New drug laws right 'script for DynaLabs
From St. Louis Business Journal. Friday, February 29, 2008
By Patrick L. Thimangu
Pruett, Odegard expect $2.7 million in revenue this year from compounded drug testing services
New laws governing compounded prescription drugs are compounding revenue at DynaLabs LLC, the St. Louis-based pharmaceutical analysis company.
Michael Pruett, 53, and Russell Odegard, 52, two former Sigma-Aldrich Corp. employees, founded DynaLabs in 2003 with $180,000 in startup capital. Odegard said the company projects revenue of $2.7 million this year, compared with $1.5 million last year, $675,000 in 2006 and $276,000 in 2005. "Our revenue has been doubling almost every year," Odegard said. "I think we will maintain that growth for the next couple of years."
The gains come as more states and pharmacies adopt higher compounded prescription-drug safety standards. DynaLabs' 17 employees, who are based at the St. Louis Enterprise Center-Midtown at 3830 Washington Blvd., ensure that compounded pharmaceuticals meet the standards for potency, purity and integrity developed by the U.S. Pharmacopeia in Rockville, Md.
Pruett and Odegard launched Dyna-Labs the year that Missouri became the first state in the nation to pass a law that requires all compounded prescription medicines sold in the state to be randomly tested. Compounded medicines are prepared by pharmacists who mix different drugs or adjust ingredients of standard prescriptions to meet specifications for individual patients.
The Missouri law was passed after Robert Courtney, a Kansas City pharmacist, was convicted of diluting prescription cancer drugs over a 10-year period to boost profits at his pharmacy. He pleaded guilty to 20 felony counts of tampering, adulteration and misbranding of prescription drugs and was sentenced to 30 years' imprisonment in December 2002.
Odegard said DynaLabs' services are sought by pharmacies in Missouri and all over the country. The Missouri Board of Pharmacy conducts random tests of compounded drugs in the state by law, he said, and many pharmacies do their own voluntary tests to maintain USP standards.
"The need for compounding keeps growing due to more demand for personalized medicine," Odegard said. "There is also more regulation, and we were ahead of the curve."
Among DynaLabs' more than 100 clients is Earth City-based Medicine Shoppe International Inc., the nation's largest franchisor of independent community pharmacies and a subsidiary of Dublin, Ohio-based pharmaceutical distributor Cardinal Health Inc. The company's other clients include Express Scripts Inc. and Children's Hospital Boston.
Compounded drugs currently account for about 1 percent of 3.8 billion drug prescriptions written in the United States annually, according to the Missouri City, Texas-based International Academy of Compounding Pharmacists (IACP). L.D. King, IACP's executive director, said that means there are about 38 million compounded drug prescriptions written annually. He said that number is bound to expand with the growing trend of customized medicine.
Pruett said the number of compounded drug prescriptions has risen about 20 percent annually since 2002, from about 42,000 prescriptions per day that year to over 100,000 today. Despite the increase in prescriptions there hasn't been a related rise in the number of analysis labs that specialize in testing compounded drugs. USP standards for testing sterile compounded drug prescriptions were created in 2004, and about 15 states have adopted those rules to perform audits checks on compounding pharmacists, Odegard said. Among those states, though, Missouri remains the only one that does actual random tests on compounded drug samples.
DynaLabs counts only three other companies in the nation as its competitors: Analytical Research Laboratories of Oklahoma City, Eagle Laboratories Inc. in Dallas, and Loveland, Co.-based Front Range Laboratories Inc.
Pruett said DynaLabs' next goal is to begin marketing a handheld device it has been developing over the last three years that will allow pharmacists and nurses to test compounded drugs on the spot. The company began developing the device, known as a DynaLyzer, in January 2006. It will begin marketing DynaLyzer late next year, with plans to lease the equipment to pharmacies and health-care institutions. The equipment has the potential to help grow DynaLabs' revenue to $50 million within the next five years, he said.
Odegard, a native of Canada and microbiologist by training, was director of projects at Sigma-Aldrich prior to co-founding DynaLabs. Pruett, a St. Louis native and registered pharmacist, was a business consultant prior to DynaLabs' founding. He also had worked as a supervisor at Sigma-Aldrich. The two, who both have MBA degrees, became friends at Sigma-Aldrich through their common interest in Taekwondo. They each hold black belts in the Korean martial art.
In addition to their own start-up capital, Pruett and Odegard -- who own 80 percent of DynaLabs' shares -- received a $100,000 loan from the Business Finance Division of the St. Louis County Economic Council in 2004, and $150,000 from the St. Louis Development Corp. in 2005 to finance the company.
Professional services: DynaLabs' attorneys are David Braswell of Armstrong Teasdale LLP and Ned Randle at Polster, Lieder, Woodruff & Lucchesi LC. Bob Fasani of Hauk Fasani Ramsey Kruse & Co., and Steve Crouse of The True North Group are the company financial advisors and accountants.
