President Jay Hardy is managing explosive growth at Hardy Diagnostics with an agile and diverse manufacturing operation and a workforce strategy that spreads wealth.
Back in 1980, Hardy was a young microbiologist with a newly minted degree from California State University, Fullerton. He was living in Santa Barbara, one of California’s most pleasant cities, and he wanted to stay there. He signed on with local clinical laboratories to make ends meet, but he quickly realized lab work just led to, well, more lab work.
Hardy had a genuine aptitude and deep passion for microbiology and business, and he wanted something more than a weekly paycheck. So, he started his own company — Hardy Diagnostics — with a partner.
“I kept working at various labs during the day while I spent every spare moment in the evening building up the business,” says Hardy. “I didn’t make a nickel for the first three years. But I knew the demand was there for the products we were producing.”
Hardy originally concentrated on the production of blood agar culture plate: the basic medium used to grow and differentiate bacterial and fungal microorganisms. Since then, the company’s product line has grown dramatically and now includes a range of rapid antigen test kits used to ID specific pathogens. Hardy maintains manufacturing centers in Santa Maria, California and Springboro, Ohio.
“We either make or distribute everything from antigen test kits to viral transport media to swabs and personal protection equipment,” says Hardy. “We manufacture 2,700 products, and we distribute for around 70 companies. So, in total, we offer about 13,000 products.”
Blood agar plate remains the company’s top seller, requiring Hardy to look to Montana for his feedstock.
“Sheep blood is the ideal culture medium for our purposes, and we work with a rancher in Montana who has a thousand head of sheep that are kept for us,” Hardy says. “It’s an extremely clean operation. They can’t use any antibiotics, and the health of the flock and the blood collection process are supervised by a veterinarian. We receive about 200 liters of blood a week from them.”
Lately, the company has been involved in the manufacture and design of automated microscope slide staining equipment. These labor-saving devices produce consistent results and save time for technologists in the clinical laboratory. Several new models will be launched this year.
Not surprisingly, Hardy Diagnostics has also been in the thick of the battle against COVID-19, selling three types of antigen and antibody test kits, along with associated viral transport media, nasopharyngeal swabs, sanitizers, masks, and other PPE.
“At this point, COVID-19 is paying a lot of our bills,” Hardy acknowledges, “but we’re also deeply invested in testing for a wide variety of other pathogens. One of the newly emerging microorganisms that really concerns us is Candida auris.”
C. auris is a type of yeast that generally affects people with weakened immune systems, including many ICU and elderly patients. Three different drugs are used to control it, but variants have emerged that are resistant to all three.
“It’s very serious because only about half the people infected with these strains will survive,” says Hardy. “We’ve developed a chromogenic culture medium that helps microbiologists detect them. Once you’ve grown your culture, you shine a UV light on it and the drug-resistant C. auris
colonies will fluoresce.”
Hardy Diagnostics also sells kits to detect pathogens in food and other consumables — including cannabis.
“Our entry into the cannabis testing market is quite new, but there’s a real need for accurate diagnostic tests in this industry,” says Hardy. “With legalization and regulation, growers and processors are very concerned about their products becoming contaminated by bacteria and fungi, particularly Aspergillus, E. coli, and Salmonella. We offer various methods that tests for all three.”
Hardy’s competitors are all domestic. That’s not due to regulation or economic policy, he emphasizes: the nature of the products is the issue.
“The products we make — and that our competitors make — are very fragile,” says Hardy. “They can be broken easily, they can’t be frozen, and they have a three-month shelf life at best. So that works to our advantage. There are only two other companies that do what we do: one in Maryland and one in Kansas. It’s somewhat friendly competition in that we buy from each other. But it’s still competition.”
On the whole, business is very good for Hardy Diagnostics. That’s due in part to increasing demand, of course.
“We work a lot of weekends and nights just to keep up with orders,” Hardy acknowledges.
But Hardy also attributes his success to the fact that it’s shared. Literally shared, as in company shares are allotted among all the staff. If his employees are a particularly dedicated workforce, it’s because they own the business where they work, he insists.
“I sold all my shares 10 years ago, and we initiated a stock distribution program to our staff,” he says. “Every year, all of our employees receive shares proportionate to their salary. And when an employee retires, we buy back their shares for redistribution. I believe the best way to motivate employees is to make them part of the business, and that strategy seems to be working. Last year our stock doubled in price. That was good for the company — and it made our owners very happy.”
Challenges: “Hospitals typically belong to group purchasing organizations, which do all the contracting and negotiating for their members,” says Hardy. “Our competitors are much larger than we are, and they can participate easily in GPOs with exceedingly low prices. Our smaller size makes GPO involvement a challenge.”
Opportunities: “In microbiology generally, the push is for speed,” says Hardy. “Microbiology is inherently a slow process. It takes time to incubate, grow, and identify microorganisms. Given the premium placed on rapid results, we’re always looking for ways to accelerate the process.” Also, with aging baby-boomers and their increasing utilization of medical procedures, the company is assured of long-lasting demand for their diagnostic products.
Needs: “Like most other businesses these days, we’re dealing with a labor shortage,” Hardy observes. “It’s increasingly difficult to find talent. We recently instated a sign-on bonus. Supply chain issues are another challenge. I think we’re better off than many companies, but it’s still a problem.”