s desk.
LD said “Now you fellows are going to be in the orthopedic business and I’m going to go back to Memphis and get a real job. And I hope you enjoy the orthopedic business. It’s a lot of fun.”
The three men stood up and made for the door. It took just a minute for the bankers to fully comprehend their dilemma. Wait up a minute, they said. Let’s talk some more. Ultimately, they accepted LD’s terms, in full.
Alan Olsen Sets the Spinal Implant Industry in Motion
Alan Olsen, the former Richards’ group product director for total joints as well as soft goods and veterinary product line, founded Danek in 1980.
Alan Olsen was born in Minnesota and grew up Richfield, a first tier, mostly Scandinavian suburb of Minneapolis. From a young age, he’d wanted to be a doctor. He took pre-med courses during his stint as a U.S. Navy corpsman and managed to wrangle a part-time job at Fairview Hospital in Minneapolis, Minnesota. By sheer coincidence, he was assigned to work with Dr. John Moe, one of the most consequential surgeons, instructors, and leaders in spine surgery and founder and past president of the Scoliosis Research Society.
That experience gave Olsen a solid grounding in the still nascent practice of spine surgery.
Olsen applied to medical school, supported by Dr. Moe, who wrote a letter of recommendation but didn’t make the cut. Disappointed, Olsen opted for work that would keep him in hospitals and working with surgeons—selling medical devices for Richards Manufacturing.
Alan Olsen is a founding father of the modern spine surgery industry.
Another seminal moment in Olsen’s life and, therefore, the creation of Danek, was when Olsen met with two Galveston, Texas surgeons, Ben Allen and Ron Ferguson, in 1979 about an improvement to the Luque Rod for scoliosis surgery. The Luque Rod and sublaminar wiring technique was an alternative to the Harrington Rod and was being marketing by Zimmer.
As Olsen remembers; “Spine was not that big of a thing. But, after listening to Ben Allen and Ron Ferguson, I got really excited. I worked about six months on a presentation to Harry Treace and the Richards’ Executive Committee about the Luque Rod system improvements. Harry sat back in his chair and said, ‘Alan, I know you worked really hard in this project. But if it goes in the brain or spine, we don’t do it.’”
Alan and Richards parted ways the day before Thanksgiving 1979.
“I told my wife, ‘Okay, I’m fired’. And she said, ‘What?’ I said, “Yeah, fired.” “Well, what are you going to do?” “I think I’m gonna start a company.”
Danek was officially founded by Alan Olsen in January 1980—to, amazingly, make super cheap, mail order arm slings and other orthopedic soft goods.
How did that work out? Not so well.
“I invested the last $2,000 I had on a direct mail piece that went out on promoting an arm sling that was our first product. After the campaign was out, I went by the mailbox. There’s no mail. No return cards. I waited and waited. And finally, after a couple of weeks, I said, ‘Oh, this isn’t working.’ I got one $75 order out of that whole campaign.”
So, Alan tells his wife, “I gotta sell the Corvette. We got to cut some expenses.”
He hit the road, knocking on hospital doors. At Memphis Children’s Hospital, one of the nurses asked Olsen if he could make restraints to safely protect kids after surgery. He could and did. That patented wrist restraint effectively launched and sustained Danek those first few years.
LD Beard and Alan had been talking about going into business together for some time. Shortly after LD Beard was able to get Biotechnology back up and running, albeit on a limited basis, he broached the idea of tucking Danek into Biotechnology and having Alan run sales and marketing. “I was thrilled to be doing that,” recalls Olsen, “because I couldn’t afford to buy old machines to manufacture metal implants, but I could afford to buy sewing machines to make soft goods.”
Biotechnology bought Danek Medical in February 1985.
The Luque Screw
In the latter part of 1985, Olsen was contacted by one of Biotechnology’s East Coast distributors, John Agricola. A customer, Dr. Ed Simmons, was having issues with the early Zielke rod and screw spinal implants.
Dr. Simmons (1926–1990) was Chief of Orthopaedic Surgery at Buffalo General Hospital, future President of the Scoliosis Research Society, Cervical Spine Research Society and Professor of Orthopaedic Surgery, University of Toronto and SUNY at Buffalo.
Alan, who had trained with another founder of the Scoliosis Research Society, Dr. John Moe, flew to New York to meet Dr. Simmons.
In a hot, cramped room in Buffalo General Hospital, Alan sat down with Dr. Simmons and about a half dozen of his spine fellows. Simmons, as Olsen remembers, was throwing up X-rays saying, “Here’s what’s happening in my surgical spine cases: on this one, the screws are breaking, on this one, the rod is breaking.”
So, Alan asked him, “Dr. Simmons, how many of these things do you use and how much do they cost?” Simmons told him. So, Olsen did a simple calculation, and he about fell off the chair. Dr. Simmon’s usage would totally blow away Biotechnology’s annual sales numbers with just Buffalo General’s spinal implant purchases.
From Buffalo, New York, Alan flew to Indianapolis for a Biotechnology board meeting with Dr. George Rapp and LD Beard. On the plane ride back, Olsen sketched out the rough design of an implant that might solve Ed Simmons’ spine implant problems. It was a bone screw that clamped onto a rod at various angles.
As Alan was describing his meeting with Dr. Ed Simmons and showing them his sketches, George Rapp was amazed “Holy cow. You met with Ed, you know, we almost became partners.” “Alan,” said Dr. Rapp, “if you want to get into spine, you need to go see my friend, Dr. Eduardo Luque in Mexico City.”
