Greatbatch Inc. History

Company Perspectives:

Our mission ... to be the world's leading independent manufacturer of innovative power sources, precision components, and provider of specialty devices for medical science and similar technically demanding applications.

Key Dates:

1960:

Wilson Greatbatch-designed pacemaker is first implanted in a human being.

1970:

Wilson Greatbatch Ltd. is founded to produce implantable medical device batteries.

1985:

Wilson Greatbatch turns over the company's chairmanship to his eldest son.

1990:

Edward Voboril is named CEO.

1997:

The Greatbatch family sells the company in a management-led leveraged buyout.

2000:

The company is taken public.

2005:

The company's name is changed to Greatbatch Inc.

Company History:

Greatbatch Inc. is a Buffalo, New York-area manufacturer of lithium batteries, capacitors, feedthrough, enclosures, and other components used in implantable medical devices (IMDs) founded by the inventor of the pacemaker, Wilson Greatbatch. The company has also transferred its expertise to non-medical applications, developing industrial batteries used in such areas as oil and gas exploration and the Space Shuttle. However, with a new generation of IMDs on the horizon, Greatbatch remains focused on the medical field, where the company has earned a reputation for producing well built, reliable batteries, all-important qualities when powering a device that has to be surgically removed to repair. Greatbatch is a public company listed on the New York Stock Exchange.

Early 1900s Background

Wilson Greatbatch was born in Buffalo in 1919, the son of an English building contractor. Early on he displayed an inquisitive nature, experimenting with a harmonica and teaching himself how to play when he was just five. At the age of ten he tackled the challenge of perpetual motion, but like countless inventors before and since, he had to admit defeat. A radio hobbyist, he began to work his way through Buffalo State Teachers College as a radio installer, with the idea of teaching industrial arts, at a time when the United States was about to be drawn into World War II. He had already joined the Naval Reserve in 1938, then in 1940 his unit was called up for a year of active duty. The tour would last five years, as he put his amateur radio experience to good use, rising to the rank of Aviation Chief Radioman. During the war, Greatbatch served on Atlantic convoys, and later in the Pacific he flew combat missions in two-man carrier-based planes, sitting back-to-back with the pilot, manning the radio as well as a rear machine gun.

Discharged from the service in 1945, Greatbatch got married, began raising a family, and worked for a year as a telephone repairman before taking advantage of the GI Bill to continue his college education. He talked his way into Cornell University to study engineering, and to support his family he now earned extra money working at a radio station and at the psychology department's animal behavior farm, where he hooked up monitoring instruments to sheep and goats for experiments. It was also on the farm that one day during 1951 he spent a brown-bag lunch chatting with a pair of visiting brain surgeons, who told him about complete heart block, a condition in which the heart's electrical impulses are unable to reach the tissue. According to Greatbatch, he translated the problem in radio terms: the signal was not getting through. As he recalled years later, "When they described it, I knew I could fix it." Unfamiliar with the field, however, he did not realize that others shared the same idea. In fact, a year later Paul Zoll developed the first external pacemaker, only practical in the sense that it worked. Because it relied on the technology of the day, vacuum tubes and an external power supply, the system was the size of a television set, a virtual anchor on the patient, while the external electrodes could grow hot enough to burn the flesh. In contrast, Greatbatch's idea was to build a self-contained, self-powered implanted pacemaker, but he would have to file away the idea until technology caught up with his vision.

After graduating from Cornell, Greatbatch spent two years as a project engineer at the Cornell Aeronautical Lab, where he was involved in the development of amplifiers that NASA would one day use to send monkeys into space. In 1952, he became an assistant professor of electrical engineering at the University of Buffalo while working on his masters degree in engineering. He was doing some work for the Chronic Disease Research Institute in 1956, attempting to use the new silicon transistors to build an oscillator to record fast heart sounds. By mistake, he installed a resistor with the wrong resistance. It started to pulse in a steady "lub-dub" pace, which Greatbatch recognized as a sound similar to that made by a properly beating heart. He instantly realized that this circuit could provide the basis for building a device that could help a diseased heart stay in rhythm by delivering regular shocks to force the muscles to contract and pump blood, and thus serve as a pacemaker.

