50 years of growth made Waters a life-sciences giant

Michael Dell founded his computer company in a college dorm room in Texas. Hewlett-Packard Co., Google Inc., and Apple Inc. trace their origins to Silicon Valley garages.

But Milford-based Waters Corp., which quietly celebrated its 50th anniversary two months ago, has a tale of its own. Jim Waters says he launched the instruments manufacturer in the basement of a Framingham police station in 1958.

"The security was very good," joked Waters, 83, who left the company in 1980 and now dedicates his time to his educational foundation.

Not all the memories are pleasant. Waters said his first office was below the police station bathroom. Every time someone flushed, he heard water rushing through the pipes above. But the low-rent quarters made good business sense, he said.

"When you are starting small, you are trying to conserve all the money you can," he said.

Over the past half-century, Waters has grown far beyond its roots, when it had just five employees.

Today, the company has 5,000 employees worldwide, including about 1,200 in Massachusetts. It has a market value of about $3.6 billion. That ranks it among the largest life-sciences companies based in Massachusetts that are publicly traded.

Of course, Waters has been pinched by the slower economy this year, along with other companies that supply equipment to laboratory researchers.

Last month, Waters warned that it expects fourth-quarter revenue to decline by 4 to 6 percent, instead of the 4 percent gain it was anticipating earlier. The company indicated it was considering spending cuts.

In an investor note on Dec. 12, a Robert W. Baird analyst, Quintin Lai, downgraded his recommendation on the stock to "neutral" and predicted the company would have flat internal revenue growth next year, primarily because of lower capital spending by customers.

But Waters executives remain optimistic about long-term growth prospects.

"It's fair to say there is probably not a company in the industry that has not been impacted by the current economic conditions," said Rohit Khanna, Waters' vice president of worldwide marketing.

But Khanna said there will be continued need in the future for Waters' instruments to test the quality of drugs, food, and other compounds.

"Waters is still extremely well positioned. The technology is second to none," he said.

Waters has made a number of shifts over the past 50 years.

Initially, it built custom instruments for clients, including a meter used to test for air pollution in Los Angeles. But the big break came when it encountered technology Dow Chemical had developed to analyze polymers. Called gel chromatography, the technology allowed researchers to separate chemicals in a substance based on the sizes of the molecules.

Waters licensed the Dow Chemical patent and wound up concentrating on making chromatography instruments.

Later, it focused on a new version of the technology, called liquid chromatography, which separates liquids (or other substances that have been dissolved into a liquid.)

Millipore Corp. (then in Bedford, but now based in Billerica) bought Waters for $167 million in 1980, combining two of Massachusetts' largest suppliers of laboratory equipment.

Millipore struggled to successfully blend the companies, however.

In 1994, it agreed to sell the company to an investor group led by Waters management for $360 million. In less than a year, Waters Corp. went public again as an independent company.

Waters has since bought several other firms, including Micromass Ltd., a British company that made mass spectrometers. And Waters developed software to make it easier to operate the instruments and track the data.

Khanna, the company's marketing chief, said the firm is embarking on its next technology advancement: miniaturization.

Over five to 10 years, he said, Waters hopes to help develop hand-held instruments for customers to use in the field to test pharmaceuticals on the manufacturing floor, milk on a farm, or water at a utility company - instead of having to ship samples to a laboratory.

That way, he said, customers can find out instantly if something is awry, rather than have to wait hours or even weeks for the results to come back from the lab.

Todd Wallack can be reached at twallack@globe.com.