Now it was Alan’s turn to be amazed. He’d wanted to get involved with Dr. Luque for years. “You know Eduardo Luque?!” ask Alan. George Rapp said that he did, picked up the phone and called him. “Eduardo, I’ve got this guy and he wants to talk to you.” Alan got on the phone, explained Ed Simmons’ spine implant issues and Dr. Luque started telling Olsen what he had designed.
Two days later, Alan Olsen was in Mexico City, scrubbing in with Dr. Luque. Remembers Alan: “Eduardo is bringing out all the implants with the screws and he gave me a mini education about sublaminar wiring, pedicle screws and plates. And I’m just eating it up and I’m just absolutely in awe of the fact I’m in the presence of Eduardo Luque. You know, the father of totally improving spine scoliosis surgical treatment from Harrington rods to sublaminar wiring.”
Olsen’s time with Dr. Moe in Minneapolis had shown him what happened when Harrington hooks would slide off the rods, and the pediatric patients would have to come back in for emergency surgery. “That was a big deal. Dr. Moe would be pissed as hell.”
Alan had no doubt that Luque’s screw and plate system would take the spinal instrumentation market by storm.
Before he left Mexico City, Dr. Luque told Alan one more thing: “Before you do anything with this Alan, you need to go see Rich Ashman at Texas Scottish Rite Hospital, because he’s doing some testing on screws and plates.”
LD Beard and Alan had been through the experience of developing new markets for medical devices at Richards. They knew the drill, the pitfalls and the resources required.
Spine, they all agreed, could be a huge opportunity. And Luque and his inventions were the way in.
If…the FDA would approve Luque’s devices.
If…Zimmer, who had a business relationship with Dr. Luque, would sign off on Biotechnology negotiating with Luque and, finally, if, somehow, they could find the resources to pay for surgeon training, salespeople and everything required to build a spinal implant business.
Alan and LD approached Zimmer. According to Olsen Zimmer said: “Yeah, you can make the Luque plates. You can have all his stuff. He’s a total pain in the butt.”
LD hired an FDA consultant who told him that Luque’s implants looked like ordinary bone plates and screws. Which meant that they could be cleared by the FDA under Section 510(k), provided they were labeled the same way as the products in place before 1976.
“So, we filed a 510(k) as bone plates and bone screws,” recalls LD. “Of course, we were not permitted to market as anything but bone plates and bone screws. We couldn’t market them as spinal products.”
The first year that Danek was part of Biotechnology, the combined companies lost several hundred thousand dollars. In 1986 the loss narrowed to a couple hundred thousand. In 1987 Biotechnology made its first profit.
Ron Pickard Joins Danek and Biotechnology
Spine surgery was not like hip surgery. A failed spine surgery was significantly more dire than a failed hip surgery. And many of the patients were children.
At the time, the only other USA spinal implant company was AcroMed, founded and run by Dr. Art Steffee. The big companies, DePuy, Biomet, Zimmer, and Stryker, were trauma, rehab and large joint reconstruction companies. To them, spine surgery products were high risk, minimal reward opportunities and, with the exception of a small handful of products, rods or hooks, they stayed away.
Pickard never lost touch with his mentor, LD Beard. LD and Alan Olsen had combined their two struggling companies—Biotechnology and Danek—and had actually come across a product and a market that, in Olsen’s opinion, could be as large as total joint replacement, maybe greater.
LD called Ron and, together with Alan Olsen, explained the Luque screw, sublaminar wiring, TSRH [Texas Scottish Rites Hospital] Crosslinks and how, in their judgement, it would be a significant advance in spinal implants. There was, however, a problem.
Biotechnology didn’t really have the resources to put a full nationwide distribution system in place for multiple new spine devices. They could certainly manufacture them, and were selling them on a limited basis, but anything beyond required capital.
LD Beard called Ron Pickard and asked if Smith & Nephew, the latest owner of Richards Manufacturing, would willing to do a license agreement to distribute these new spine surgery products.
Ron put together a proposal to license the Luque screw for spinal fixation and took it to his bosses at Smith & Nephew. They said “no.” The liability associated with spine surgery was too much of a risk.
So, Ron Pickard went back to LD Beard and said, “Smith & Nephew has passed on it, but I would like to maybe discuss with you the opportunity.”
In short, with LD Beard, Ron Pickard and Alan Olsen, the Richards Band was beginning to get back together.
In the wings were Rick Treharne, Alex Lukianov, Michael DeMane, R. Lew Bennett, and Mike Sherman.
In August 1990, Ron Pickard resigned from the Richards Manufacturing division of London based Smith & Nephew and became the President and Chief Operating Officer of Biotechnology, which was soon renamed, Danek Medical, Inc.
End of Danek Part I of the History of Modern Spine Surgery. Creating Medtronic Spine, the largest supplier of spinal implants, instruments, systems, biologics and more for the treatment of the spine.
Coming soon:
Danek Part II: The evolution of spinal implants and instrumentation, Cotrel-Dubboset, TSRH and Danek goes public
Sofamor Danek Part I: Merger with Sofamor, development of BMP2, managing explosive sales growth
Sofamor Danek Part II: The Pedicle Screw Litigation Storm
Sofamor Danek Part III: The first spinal navigation system, sale to Medtronic and Breaking up the Band