Key Partners in the Late 1950s

After Greatbatch received his masters at the University of Buffalo in 1957, he took a job with Tabor Instrument Corporation, where he worked on medical instrumentation and continued the development of his pacemaker. In 1958, he found an important champion for his idea, Dr. William Chardack, chief surgeon at the Buffalo Veterans Administration Hospital. While visiting Chardack to troubleshoot a problem with an oximeter, Greatbatch discovered that Dr. Chardack's assistant was an old high school friend, Dr. Andrew Gage. Greatbatch told them about his idea for a pacemaker, and Dr. Chardack was immediately excited by the idea. Three weeks later, Chardack and Gage implanted Greatbatch's first model of a pacemaker, which relied on a pair of Texas Instrument transistors, in a dog at the Veterans Hospital. Greatbatch touched two wires together and the device worked. He later wrote in his lab diary, "I seriously doubt if anything I ever do will ever give me the elation I felt that day when my own two cubic inch piece of electronic design controlled a living heart." However, after four hours the makeshift electrical tape wrapped around it as a seal proved no match for the dog's bodily fluids, which shorted out the circuit. To address this problem, Greatbatch redesigned his pacemaker using epoxy blocks, and within a year the prototype could last four months. Greatbatch and Chardack began looking for their first human subjects, but it was at this point that Taber Instrument bowed out, fearful of the legal liability.

Committed to the development of the pacemaker, Greatbatch quit his job. With $2,000 in savings and enough money to feed his family for the next two years, he set up shop in his barn, where he built 50 pacemakers of varying design, the first 40 implanted in animals. At this point, the development of the first practical implantable pacemaker had become a global technology race, and the odds that Greatbatch would prevail were slim. Then, starting in April 1960, the first of ten Greatbatch-designed pacemakers was implanted in a human patient. Most of the subjects were more than 60 years of age. The first died after 18 months, but a younger patient lived 30 years after receiving a pacemaker. Greatbatch received a patent on the device and formed a company, Wilson Greatbatch Inc., to license it. Early in 1961, Minneapolis-based Medtronic Inc. licensed the pacemaker. Wilson Greatbatch Inc. was reorganized in 1963 as Menned-Greatbatch Electronics, with Greatbatch taking over as vice-president and technical director, heading the effort to develop the "demand" pacemaker, which did not work continuously. Instead, it only fired when the patient's natural pacemaker failed to function. During the second half of the 1960s, Greatbatch turned his attention to study the electrochemical functioning of the human body, publishing scholarly papers on the subject.

In 1970, Greatbatch resumed his work on the pacemaker, this time focusing on the batteries the device used. They lasted little more than two years, requiring surgery to replace. He formed another company, Wilson Greatbatch Ltd., today's Greatbatch Inc., and set out to create "lifetime" implantable batteries. After dabbling with nuclear power, he achieved a breakthrough using lithium as a power source. His new lithium-based batteries could last over ten years and became the gold standard for pacemaker batteries, making the company the market leader. Greatbatch turned his attention to other areas, eventually receiving more than 200 patents for his inventions, and left the running of the battery business to others. In 1985, he stepped down as chairman, turning over the post to his eldest son, Warren Greatbatch, and founded a company to become involved in genetic engineering, Greatbatch Gen-Aid Ltd. His latest ambition was to find a genetic cure for AIDS.

In 1990, the company's current chairman, president, and chief executive officer, Edward F. Voboril, joined Wilson Greatbatch Ltd. as president and CEO. He was the former president and general manager of the biomedical division of PPG Industries. Vonoril took over a company that had a near monopoly on the pacemaker battery market, directly manufacturing 60 percent of the batteries and another 30 percent under licenses it granted to other companies. However, it was a mature market, growing at a modest rate, around 4 percent a year. In the 1990s, the company began applying its technology to develop batteries for commercial customers, such as the ones used on the Space Shuttle and in the probes sent out to check for leaks or damage inside oil pipelines. Greatbatch also explored new medical applications, developing batteries for use in implantable defibrillators, drug delivery systems, and neurostimulators. The company even explored the idea of developing lithium battery-powered surgical instruments, eliminating cumbersome power cords. By the mid-1990s, the research and development push resulted in annual sales in the $50 million range. Half of the company's 800,000 batteries sold for medical uses and half for commercial devices. In a matter of five years, Greatbatch doubled its business and outgrew its main facility in Clarence, New York. It was wooed by a number of states, in particular Arizona and the Carolinas, but in the end Greatbatch elected to remain in western New York. Its decision sweetened by $1.4 million in incentives from state and local economic development agencies, management launched a $6 million expansion of company headquarters.

Management Buyout in the Late 1990s

The company was still owned by Wilson Greatbatch and his family, but that changed in 1997 when it became apparent that if the company was to remain competitive it needed greater access to financial backing. With the Wall Street firm Donaldson, Lufkin and Jenrette taking a majority interest through its medical industries unit, Global Health Care Partners, Voboril and his senior management team led a buyout effort. When it was completed, the company changed its name to Wilson Greatbatch Technologies, Inc., and Warren Greatbatch stepped down as chairman, replaced by Voboril.

