For Pelican Products Inc., a Torrance maker of specialized carrying cases, a downturn in government business has proved to be a healthy turn of events.
Government agencies were among the largest customers for Pelican’s waterproof, bulletproof carrying cases, but with that spending down, the company has turned aggressively to the growing biopharma industry, developing products in-house and rolling up competitors.
Its most recent deal, completed in February, was the acquisition of U.K. temperature-controlled case maker and distributor Cool Logistics. With that deal, terms of which were not disclosed, the $330 million-a-year Pelican has doubled its capacity in the specialized space. The sale of temperature-controlled cases used by pharmaceutical and logistics companies to transport drugs, vaccines, blood and the like, now accounts for one-fifth of Pelican’s revenue. It was not even a business segment three years ago.
The addition of Cool Logistics came on the heels of Pelican’s purchase last year of Minnesota Thermal Science, a biopharma protective case maker in Plymouth. Cool Logistic is a worldwide exclusive distributor of MTS products.
“If you look at any of the large pharmaceutical companies, you’ll see they all have drugs that require temperature-controlled transportation,” said Dave Williams, vice president of strategic initiatives at Pelican.
Pelican will integrate Cool Logistics into its biopharma division, merging with MTS, which according to the company, will make the largest global footprint in the industry.
“We used MTS to accelerate our biopharma strategy domestically and Cool Logistics to accelerate our biopharma strategy internationally,” said Pelican Chief Executive Lyndon Faulkner.
“We would certainly be the company with the widest range of products and with the main service centers,” he said. “When you put that together, we’ve probably just become the company that these big global companies can come to for one-stop shopping.”
Matt Turlip, an analyst with New York research firm PrivCo, which specializes in privately held companies, said MTS has significantly increased Pelican’s customer base and distribution channels, and its engineering capability also will boost its parent.
“(Cool Logistics) is a strategic purchase as an add-on acquisition to help grow the biopharma strategy of Pelican due to the expanded opportunity in this area,” he said.
Internal, external growth
Pelican was founded in 1976 in Torrance by Dave Parker, a longtime scuba diver, who saw a need for waterproof and bulletproof cases and heavy-duty flashlights.
The company grew steadily, but had plateaued by the early 2000s. In 2004, Parker sold the company to private equity firm Behrman Capital of New York for $200 million. Behrman brought in Faulkner in 2006 to further grow the company internationally.
Before joining Pelican, Faulkner worked at Technicolor/Nimbus CD International and Microsoft Corp. as a senior executive. He has grown Pelican’s revenue by 400 percent through acquisitions and internal expansion since 2006.
The company operates a 200,000-square-foot headquarters in Torrance, and it has six manufacturing plants and 28 offices in the United States and 19 other countries. Pelican employs 1,500 people worldwide. Most of its manufacturing is done in Torrance; 35 percent of its revenue comes from exports.
The company’s first foray into the biopharma field came in 2012 with its internal development of two products. It soon found that it would be more effective to grow through acquisitions. It bought MTS and its catalog of 200 to 300 products in January of last year. Cool Logistics, in addition to doing customer support and being a major distributor, creates custom products.
“It is an extremely fast-growing industry,” said Kevin Lawler, MTS vice president of sales and marketing, “driven by accelerated compliance or regulatory control for temperature-sensitive medical materials.”
Most new drugs now require a temperature-controlled environment, which was not always the case in the past, he said.
In addition to the biopharma strategy, Pelican has been active in developing consumer electronics cases, such as high-performance products for iPads. Faulkner said there will be mass distribution deals of computer cases and mobile phone cases announced in April, but he didn’t disclose any specifics.
The company has started to look to a variety of sectors that could offer growth opportunity. It has hired a couple of market research firms to work with its own strategy team and has identified consumer electronics along with biopharma as a major growth sector in coming years.
“Government is still a healthy revenue stream for us, but it’s not going to be the source of significant growth to Pelican due to sequestration and the fact that we aren’t in conflict,” Faulkner said. “We have to come up with new divisions and new geographic markets to help us offset what we knew would be a declining market.”
