<figcaption> Credit: COURTESY OF CEPHEID</figcaption>

On a fall afternoon, John Bishop, the CEO of Cepheid, a company that develops genetics-based analysis systems for clinical diagnosis and biothreat assessment, pulls a piece of paper from behind the desk of his sparsely decorated Sunnyvale, Calif., office. On the paper - which Bishop holds perhaps more dear than anything else in his office - are bar graphs displaying the personality attributes of his key employees.

Bishop explains that by knowing how individuals in his staff approach the world, he can best communicate with them. For example, someone who gets high marks as a "persister" makes decisions based on the opinions he or she holds rather than excitement that may stem from a specific choice ("rebels") or what may be the most expedient choice in a given situation ("promoters"). (Bishop himself is a "workaholic," which makes him goal-oriented, approaching the world via thinking, rather than...

Lost in translation

Armed with a bachelor's degree in zoology from the University of Miami in 1968, Bishop started his ride through biotech as a technical sales representative at the American Dade division of AHSC. Already married, he had thought about medical school, he says, but decided business was a better route to financial stability. He traveled around southern Texas, showing customers - major medical centers as well as the Southwest National Primate Research Center in San Antonio - how to use the company's chemistry and diagnostic equipment. He rose through the ranks, becoming a district manager, product manager, sales and marketing manager, and eventually director of product management.

After 10 years, he was sent to Kobe, Japan. In addition to returning the company to a Japanese-speaking organization, Bishop, who spoke no Japanese, consolidated multiple brands produced or distributed in the United States and Japan into a single brand with an identifiable look and feel. There were some bumps, of course, including bringing in a product manager out of US-based Thunderbird University, known for its international management program. This caused resentment from within, he says, especially in an atmosphere in which people in Japan often worked for the same company their entire lives, and promotion from within was seen as the natural order of things. Bishop sent his recruit packing.

Overall, the four years of running the company were "a general management MBA-type program," he says. But, after growing sales from $13 million to $30 million, it was time to return to the States: "When you leave your own culture, it's like you're frozen in time. You go back once a year, you go to the department store and shop, people would look at you like you're Rip Van Winkle."

<figcaption>Inside the labs at Cepheid. Credit: COURTESY OF CEPHEID</figcaption>
Inside the labs at Cepheid. Credit: COURTESY OF CEPHEID

A journeyman CEO

When Bishop returned to Orange County, Calif., the AHSC "didn't know what to do with me," he says. "I had done well running the joint venture in Japan, so they asked me to take a shot" starting Paramax, a clinical chemistry systems business. He was there for two years, and his biggest lesson was one he learned early, he says: Focus on systems integration.

Early on, the "engineering group was pointing fingers at the reagents group, and the problem was figuring out where problems were coming from. We realized we needed systems-oriented people who can take in the entire system, not just instruments or reagents. You have to address things as a whole. If you don't have a systems integration group, you can be destined for failure." Bishop created the group and had it report directly to him.

But in 1984, he saw the science change and with it, a business opportunity. "Up until that point, everything you were doing was outside the cell, on cell-surface receptors. As a result, you were looking at downstream reactions. Trying to catch disease earlier and earlier was the challenge. Until we got into molecular, that was limited."

The new molecular science was validated as a business with the sale of San Diego-based Hybritech to Eli Lilly, says Bishop. "I saw highflying people making money," he says, and he wanted to do the same. A succession of jobs followed. As president of Gen-Probe, he got a lesson in team dynamics at a company with a lot of stars: "Like the LA Lakers, they were a great team, but there can be problem with too many stars."

His take-away at his next job as CEO of Source Scientific Systems (formerly Ocean Scientific, and which he merged with MicroProbe), was that he didn't like to be in the business of original equipment manufacturing, making systems for other people to put their name on. "You're not in control of your own destiny," he says. "You can't control the marketing of your product." And at Vysis, he says he learned to make the hard decision of cutting one's losses relatively quickly. In this case, he closed down the company's infectious disease division, which was robust, he says, but in an already crowded field. Bishop instead focused the company on genetics. Five years after joining the company, which he initially helped spin off from Amoco, he took the company public. And in 2001, he orchestrated the sale of Vysis to Abbott Laboratories.

