Ortho CEO leads massive turnaround

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When Ortho Clinical Diagnostics lived under the roof of Johnson & Johnson, it had the luxury of focusing on its product and service mix — and not a whole lot else. While the group made the right noises about customer-centricity, it largely left such matters to its J&J corporate brethren.

That changed on June 30, 2014, the day private equity giant The Carlyle Group completed its $4 billion acquisition of Ortho.

That was also the day Dr. Martin Madaus took the leadership reins at the newly liberated J&J unit, now one of the most successful players in in vitro diagnostic equipment, and realized the breadth of the endeavor ahead of him.

“Carving a company out of a multinational is very complicated, which we knew going in,” Madaus recalls.

“What was more of a challenge was that it wasn't clear where the company was going at the time. I think we were a little bit lost inside J&J.”

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Compounding that initial strain was the immediate need to build a corporate infrastructure from scratch.

Ortho's finance, HR, and IT functions were handled by the J&J mothership. It lacked anything remotely resembling a comms apparatus.

Throw in complications of whether Ortho's new leaders could convince the company's A-listers to follow them into independence, and Madaus and his team were staring down a situation more akin to the type faced by infant-age startups.

That Ortho came out of it so well — it now generates around $1.7 billion in annual revenue and has become an acquisition target and IPO candidate — speaks volumes about Madaus' leadership.

At the same time, he's no typical industry CEO.

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Prior to entering the business, Madaus received a Ph.D. in veterinary medicine and worked with horses for several years. He invests in a broad range of early-stage health tech startups.

A self-described fitness fanatic, Madaus lists kiteboarding and competition in “obstacle-type races” as his out-of-the-office passions.

“I have no formal business education,” he notes. “Everyone you meet at conferences comes from Harvard. I kind of stick out.”

Upon assuming the head job at Ortho, Madaus identified a series of priorities.

Most important were the ones related to the intensification of customer relationships. Before long, an organization regarded as product-focused began to develop a reputation for its attentiveness to customers — a rarity in the stratified diagnostics realm.

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“When we started reaching out to customers, [they said], ‘Oh, you're still there. I'm glad you're calling,'” Madaus says. “There was never any focus on customers before.” 

Left unsaid: If you're in the business of running labs that deliver life-saving information, you need to check in with those customers or partners more often.

However, what's next for the company is anyone's guess. As MM&M went to press, rumors persisted Carlyle had hired bankers to negotiate a sale of Ortho, with the possible price tag — including debt — exceeding $7 billion.

If such plans are already in motion, Madaus has a great poker face. He points instead to continued expansion, likely in China, as well as to “something I don't know yet.”

“Maybe it's a new partnership or product line that complements our core business,” he says. “Whatever we do will be from a position of strength, [because] we understand the productivity demands of our clients. I couldn't have said that a few years ago.”

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