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    GLOBE 100
    The growth gazelles? High-tech once again

    By Chris Reidy, Globe Staff, 05/18/99

    PolyMedica Corp. chief executive Steven Lee with pills that his firm coats for pharmaceutical companies. (Globe Photo / Tom Herde)

    n theory, the Growth 50 should offer some clues about which companies might be the next superstars of the Massachusetts economy, the firms that might someday rank on par with Raytheon Co., Gillette Co., and Fleet Financial Group.

    Massachusetts abounds with rags-to-riches growth stories. One example is TJX Cos. In 1976, TJX had no stores, only an idea about off-price retailing and a guy named Ben Cammarata; in 1998, the operator of T.J. Maxx and Marshalls had sales of $7.9 billion. What was once a one-man show now employs 62,000.

    Time will tell whether this year's crop of Growth 50 companies can produce some equally compelling tales.

    For 1997, TJX was the one of the few non-high-tech companies to rank high on the Growth 50, placing fourth. For 1998, high-tech companies once again rule the upper rungs of the Growth 50.

    Geotel Communications Corp. of Lowell knows all about explosive growth. It led this year's Growth 50 list, racking up astonishing gains. A six-year-old company, Geotel makes software for routing customer phone calls for such corporate clients as American Express, American Airlines, and America Online.

    But the same forces that propelled Geotel to the top of the Growth 50 list also made it attractive to companies outside the region. Last month, Cisco Systems Inc., a giant networking company based in California, announced plans to buy Geotel.

    PolyMedica Corp., the number two company on the Growth 50, represents the flip side of the acquisition equation. A few years ago, Woburn-based PolyMedica purchased a Florida company that makes test strips for diabetics. That acquisition of an out-of-state company has been the catalyst for rapid growth.

    Other health-care companies are sweating changes in Medicare reimbursements that can reduce their revenues. In PolyMedica's case, a policy change has nearly doubled the number of diabetics eligible for Medicare reimbursements for some of its products.

    How does a company land on the Growth 50? The list is based on average annual increases in profit and sales over two years. To be eligible for the list, companies must have had at least $10 million in 1997 sales and $1 million in 1997 profits. They must also have been publicly traded for all of 1997 and 1998.

    Biogen Inc., the Growth 50's top company last year, now ranks third. A key to Biogen's growth is Avonex, a drug it developed to treat multiple sclerosis. But Cambridge-based Biogen isn't dependent on a single drug or vaccine. That makes it one of the strongest companies in the biomedical industry.

    Vivid Technologies Inc. of Woburn sells systems that airports use to detect explosives hidden in luggage. Its recent growth was driven by sales to new airports in Hong Kong and Kuala Lumpur. But an economic slowdown in Asia and policy changes that have extended the deadline requiring European airports to install such equipment could temporarily cool off Vivid's pace in 1999.

    Keane Inc., fifth on the Growth 50, could also see a bit of a slowdown. Big gains in revenues and profits have been driven by corporate Y2K problems, something Boston-based Keane specializes in fixing. A key challenge will be to replace that Y2K business after the new millennium arrives.

    Keane was the only company on the top 10 of the Growth 50 to have revenues of more than $1 billion. Clearly, it's easier for a small company to grow rapidly than a larger one. But that didn't stop heavyweights such as EMC Corp., State Street Corp., Raytheon Co., and Staples Inc. from enjoying impressive growth.

    This story ran on page D25 of the Boston Globe on 05/18/99.
    © Copyright 1999 Globe Newspaper Company.

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