When Bishop came to Cepheid, he actively sought to understand how employees thought and worked together.

Aboard at Cepheid

In 2002, he joined Cepheid, taking over leadership from Tom Gutshall, who cofounded the company in 1996. Cepheid had started life combining microfluidics with gene-based diagnostics. In 1999, it delivered a PCR-based system for detecting biowarfare agents, including anthrax, to the US Department of Defense. After the Sept. 11, 2001, terror attacks, biodetection contracts with the military continued, as well as an agreement through Northrop Grumman to supply the US Postal Service (USPS) with an automated system to spot-check letters for anthrax via DNA analysis. USPS currently runs approximately 1,100 of its systems every day. The deal, which generates approximately $45 million annually, meant that "Cepheid had decided to forgo the clinical and focus on the biothreat" market, says Bishop.

Cepheid was ready to focus on the clinical molecular diagnostics market, which is projected to be $3.6 billion worldwide by 2010, according to Frost & Sullivan. The challenge, and opportunity, is in the rapid evolution of this space, says Adam Chazen, vice president of the global healthcare group at Merrill Lynch. But "John is a seasoned diagnostics veteran. He was at the helm when he sold Vysis to Abbott, and it's the core of Abbott's molecular oncology business."

Bishop decided it was time for a change for Cepheid. "The company was only selling instruments, it was a tools play," says Bishop. "If you're instruments-only, you're relying on other companies putting tests on your instruments." Bishop wanted the company to have control of its own destiny. The company was low on cash, so he quickly raised $10 million. Another round of funding in 2004 brought in $61.9 million and allowed the company to pay $32 million for license rights to real-time PCR from Roche and Applied Biosystems. With the new money and intellectual property, and more money raised in 2006, Bishop has been building up the company's clinical diagnostic offerings, which now include two platforms: a real-time thermal cycler used for identifying DNA/RNA in approximately 20 minutes from prepared biological samples, and a cartridge-based sample-prep system to purify, concentrate, detect, and identify targeted nucleic acid sequences in about 30 minutes. Tests include those for Bordetella pertussis, enterovirus, flu A/B, respiratory syncytial virus, Mycoplasma pneumoniae, and group B Streptococcus.

The immediate challenge, says Merrill Lynch's Chazen, will be for Bishop to pick the right kinds of tests and offer enough of them to entice a lab or hospital to invest in the company's platform. Part of that strategy, says Bishop, is simplifying the tests so that they can be used by as many people as possible. In August, the FDA categorized its strep test as "moderate complexity," which makes it available to more than 27,000 US laboratories registered in that category, in addition to the approximately 7,000 high-complexity laboratories.

Back to the cheat sheet

Growing Cepheid has meant reaching back into Bishop's past. He knew Humberto Reyes, the new senior vice president for operations, from AHSC. "John called, said he needed someone with my level of experience," says Reyes. "I was doing consulting, traveling to Europe, and he convinced me that I shouldn't be traveling so much." Other key people and former colleagues Bishop has recruited include vice presidents for regulatory and clinical affairs, sales and marketing, clinical affairs, and a CFO: all are alumni of Vysis, MicroProbe, Gen-Probe or AHSC.

All those employees are featured in Bishop's bar graphs. Bishop keeps his personality "cheat-sheet" close by, and plans to use it often over the next five years to reach his goals: positive cash flow (vs. a current burn rate of $3 million per quarter, with $98.4 million in unrestricted cash and marketable securities), and $100 million in revenue a year (2005 revenue was $85 million). To get there, he sees the staff doubling from its current 290. Bishops says that he will retire after this job, though his management guru Tom Coble thinks otherwise: "I don't think John will ever retire. If he does, he will die. John needs a challenge and a purpose."


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