UNITED STATES SURGICAL GETTING HOT IDEAS FROM CUSTOMERS
By Jennifer Reese

(FORTUNE Magazine) – IN ANY ten-day period, United States Surgical sales representatives visit every one of the 5,000 American hospitals where surgery is performed. They gown up and march right into operating rooms to coach surgeons in the use of the complex instruments their company makes. They listen to what the doctors like and don't like, need and don't need. Getting right in there under the operating room lights with the customer increased revenues sharply last year and nearly doubled profits. Most of the growth is in laparoscopic instruments, used to do a variety of procedures through minute incisions. Security analysts see that as a $3 billion market by 1996; U.S. Surgical has roughly an 85% share. ''They were in the right place at the right time,'' says Robert Croce, worldwide president of Johnson & Johnson's Ethicon Endo-Surgery division, U.S. Surgical's chief rival. But it was more than luck that helped the 28-year-old Norwalk, Connecticut, company spot and jump aboard the hottest trend in surgery. Its close connection to customers made it quick to pick up on early experiments in laparoscopy. In 1989 an employee who had graduated from the company's demanding sales training program met a surgeon who was using a jury- rigged clip to remove gallbladders laparoscopically. The U.S. Surgical woman carried word back to headquarters, and by early 1990 the company had a basic laparoscopic stapler ready to go.

Then its sales force, the most aggressive in the industry, took both the technique and the instrumentation out to surgeons. The result: a boom in laparoscopy, which works by inserting a tiny TV camera into the body along with slim, long-handled instruments like clips and staple guns. It's safer, cheaper, and less painful than open surgery. In 1990 no more than 30% of gallbladders were removed laparoscopically; in 1991, 60% were. U.S. Surgical is no stranger to the cutting edge. In 1967 it was first to market with a user-friendly surgical stapler that revolutionized wound closure. The stapler was the handiwork of company founder Leon Hirsch, now 64, a onetime coin-op dry-cleaning salesman from the Bronx. In his basement Hirsch tinkered with an unwieldy Soviet-made surgical stapler until he had something salable. While it offered terrific benefits -- less damage to tissue, less time on the operating table -- surgeons hesitated to hang up their needles. The company lost money, and Hirsch decided only a superb sales force could turn it around. His salesmen, he concluded, would have to be conversant with medical terminology and comfortable enough in an operating room to coach skeptical surgeons in stapling. In 1972 he set up stringent six-week training courses with daily exams in anatomy, scrub technique, and the intricacies of company products. Some 20% of trainees fail. All salesmen must also pass a rigorous yearly recertification exam. The laparoscopic instruments boom that Hirsch's training program was largely responsible for brought in $315 million in 1991, and U.S. Surgical stock rose 211%. Hirsch, the biggest shareholder, has stock and options now worth $620 million. For 1991 his pay came to an astounding $118 million. Says Hirsch of the laparoscopic breakthrough that made him rich: ''Everybody in the medical industry had a crack at that. The doctor had been to J&J ahead of us to ask them to work on it with him, and they never got back to him.'' J&J denies this but concedes it was caught flat-footed. To press the attack, its Ethicon Endo-Surgery division has restructured management and strengthened its sales force. Its program now looks much like U.S. Surgical's, and J&J aims to be market leader by 1995. Says Croce: ''We have the resources of all J&J to call on.'' Ethicon will doubtless increase market share, but Hirsch is unfazed. With some reason. Dr. Yanek Chiu, a San Francisco bowel surgeon, thinks Ethicon's product line is getting stronger, but he is still buying from U.S. Surgical -- as he has for the past ten years. Says he: ''If you happen to work with one company early on, it becomes a family tie. You say, why switch when you have something comfortable?''

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