One essential business Two feuding Cousins
Bloomberg Businessweek|March 22, 2021
The U.S. government gave the tiny company that makes Covid swabs $250 million to increase production. That doesn’t mean the guys in charge stopped fighting
Olivia Carville

A year ago, on Friday, March 13, about 50 government officials and experts met for the first time to talk about a crucial problem: how to test more Americans to determine if they were infected with the novel coronavirus. Jared Kushner stopped by; Mike Pence made an appearance later that weekend. SARS-CoV-2 had spread to more than a hundred countries—Tom Hanks had been infected in Australia—and the death toll in the U.S. was expected to reach as high as 250,000. Offices, schools, and streets were emptying; stocks were plunging. The NBA had just suspended its season. It was the official start of the global pandemic.

Admiral Brett Giroir, then an assistant secretary for health at the Department of Health and Human Services, had been put in charge of testing, and he had plenty of concerns. But on that afternoon he was mostly concerned about one essential component of the testing process: swabs. Specifically, the particular 6-inch swab flexible enough to sweep the depths of the nasopharynx where the corona virus replicates, the one now known as the brain tickler, and the only one approved for testing for such respiratory viruses. The U.S. had enough of them to conduct about 8,000 tests a day. That was short by three orders of magnitude—the U.S. needed to do millions of tests a day. Kushner told the admiral to secure a billion swabs however he could and then left.

“How many nasopharyngeal swabs are in the national stockpile?” Giroir asked the officials. None. “Does anyone know who manufactures them?” No. Giroir ordered an urgent market analysis of the industry. Some started Googling. Throughout the evening and into the morning, the group remained in the conference room next to his office on the seventh floor of the Hubert H. Humphrey Building, overlooking the Capitol. They drank Diet Coke, ate cold pizza, and called the chief executive officers of Thermo Fisher Scientific, BD, Henry Schein, and other medical suppliers to ask about their capacity to manufacture the swabs. One by one, the executives said they had no such capacity.

Giroir was in his office early Saturday afternoon when one of his staffers finally reported back: “Sir, I’m sorry to inform you what we initially thought were 10 to 15 swab producers are in fact only distributors.” Giroir was further told that only two companies in the world make the swabs: Copan Diagnostics Inc. in northern Italy, an area then being ravaged by Covid-19, and a small, family-owned business in Maine called Puritan Medical Products Co. The swabs are highly specialized devices requiring precise manufacturing in proprietary machines to meet the strict regulatory requirements of hospitals. No other companies could quickly step in. “I had this sinking feeling, like my entire blood supply just went to my feet,” Giroir recalls.

He immediately arranged for C-17 Globemaster military transport planes to pick up an order for a half-million swabs from Copan before Italy closed its borders. Then he called Puritan. It was Saturday evening when Timothy Templet, the co-owner and executive vice president for global sales, saw a Washington, D.C., number flash across his cellphone. Giroir told Templet he needed about 100,000 nasopharyngeal swabs within a week. Templet told the admiral that wouldn’t be possible. Giroir asked him to reconsider. The next morning, Templet told him it would be possible.

Never before had Puritan, founded a century ago in the tiny town of Guilford, been more important. And never before had it been so dysfunctional. A yearslong feud between the two owners, Templet and his cousin John Cartwright, had left the business in a management crisis. Three weeks before Giroir’s call, Templet had filed a lawsuit in Cumberland County Superior Court to dissolve their joint ownership of Puritan and its other business, Hardwood Products Co., which had started out making mint-flavored toothpicks, because of “major, longstanding and irreconcilable disagreements” between him and his cousin.

The rift had resulted in delayed investments to modernize manufacturing lines, stagnant wages for a dwindling workforce, and an outdated back-office information technology system. “The general partners’ deadlock has created a dangerous situation, leaving the companies close to a point where something is going to break,” the lawsuit read. “Cartwright and Templet no longer speak, no longer make joint decisions, and are essentially unable even to be in the same room together.”

When Giroir heard about the lawsuit, he assumed Cartwright and Templet would set aside their animosities. He also knew what might happen if they didn’t: The government would have to buy Puritan—or buy out one of the cousins—at an outrageous price. “Either they were a good, stable company, or we were going to do something to make it that way,” he says. What the government did was invoke the Defense Production Act, invest a quarter of a billion dollars into Puritan to boost production tenfold, and hope that would it make a good, stable company, at least for the duration of the pandemic.

In the year since that first call, Puritan has retrofitted two idle plants in Pittsfield, Maine, and made plans to build one in Tennessee. Giroir estimates Puritan produced as much as 90% of the 195 million swabs the government bought through January, when he left with the Trump administration. (He’s now an adviser to Gauss Surgical Inc., which makes rapid at-home Covid tests.) The company used to make about 20 million swabs a month. Soon it will be almost 300 million. Puritan and Hardwood had sales of about $55 million a year in 2019. Government contracts will likely have doubled that. As protocols changed to emphasize rapid antigen testing, which requires 3-inch foam or polyester nasal swabs, Puritan’s role only expanded. It makes those, too. “The world is still exquisitely dependent on Puritan,” Giroir says.

Speaking on his cellphone while driving to one of the new factories back in June, Templet was happy to talk about Puritan’s success. “Our employees have gone way beyond the call of duty for the company and the United States,” he said. When it came to the lawsuit, he had less to say. “I’m not going to comment. It’s personal. It’s not your business, and Puritan is in a great position for America. Trust me.” Later he wrote in an email: “Our families along with all our employees have worked hard since March 2020 to provide swabs for Covid testing.” He said that doing so is their first priority and also that he, Cartwright, and the company’s senior managers meet regularly. He wouldn’t discuss the company’s finances over the past year. Cartwright declined to comment, instead referring to a previous statement from his lawyer: The family trust Cartwright represents does not “think the press or the public have any basis for asking to know the details of the differences between two cousins in how they run their company.”

The fight between the owners over Puritan’s fate continues in private courtroom sessions, according to previously sealed legal documents Bloomberg Businessweek obtained. Puritan now has three factories and soon a fourth, hundreds of new employees, and a dominant share of a multibillion-dollar industry. But the U.S. never developed a national testing strategy under President Trump. He tried to diminish its importance and discounted the data that was available. More than 530,000 Americans have died from Covid-19, far more than in any other country. And in Guilford, those close to the cousins say their dispute over the future of the company is likely to become even more fraught now that Puritan is worth so much more.

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