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Strategies : A Finger on the Pulse : Nichols Institute Bridges Gaps Between the Academic and Commercial Worlds

December 29, 1987|LESLIE BERKMAN | Times Staff Writer

Among the mementos received by hundreds of women athletes who participated in the 1984 Summer Olympics are certificates declaring they are, indeed, women.

The documents were issued by Nichols Institute, a small medical laboratory in San Juan Capistrano that is virtually unknown among the general public but distinguished in medical circles.

It was the company's reputation that led the U.S. Olympic Committee to its door and landed it a contract to verify the sex of all female competitors by analyzing the chromosomes contained in tiny bits of tissue scraped from inside their mouths.

The company was founded in 1971 by Dr. Albert L. Nichols, described as "probably the best-known endocrinologist in the country" by Joseph Keffer, president elect of the American Society of Clinical Pathologists. An endocrinologist is a physician who specializes in hormones.

As a young doctor in the late 1960s, Nichols said, he was impressed with the diagnostic breakthroughs developed in university laboratories but frustrated by the long delays in getting the new procedures into doctors' offices and clinical laboratories.

So he established Nichols Institute to bridge the gap between the academic and commercial worlds of medicine by helping university researchers prepare their discoveries for the marketplace.

While it is not the only medical laboratory to introduce new testing procedures, Nichols Institute is unusual in that it invites to its facilities the scientists who have devised new diagnostic tests in the course of their university research. Most laboratories have in-house researchers.

'Academic Associates'

At Nichols, the university researchers, called "academic associates," control the process of modifying their tests for commercial application. Nichols gives them facilities and scientific and technical assistance to do the job, which typically takes about a year.

In exchange for the opportunity to sell the tests to hospitals and clinics at a profit, Nichols gives the academic associates fellowships and other financial assistance to help them continue their university research.

Nichols, 53, recalled that his idea of establishing a for-profit clinical laboratory that would enable university researchers to prepare their discoveries for a commercial market was originally considered a violation of academic standards.

But in recent years, Nichols noted, the tables have turned, and many universities have set up "technology transfer" offices with the dual purposes of advancing medical knowledge and raising funds for the campus by patenting new discoveries and collecting royalties.

"It is fascinating to me to think that something that once was scandalous has become the order of the day," he said.

At Nichols Institute, originally located in San Pedro, success came first from what its founder knew best. Nichols guided his company to national recognition among medical researchers for its expertise in measuring the hormones that regulate a wide variety of body functions, ranging from blood pressure to fertility.

With Early Detection

One of the first tests that Nichols Institute marketed was one developed at the Los Angeles County Harbor UCLA Medical Center in Torrance for measuring thyroid hormones.

By applying the test to a drop of blood from a newborn, doctors for the first time could discover whether the child suffered from a deficiency of thyroid hormones that causes a type of mental retardation called cretinism. With early detection, retardation can be prevented with hormone supplements, Nichols said.

By establishing its testing expertise, Nichols Institute built a steady business by analyzing blood and tissue samples flown in daily from about 3,000 hospitals and clinics throughout the country.

In more recent years, the company has branched out from endocrinology to perform diagnostic tests in all fields of medical science, from genetics to toxicology, oncology and microbiology. It specializes in performing newly developed and complicated tests that are beyond the ken of most laboratories.

Since selling stock to the public in 1985, Nichols Institute has been enlarging its staff and facilities to take advantage of a burgeoning demand for high-tech laboratory services, sparked by new developments in bio-engineering and the medical industry's new focus on cost efficiency.

Most of the $5 million raised when Nichols went public was spent on expansion. In an attempt to increase its market share, the company bought several clinical laboratories to expand its market, as well as to provide a ready-made customer list for its specialized tests. Nichols also expanded its computer system and pumped a portion of the proceeds from the offering into research and development.

Owns 70% of the Stock

To keep a grip on laboratory policies and foil hostile takeover attempts, Nichols said he has retained personal ownership of 70% of the Nichols Institute's voting stock.

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