Peter Built His Company into a Major National Esoteric Laboratory
One of laboratory medicine’s most successful scientist-entrepreneurs died last Friday, October 30, 2009. James B. Peter M.D., Ph.D., Founder of Specialty Laboratories, Inc., died in his home in Santa Monica, California of complications from cancer. He was 76 years old.
A native of Omaha, Nebraska, it was 1958 when Peter earned his M.D. from St. Louis University. He then went to the University of Minnesota where he earned a Ph.D. in Biochemistry in 1963. It was here that he worked with Professor Paul D. Boyer, Ph.D., a laureate for the 1997 Nobel Prize in chemistry. Peter also worked with Boyer at UCLA. At UCLA, Peter served as Professor, Clinical Professor, and College of Letters and Sciences Advisory Board Member. He had a strong interest in clinical chemistry and immunology.
It was 1975 when he founded Clinical Immunologies, Inc. By the mid-1980s, this company had become Specialty Laboratories, Inc. As founder, CEO, and Chairman of the Board of the company, Peter created a unique niche in the lab industry. He and his scientific team developed a constant flow of proprietary esoteric tests. Specialty Laboratories also set up and performed a large number of other esoteric assays. By performing these tests several times each week, Specialty Labs was able to offer faster turnaround times than most of its competitors.
James Peter, M.D., Ph.D., 1933-2009
(Photo © Omaha World-Herald)
In the early 1990s, Peter decided to accelerate the expansion of Specialty Labs. By the end of the decade, it was one of the major national reference and esoteric laboratories in the United States. From a revenue base of $39 million in 1995, Specialty reached $148 million in revenue for 2000. It was competing with the nation’s largest reference labs, including:
- ARUP Laboratories
- Mayo Medical Laboratories
- Nichols Institute
- Quest Diagnostics Incorporated (NYSE:DGX)
- Laboratory Corporation of America (NYSE:LH)
When Specialty Laboratories was listed on the New York Stock Exchange in December 2000, its 800 employees offered 3,800 tests to 8,000 clients in 16 countries. At the time of the initial public offering, branded proprietary assays represented 43% of Specialty’s total revenues. (See The Dark Report)
Two years later came a major setback in Peter’s career. In early 2002, federal laboratory regulators suspended the Medicare and Medicaid license of Specialty Laboratories following a series of inspections that uncovered various deficiencies in the operation of the laboratory. Within six months, Specialty Laboratories had regained full status with the Medicare program. (See The Dark Report, “State, Federal Regulators Target Specialty Labs.” April 22, 2002). But the episode broke the growth momentum of the lab company. This remains the only time a publicly-traded laboratory company has had its Medicare license suspended or revoked.
On September 30, 2005, AmeriPath, Inc. paid $344 million to acquire Specialty Laboratories, Inc. Peter invested a significant part of his share of the sales proceeds into AmeriPath. This turned out to be a shrewd investment for Peter. Less than two years later, in April 2007, Quest Diagnostics acquired AmeriPath for $2 billion. Quest Diagnostics has operated Specialty Laboratories since it acquired AmeriPath.
James Peter, M.D., Ph.D., was one of a select group of laboratory professionals who founded successful laboratory companies during the 1970s. This group includes Paul Brown, M.D., founder of MetPath, Inc. (now Quest Diagnostics); James B. Powell, M.D., founder of Biomedical Reference Laboratories (now LabCorp); and Albert Nichols, M.D., founder of Nichols Institute.
Dark Daily would like to hear from former employees who worked with Dr. Peter, particularly during the 1970s and 1980s when Specialty Laboratories was in its formative years. Contact editor Robert Michel at mailto:email@example.com