Ecto Development Corporation helps the world’s biggest companies turn their animal health ideas into real products for pets and livestock.
Entrepreneur John E. Rose
Company Information Ecto Development Corporation 850 N.W. Pink Hill Road Blue Springs, MO 64015 (816) 220-2015 www.ectodev.com
Type of Business Contract research and development for animal health and pesticide products
Year Founded 1993
Keys to success “You have to make your customers want to come back. We get repeat business because we are pretty good at what we do.” -Ed Lawrence, vice president of operations
Dogs, cats and farm animals can be thankful for Ecto Development Corporation in Blue Springs.
Ecto concocts liquid formulas to keep fleas, ticks, flies and other bugs away from pets and livestock —and are sold by some of the world’s largest retailers and distributors. If you’re a pet owner, there’s a good chance you’ve bought one of their products.
“Our clients are the largest pharmaceutical and animal health companies in the world,” said John Rose, president and CEO of Ecto. “If you name it, we probably worked on it.”
Ecto researches and develops pesticides for applications in liquids, sprays, powders, tablets, pet collars and cattle ear tags.
“It’s really cool to do something no one else has done and to see a product you develop sell in the millions,” said Rose, who joined the company 15 years ago and bought it in 2009. Ecto also is a consultant on formulations, product registrations and how to navigate voluminous regulations in the animal health industry. Rose, a chemist who spends much of his time in the Ecto lab, said he likes the business because of the visible results his efforts yield.
Rose said buying Ecto after years of working there made for a smooth transition. He has an undergraduate degree in chemistry and a master’s in business administration—a good combination for running both the lab and front office.
Ecto, which employs about 10 people, is a family operation business. Rose’s son Bobby serves as a formulation chemist, and son Richard is a research associate.
“That has its challenges,” Rose said. “It’s always cool to say your sons work for you, but when you are a dad and also the boss, there are two hats to wear.”
The company quickly expanded its business two years ago after moving its lab and offices from a house in Excelsior Springs to a larger building in Blue Springs. The lab alone at the new site is bigger than the entire house in Excelsior Springs, Rose said. Annual revenue also has grown—from less than $1 million two years ago to $4 million today, thanks mostly to the larger facility, Rose said.
Acquiring a new facility is always a risk, Rose said, but Ecto is a cash operation with no debt. The company has 7,500 square feet of floor space and is adding another 2,500 square feet. The new space will include an archives center, a teleconference room and a prayer room available to churches and other groups.
The expanded facility will enable Ecto to better serve its clients from across the United States and around the world, including some in South America, Japan, Australia and Switzerland, Rose said. The old site’s cramped house and garage did not leave much of an impression on visiting clients from overseas, he said.
Research and Royalties
Ed Lawrence, vice president of operations, said the company makes money three ways: doing formulations for clients, collecting royalties on products it helps develop and manufacturing pesticide products.
“Royalties are where we make our real money,” Lawrence said. “Someone comes in and says, ‘We’d like to have this product for dogs or cats or poultry, but we don’t want to put out the money.’ So we formulate it and take royalties.”
Typically, a company will come to Ecto with an idea or a chemical that it would like to develop as a product. Not everything pans out, but about half of the 300 projects Ecto has worked on over the past 15 years have made it to market, Rose said.
A lot of factors go into what will work and what won’t, Rose said. For example, topical products for cattle have to be without certain defined toxicities because the animals are used for human consumption of milk and meat, he said. The effectiveness of a product also varies based on the biology of the animal.
Ecto does not do its own testing of products on animals. That is contracted out to third-party sites that have their own testing facilities, Rose said.
Spot-On Solutions and Mole Bait
Most of the pesticides for dogs and cats are called spot-ons, in that they are applied from a small tube onto the skin of the pet. For livestock, the term is pour-on because of the larger volume. Some dogs, such as active sporting dogs, wear pesticide-treated collars, Lawrence said.
“For the average pet owner, spot-on is the most convenient because you put it on once a month and don’t have to worry about it,” Lawrence said.
The treatment keeps fleas off pets and can prevent new fleas from hatching for up to four months, thus stopping fleas from infesting your home, he said.
“The spot-on product revolutionized the whole pet care market because you don’t see people worrying about fleas anymore,” Rose said. “They don’t have to use spray bombs or dust bombs.”
Ecto has helped develop a variety of other products, too, such as pet shampoos, powders and sprays and some treatments for scabies and other animal skin conditions, Rose said.
Pet products aren’t the only focus for Ecto. It produced a strip that is placed in beehives to kill mites that may otherwise get in the esophagus of bees and kill them. And the company has worked on mole bait and created a product to keep sweat on horse hair so topical medications won’t drain away.
Competing with— and Working for—the Big Guys
Ecto—a Latin term for “on the outside”—is one of the few companies in the world that researches and develops pesticides independently, Rose said. Its biggest competitors are the research arms of the pharmaceutical companies themselves.
But for larger companies, outsourcing the work to Ecto can be attractive for financial reasons, Rose said.
“If it’s not something that will go on forever, they budget for it, and when it’s done, it’s done.”
Ecto never advertises or markets itself, Rose said. (It is part of BioResearch Central, a group of more than 90 contractors that is promoting Kansas City’s reputation as a hub for contract R&D.) The company’s work and its clients are considered confidential and can’t be promoted, but word gets around about Ecto and its reliability, Rose said.
“One thing about our business is we have to accommodate our clients,” Rose said. “A lot of these large pharmaceutical companies demand you meet deadlines. We meet our deadlines, and if we can’t, we have a good reason. A lot of companies don’t do that.”
Complying with Strict Regulations
Pesticide product development is a growing market for pharmaceutical companies, Rose said, because of the relatively short turnaround time compared to products made for human use.
“The biggest challenges are regulatory,” Lawrence said. “The regulatory environment changes weekly—literally. You have federal and state regulations, European regulations, Australian regulations. And they are constantly changing.”
In the United States alone, 14 different regulatory agencies oversee Ecto’s research and development, Lawrence said. The Environmental Protection Agency is the most involved, he said.
“The EPA has become a much larger organization than it used to be 20 years ago,” Lawrence said. “The public really wants more enforcement, with the whole green thing. It’s gotten much stricter. Contact with the EPA occurs weekly.”
Foreign countries have guidelines of their own. For instance, an inspector from Australia last year not only examined the Ecto manufacturing location but the entire facility inside and out for cleanliness, Lawrence said.
“Everything had to be tidy, no rubbish,” Lawrence said. “He was looking outside for rubbish. He also wanted to know if we had a rat control program. He wanted to check our mops and our mop sink. To him, making a pesticide was no different than making a pharmaceutical.”
The animal care business has changed in recent years because of mergers in the industry, Lawrence said. The retail environment also is different with the sale of animal health products at groceries and big box stores such as Petco instead of just at veterinarian offices, he said.
But most of the same people Rose and Lawrence have worked with at the large pharmaceutical companies are still around, Lawrence said. Those professional relationships mean a lot in repeat business, he said.
“It’s a pretty tightly held industry,” Lawrence said. “You have to make your customers want to come back. We get repeat business because we are pretty good at what we do.”