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THE TIMES 100 : RISING FORTUNES : New Firms Climb to Top of Growth List


California's economy may be ailing, but health and nutritional firms solidified their hold on the top ranks of the state's fastest- growing companies last year--displacing a raft of computer and high-technology concerns that had dominated since the late 1980s.

The nutritional supplement distributor Herbalife as well as the health maintenance organizations TakeCare Inc. and GranCare Inc. were among the health and nutritional companies that either made their debut or advanced from last year's ranking on The Times Growth 100 list.

Health-related businesses captured eight of the top 20 slots, even though pharmaceutical, nutrition and health care companies are less concentrated in California than their electronic and computer counterparts. The health and nutritional firms doubled their presence in the top 20, while the number of computer hardware and software firms fell by about the same amount.

The loosening of high-technology's grip on the Growth 100 comes as the sector matures and moves some manufacturing operations overseas.

Though a number of high-tech firms, such as Read-Rite (No. 1) and Sunward Technologies (No. 8), experienced strong revenue growth last year, California's deep economic slump crimped demand for computer hardware and other high-tech goods and thwarted a broader industrywide advance.

Health care, by contrast, proved nearly recession-proof, despite the layoffs of about 800,000 California workers since 1990 and the nationwide effort by government and industry to trim health care costs.

Health maintenance organizations, a system of managed care in which patients can see a doctor as often as they like for a nominal fee per visit or hospital stay, have reaped especially big gains as more and more employers strive to hold down rapidly escalating employee health care costs.

HMOs have lower costs primarily because their member doctors agree to reduce their fees in exchange for a steady flow of business. Moreover, HMOs try to promote preventive care by intervening before an illness becomes more costly to treat.

The shift to managed care and preventive care also produced a surprising bonanza for pharmaceutical firms like Total Pharmaceutical Care Inc. The company, which specializes in home infusion therapy, saw its sales jump 102%.

Experts say early medical intervention helps drug companies because ailments can be caught early enough to be treated with medication rather than surgery.

But the Growth 100 was not limited to medicine, according to STAR Services, the San Francisco business research firm that compiled The Times 100.

The Fox Television series "Beverly Hills 90210," "Melrose Place," "Roundtable," "The Heights" and "2000 Malibu Road" helped Los Angeles-based Spelling Entertainment rack up a 111% sales increase, company officials said. Meanwhile, falling interest rates last year triggered a nationwide explosion in home mortgage refinancings. Pasadena-based Countrywide Credit Industries Inc., the nation's largest publicly owned mortgage banker, doubled its 1992 revenue to $573.3 million.

Indeed, for all the havoc wreaked by California's economic slump, it took brisker sales to land a spot on the list of fast-growers in 1992 than it did the year before. Annual growth of 20% was needed to make the cut in 1992, compared to minimum growth of 15.1% in 1991.

Yet while low interest rates could continue to fuel refinancings and help Countrywide repeat its showing next year, and while Spelling Entertainment will likely strive to duplicate the ratings success of its hit TV show "Beverly Hills 90210," medicine's growth spurt is in jeopardy.

The Clinton Administration will unveil a health care reform package this spring that is expected to impose stiff price restrictions on health care providers and drug companies. Many investors have already soured on pharmaceutical firms and health care providers amid debate over the proposals.

However, pharmaceutical and nutritional products companies contend that increased government regulation will likely have minimal impact on their business. They say that robust overseas sales will more than offset any slowdown in the United States.

"There appears to be a growing worldwide demand" for products in the nutritional and weight-loss categories, said Norman E. Friedmann, executive vice president and chief executive of Inglewood-based Herbalife, which now markets such products in 15 countries.

He said demand has been especially strong in Europe and Japan as the introduction of fast food has altered local dietary habits and heightened concern about becoming overweight.

Some experts agree that the outlook for the health care industry is bright despite the prospect of increased government regulation.

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