Management planned to build sales to $200 million in three to five years. To achieve that goal, it looked to add new products as well as grow the business through acquisitions. Essentially Voboril wanted the company to produce every component of a pacemaker, with the exception of the microelectronics, to become in effect a one-stop supplier for its customers. In 1998, a new, more efficient capacitor for defibrillators was added to the lineup (capacitors store a battery's energy before it is delivered to the heart) and a new rechargeable lithium ion battery was also nearing production. In addition, Greatbatch completed an acquisition in August 1998, paying $71.8 million for Columbia, Maryland-based Hittman Materials & Medical Components Inc., a family-run business founded in 1962 that produced hermetic seals, electrodes, and other components for implantable devices.

Greatbatch experienced a difficult 1999, as sales grew by just 2 percent, resulting in a net loss of $2.28 million. A major setback was an industry-wide change in the design of defibrillators, which instead of using two batteries now used one. In addition, Medtronic began making its own batteries for its latest internal defibrillator. Greatbatch's management responded by cutting costs, an effort that included a temporary 10 percent cut in salaries. The company rebounded in 2000, as the addition of Hittman Materials and new products offset the loss in business incurred in 1999. Ever since the business was bought from the Greatbatch family, it was expected that sooner or later Donaldson, Lufkin and Jenrette would look to engineer an initial public offering (IPO) of stock to cash out at least part of its investment. The offering, completed in September 2000, proved successful, as Greatbatch received a $16 price, in the middle of its targeted range of $15 to $17. For its part, the company raised $80 million, earmarked to pay down debt.

A month before its IPO, Greatbatch used some of its stock to make another acquisition, picking up Battery Engineering, Inc. from Hitachi-Maxell, Ltd. Battery Engineering had recently developed the world's first fire-safe rechargeable lithium battery system. Next, in June 2001, Greatbatch paid $49 million to add Maxwell Technologies' Sierra-KD Components division, maker of ceramic capacitors. Another significant move to build the components business followed a year later when the company spent $48 million and assumed $9 million in debt for Globe Tool and Manufacturing, Inc., a Minneapolis-based maker of the titanium cases used by pacemakers and defibrillators. Globe was also a good fit because it shared the same three major customers: Guidant, St. Jude Medical, and Medtronic.

In the meantime, Greatbatch did not lose sight of internal development of new products. It launched an expansion of its Clarence facilities, including the addition of a $4.5 million, 12,300-square-foot dedicated research and development center, which opened in June 2002. The facility would be crucial in the company push to develop the batteries that would be needed to power a host of implantable devices in the current pipelines of medical companies. Cybertronics Inc., for instance, gained approval for a device to treat epilepsy and was also working on an implantable device to treat depression. Moreover, other companies were exploring ways of using implantable devices to deal with pain management, drug delivery, urinary incontinence, and, as stimulators, bone growth. Because of its proven ability to provide reliable batteries, Greatbatch was well positioned to take advantage of this new generation of products. To meet the challenge, the company invested more than $26 million in research and development in 2002 and 2003, as it completed the development of its next generation Symphony Battery. Greatbatch also remained on the lookout for opportunities to buy technology. In 2004, it paid $45 million for Fremont, California-based NanoGram Devices Corp., a new spin-off company that possessed technology capable of adding 50 percent more capacity to current batteries and the ability to deliver higher rates of energy. Management believed that the potential of NanoGram's technology was profound and would ensure Greatbatch's leadership position in the implantable battery market for years to come.

With the company broadening its range of products, management decided another name change was in order, given the close association of the Wilson Greatbatch name with pacemakers. In May 2005, the company shortened its name from Wilson Greatbatch Technologies to Greatbatch Inc.

Principal Subsidiaries: WGL Intermediate Holdings, Inc.; Wilson Greatbatch Ltd.; Greatbatch-Hittman, Inc.; Battery Engineering, Inc.; Greatbatch-Sierra, Inc,; Greatbatch-Globe Tool, Inc.

Principal Competitors: Eagle-Pitcher Holding, Inc.; HEI, Inc.; Medtronic, Inc.

Further Reading:

• Drury, Tracey, "Inventor Pursues the Unknown," Business First of Buffalo, September 8, 1997, p. 1.
• Greatbatch, Wilson, The Making of the Pacemaker: Celebrating a Life-saving Invention, Amherst, New York: Prometheus Press, 1999.
• Robinson, David, "Greatbatch to Raise Money by Selling Stock to Public," Buffalo News, May 28, 2000, p B7.
• ------, "Wilson Greatbatch Looks Beyond Pacemakers," Buffalo News, February 12, 1995, p. A13.
• Thompson, Carolyn, "At 78, Pacemaker Inventor Looks Forward, Not Back," Associate Press Newswires, December 11, 1997.
• Turner, Douglas, "Acclaim to Fame Inventor Wilson Greatbatch's Life Work Honored," Buffalo News, February 1, 2001, p. A1.
• Woodard, Chris, "Clarence, New York Battery Maker Puts A Lot of Heart into This Market," Investor's Business Daily, December 27, 2001, p. A11.

Source: International Directory of Company Histories, Vol.72. St. James Press, 2005.

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