Despite having both its business model and executive leadership in transition, this family business maintains its high growth rate.

The announcement reverberated around the world. Scientists successfully reprogrammed the skin cell of a mouse back to the embryonic state, opening the door to the possibility that regenerative medicine will someday be free of the controversy of stem cell research.

The discovery represents a remarkable leap in bioscience. It also underscores the role mice play in medical research and how genetic engineering is transforming that industry.

Taconic Farms, Inc., headquartered in Germantown, NY, lives that transformation day today. Founded in 1952, the family business is the world’s third largest supplier of laboratory mice and rats for drug discovery and other research applications.

“In the past, this was essentially a high-volume commodity business, but we’ve had to become much more of a service business over the last 15 years, facilitating researchers’ access to genetically modified mice and rats,” said Sam Phelan, CEO.

Sam Phelan, CEO

While the simultaneous evolutions are transforming Taconic, its bottom line continues to thrive. Taconic’s annual growth rate was as high as 25% in the late 1990s and early 2000s. It has slowed somewhat over the last few years as the market for genetically modified animals, or models (GMMs), matured, but it remains at around 10%.

Rodent technology
“We continue to set ambitious growth targets that keep us out there meeting new people and exploring new technologies and techniques. Things keep changing, and if you are not actively participating and willing to change yourself, you fall behind,” Phelan said.

There are hundreds of strains of naturally produced mice and rats, each with their own natural characteristics that allow replication of human diseases and medical conditions. No one owns these strains, and the animals remain readily available for research.

GMMs, in contrast, are often patented by the companies, universities, and other agencies that develop them. Mice in particular are ideally suited to genetic engineering because they are the only species in which genes can be easily added or removed.

Taconic’s clients include those who develop specific GMMs themselves, as well as those who pay others to do it for them or who license animals already in existence. The company’s services range from breeding to doing molecular analysis to determine gene makeup, preparing animals for researchers, and conducting actual studies on behalf of clients. Pharmaceutical and biotech companies comprise about half of its client base, with government and academic researchers making up the rest.

One of the outcomes of genetic engineering is that fewer and fewer animals are being used as researchers are able to more precisely target their experiments. “As researchers gain a better understanding of a particular disease and then select the point in which they want to intervene in development of that disease, they create a model, or mouse, that represents their target. It is like shooting with a rifle rather than a shotgun,” Phelan said.

Added to that decline in numbers are the changing industry standards and regulations over the last several years in terms of the proper care and use of animals. For example, researchers now are more likely to make sure that they are not duplicating experiments done by others and using the minimum number of animals required for the efficacy of the study.

Taconic’s growth, therefore, is tied to its ability to industrialize the scientific techniques associated with GMMs so it can make them available to researchers faster and more cost-effectively. To that end, the company built a new breeding facility in Indiana, which will be expanded soon to two and half times its current capacity, and purchased a breeding facility in Denmark. It also has facilities at its headquarters in the Hudson River Valley, as well as Albany, NY and Rockville, Md.

Human capital
Taconic employs about 900 people worldwide. With labor accounting for about half of its cost structure, the company makes a significant investment in training. In fact, the labor shortage in the Hudson River Valley was one of the reasons behind locating the new plant in the Midwest.

“We couldn’t find people with experience in breeding and raising mice and rats in Indiana, but we did find people with good work and supervisory experience, people who were familiar with quality assurance programs, production lines, and order fulfillment. It was a much bigger labor pool to draw from,” Phelan said.

Quality assurance has been a big focus in succession planning. “Over the last five years, we’ve put metrics in place to support the scalability of the company,” said Phelan. “When you are managing a business yourself, you tend to know these things intuitively. But when you remove yourself from the day-to-day management, you need systems to generate and report that information.”

Putting those systems in place and letting others be responsible for them has been a somewhat bittersweet experience for Phelan. “It’s always difficult to let go, but if you don’t, others can’t do what you need them to do. I often ask myself now where I can provide the most value. I handle very few projects now, focusing instead on development of alliances with other companies and high-level contact with clients,” he said.

As non-family executives step up and take on more leadership, the biggest challenge has been in the area of risk taking. “There were many times when my brothers and I would make an instant judgement to take a risk. I think it is much harder for those who do not own the company to make that kind of assessment,” Phelan said.

Phelan plans to continue in his role as CEO for the next couple of years. In the meantime, his brothers have retired but continue to guide the company by serving on the board of directors, a role Phelan assumes he—and future generations—will play long into the future.

“We definitely want to retain Taconic as a family-owned company. We’ve had a tradition of having directors on our board who are not family members or part of the management team, so it is logical that going forward we have a mix of family and independent directors. I hope I will never completely disengage from directing the company and adding value to its operations,” he concluded.

Kristine Ellis is a freelance writer based in Helena, Montana. She can be contacted at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .