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Intai Technology Corp.

Surgical Precision in the Making


Surgical Precision in the Making


This erstwhile mechanics shop slowly evolved into a leading maker of precision devices, and an important supplier for Johnson & Johnson. Now it has launched a brand of its own.



Surgical Precision in the Making

By Whitney Huang
From CommonWealth Magazine (vol. 521 )

Off Jingke Road in the Taichung Precision Machinery Technological Park, a four-story office building with a sparkling blue glass curtain wall rises proudly. Located close by are Largan Precision Co. Ltd. and Hiwin Technologies Corp., two stars of the Taiwan stock exchange.

These are the new Intai headquarters, inaugurated just last year.

Like a martial arts master secluded in a mountain retreat, Intai long remained hidden from public view. Only in 2012, when the company listed on the over-the-counter GreTai Securities Market did it gradually become known to the public.

Nonetheless, Intai has been an important partner of Johnson & Johnson for twenty years, producing surgical instruments as a contract manufacturer. It is also the only Asian supplier for minimally invasive surgical devices (MIS devices), used in keyhole surgery, which has largely replaced traditional open surgery in many fields.

The global output value of the MIS device sector is projected to top NT$270 billion by 2015. Thus, R&D in MIS device parts and components is shaping up as the new battleground for medical device makers round the world. Intai already has a strong foothold in this fray.

Surprisingly, Intai did not start out as a high-tech company, but as a manufacturer of automated packaging machines for screws and other fasteners.

"We got our start as mechanics, working out of a little shop," recalls company founder and chairman Paul Lin. Pointing to his shirt, pants and shoes, the 61-year-old says with a laugh that he paid less than NT$1,000 for all of them combined. The faded, worn out heels of Lin's shoes testify to his frugal nature.

Lin, his younger brother and a few friends founded Intai 26 years ago with NT$500,000 in startup capital. They rented an illegally built factory in the Wuri District of Taichung City, to manufacture and sell packaging machines for screws.

At the time, the machine designed by Lin was the fastest on the market. It could package 40 to 50 bags of screws per minute, whereas the average machine managed just over 20 bags per minute.

Intai started out with small bags of ordinary screws before gradually entering the market for professional precision fasteners used in industrial applications.

That the company eventually ventured into the medical device market is due to a happy coincidence.

More than two decades ago, a merchant from Taipei showed Lin cutting tips for puncture sets and trocars, designed for minimally invasive surgery. The tips were a Johnson & Johnson product and the merchant wanted to know whether Intai could produce such tips. The merchant had been trying to find a manufacturer for this sharp-pointed surgical instrument for two years, but to no avail.

With the trocar's sharp arrowhead tip, doctors can operate on a patient by making tiny incisions through the skin surface instead of using an open procedure.

Custom-made in Eight Months

Lin, who graduated from the mechanical engineering program of National Taipei Institute of Technology, the precursor of National Taipei University of Technology, embraces a "nothing is impossible" spirit. He immediately put together a team of four or five who untiringly worked on the project often deep into the night and without taking a break on weekends or national holidays. After eight months they were there.

But it still took two more years before Intai received its first small OEM order from Johnson & Johnson for puncture set cutting tips. That's when the company formally entered the medical device business.

Not long afterward, Johnson & Johnson wanted to release a novel trocar with a single-bladed flat tip. The company's American contract manufacturer ran behind schedule and was still not able to deliver after half a year of efforts.

It was just around that time that Lin visited the Johnson & Johnson headquarters to sound out opportunities for further cooperation. Having nothing to lose, the Johnson & Johnson manager gave the cutting tip to Lin in a last-ditch effort, asking him to give it a try.

Working in an improvised manner, Intai made a qualified prototype in just one month. Three months later, they went into mass production. Johnson & Johnson was quite surprised at Intai's technological capacity. From then on, the multinational regularly placed orders with Intai.

"Thanks to this incident we instantly made a name for ourselves at J&J," Intai's president Simon Tsai says spiritedly. Tsai, an automation expert, was recruited by Lin particularly for the flat cutting tip project and has been with the company ever since.

Intai gradually expanded from cutting tips to other MIS tool products.

At the same time, Intai also began to develop professional machinery for the manufacture of medical instruments. Intai has, for instance, several deburring machines, which remove the protrusions that form when metal or plastic is molded. The company has also developed image-based automated product testing machines.

Lin reveals that Johnson & Johnson rates its suppliers on an annual basis, and Intai has been among the top five for many years, winning numerous awards.

As an endorsed Johnson & Johnson supplier Intai has drawn the attention of other multinationals in the medical device industry. Boston Scientific, the world's largest MIS device company, and AtriCure, a maker of cardiac surgery equipment and instruments, count among Inlai's major customers. Medical devices currently account for 51 percent of Intai revenue.

"Intai is a hidden champion. Manufacturing medical devices for overseas clients is not an easy feat, because requirements for such devices are extremely strict," notes Liao Chun-jen, the former head of Orthopedic Device and Tissue Regeneration Product Technologies at the Industrial Technology Research Institute (ITRI).

Liao left ITRI only last month to take the post of CEO at the just-founded Taiwan Biomaterial Co. Ltd., an ITRI spin-off. It was five years ago that Liao heard of Intai for the first time.

At the time ITRI had bought an expensive piece of machining equipment from Germany that cost more than one million Taiwan dollars. The Taiwanese maintenance company told Liao that a medical device manufacturer in Taichung had bought four of the German machines in a single deal. That piece of information sparked Liao's curiosity. He wondered which Taiwanese company would be ready to invest so much money in equipment. He called Intai and went to see for himself.

Subsequently, ITRI and an orthopedics professor at National Taiwan University were planning a research project on artificial cartilage. For that purpose they needed a blade that was able to cut cartilage. Liao had a hard time finding a manufacturer that was able to process specific metals used in medical applications.

Liao went on a tour of Taichung, which boasts its own precision industry cluster, and discovered that many of these companies were Intai partners. Eventually he realized that only Intai had the capability to make the required blade.

Very quickly Intai produced a suitable specialty blade. Within less than two years the research entered the clinical trial stage.

"Without Intai we wouldn't have been that fast," Liao admits frankly.

ITRI was also impressed by Intai's quality standards and technological capability. Therefore, the institute joined hands with Intai to found Wiltrom Co. Ltd. , which develops bone grafts, bone fixation systems and other implantable devices, three years ago.

Turning Employees into Shareholders

Instead of resting on its laurels, Intai continues to venture into new market segments. The company has begun to establish its own brand of medical device products for dentistry and orthopedics. Among its products are artificial roots, cervical sets, cages that are used as disc replacement spacers to treat spinal problems as well as plates that are used to fix in place broken or dislocated bones during the healing process.

Intai's ability to transform itself is related to the personality of its founder.

Lin's credo is, "Management is nothing but leading by example." Lin runs five kilometers every morning, a habit that he has cultivated for many years. He has never been late for work.

Given that his company manufactures medical devices, Lin is fastidious about cleanliness and hygiene.

While speaking with CommonWealth Magazine, he demonstratively wiped his finger along a stainless steel ledge under the panorama window in his conference room. Inspecting his finger to make sure no dust was on it, he brushed it against his cheek, saying with satisfaction, "It's so clean, you can touch your face."

Aside from being conscientious and leading by personal example, Lin attaches great importance to cultivating talent. Rather than being mere employees, Lin wants his managerial staff to be stakeholders in the company.

Therefore, he persuaded his younger brother, a cofounder of the company, to reduce their joint 100 percent stake in the company step by step by transferring shares to employees. Lin currently holds only a 30 percent stake.

Intai CFO Lily Su, who has been with the company from the start, reveals that Lin presents employees with shares as soon as they join, giving them a vote of confidence instead of waiting until after they have proven themselves in their job. Such unconditional trust strikes a chord with people.

As a company with a sound basis in precision processing and twenty years of contract manufacturing for leading multinationals, Intai is backed by rich experience, making it Taiwan's most promising star as the country develops its medical device industry.

Translated from the Chinese by Susanne Ganz

Intai Technology Corp.

Founded: 2004 (precursor founded in 1987)

Employees: 496

Founder: Paul Lin

2012 revenue: NT$1.32 billion

EPS: NT$4.7