Traditional companies take the reins

Tech industry is bounced by medical device, construction firms

By Liz Kowalczyk, Globe Staff, 5/21/2002

Growth:   1. Cytyc   2. Polymedica Corp.   3. Perini   4. Tweeter   5. Boston Private Financial    The Growth 50    Revenue growth    All the charts

his year's roster of the fastest-growing Massachusetts companies is as remarkable for who isn't on it as for who is.

A year ago, the technology, electronics, and telecommunications industries still dominated the category of public companies with huge jumps in annual sales and income for 1999 and 2000.

But now, with the late 1990s dot-com boom well behind them, many of these companies have fallen behind, making room for a range of medical device firms, home goods companies, and financial services firms.

The growth field has opened up so much that even companies with bumpy recent histories have been able to shoot to the top, with strong performances in 2000 and 2001.

Topping the list is Cytyc Corp., a Boxborough medical device company that has spent six years chipping away at the dominance of the Pap smear -- a test that reigned unrivaled for nearly 50 years and spared thousands of women cervical cancer. In 1996, regulators approved the company's ThinPrep test, deeming it better than the traditional Pap for detecting the subtle changes that lead to cancer.

Since then, Cytyc has steadily won a progressively larger share of the market.

Ryan Rauch, an analyst for Adams, Harkness & Hill in San Francisco, said the company enjoys a 64 percent market share, with just one competitor. "It's unusual that you have a virtual monopoly in a very large market," he said. "They are in a unique situation."

Another medical device company, Polymedica Corp., moved from seventh place to second on the Globe's Growth 50, with annual sales averaging 37 percent over two years. The company, the nation's largest direct-to-patient provider of home diabetes test kits, thrived despite having received notice in December of a formal investigation by the Securities and Exchange Commission into its accounting practices, financial reports, other public disclosures, and sales of securities. The company also is under federal investigation on suspicions its Liberty Medical Supply unit was involved in illegal Medicare billing.

Rauch said the SEC has stopped its investigation and that the company's stock has bounced back.

"The fundamental business continues to strengthen, using cheaper advertising times to gain more strength and increase customers," he said. "They are reaping the rewards of the aging of our society."

Despite bumpy rides, a number of companies were able to vault into the top 10. Perini Corp., which ranked 44th last year, jumped to number three. The company was able to revive its net worth after a string of setbacks in its construction projects by selling $40 million of new shares to Tutor Group in 1999. And despite a dramatic drop in sales after Sept. 11, Tweeter Home Entertainment Group rose from 13th to number four, with average annual growth over two years at 40 percent.

Meanwhile, companies affected by the dot-com bust did not fare well. Last year, ACT Manufacturing Inc. of Hudson topped The Globe 100's Growth 50. In December, the company sought Chapter 11 protection in US Bankruptcy Court. Analog Devices, maker of high-speed communications chips, also fell, from number three to number 50 on the growth list.

Liz Kowalczyk can be reached at kowalczyk@globe.com.