Every day, approximately 2,000 letter-sized envelopes or small boxes are shipped from Integrated DNA Technologies’ Coralville headquarters, bound for laboratories as close by as the University of Iowa or as far away as South Africa.

In each package are tubes or laboratory plates loaded with synthetically produced strands of DNA, which provide the basic research materials for more than 77,000 client organizations of IDT worldwide.

IDT’s low-key brick building – located across the street from a Super Wal-Mart store and a Harley-Davidson dealership – is not exactly where one would expect to find the largest U.S. manufacturer of custom-made DNA material. Inside, however, technicians are working around the clock in three shifts to keep up with worldwide demand for its products.

Now, with its recent acquisition of a Belgium-based life sciences company, IDT is targeting the world’s next-largest market to the United States for these research materials, Europe. With sales of over $50 million a year currently, IDT’s goal is to reach $100 million in revenues within the next few years and to possibly become a publicly traded company.

On a daily basis, IDT produces approximately 36,000 custom-made DNA strands, known as oligonucleotides, or oligos. That’s nearly twice the number of its nearest competitor, in a U.S. market estimated at $250 million in annual sales. The common uses of oligos range from diagnostic tests for genetic diseases such as breast cancer or cystic fibrosis to advanced research for new drugs or diagnostic tests.

The company’s founder and owner, Joseph Walder, launched the company in 1987 at the University of Iowa Technology Innovation Center through a partnership with Baxter Healthcare Corp. IDT began selling to the commercial market in 1992,   and by May 2004 had reached a milestone of 1 million oligos sold. The company, which currently employs approximately 350 of its more than 400 professionals at its Coralville laboratories, has also grown through the acquisition of four biotechnology companies within the past four years, the latest being RNA-TEC, which is based in Belgium.

That acquisition positioned IDT to launch the first of possibly several production facilities in Europe this summer. That center will enable IDT to expand into large-scale production of another type of genetic material, RNAi, which holds promise for use in the development of a radically new generation of pharmaceuticals.

“There are two reasons we’ve chosen to do so through acquisition,” said Trey Martin, IDT’s chief operating officer. “One, so that we could have friends on the ground in Europe who understand the business. Secondarily, this is a group we’ve worked with that has a certain specialty in therapeutic RNAi, a recently discovered natural process of mediating gene expression. It’s basically changing the face of life sciences right now, because it presents a potential therapeutic avenue for the control of gene expression. For that reason, it could be incredibly powerful.”

For example, a typical allergy drug desensitizes the body to the histamine protein to block an allergic reaction from occurring, Martin said. “But an antihistamine RNAi would keep the histamine protein from ever appearing at all. In the same way, harmful or mutated proteins could also be prevented.”

RNA-TEC will provide IDT with the capability of producing the large quantities of RNAi that are necessary to conduct full-scale drug trials.

Coralville will remain both the primary production facility and the central administrative support for the increasingly global company, with its sales and support operations expanding and increasing their hours to match the demands from a European market, as well as to support its existing satellite production facility in San Diego.

“Essentially this building will be humming 24 hours a day for almost all functions,” Martin said.

“That includes advertising as well, and expanding our customer support and tech support services to European times,” said Bonnie Barney, IDT’s senior vice president for sales administration and advertising. “We’re also focusing on hiring multilingual people for those positions, both here and in Belgium, as well as the European sales team.”

To accommodate expected growth, IDT more than doubled the size of its headquarters building with a 77,000-square-foot expansion that includes 20,000 square feet of   ready-to-occupy space. Though commercial retail development such as Wal-Mart has surrounded its building over the past few years, being close to restaurants and other services has actually been a plus for its employees, Martin said.

Strict quality-control processes and attention to customer service have been keys to IDT’s rapid growth, according to Martin, who said the company’s sales growth has averaged 15 to 20 percent annually.

About 60 percent of IDT’s client base consists of universities or government-funded research centers, which has helped the company to weather economic downturns such as the Nasdaq stock market crash in 2001, Martin said.

“We lost some activity from some of our largest corporate customers,” he said. “But the next day, the university guys kept coming to work and doing their thing. They didn’t lose their stock value, and it didn’t change their activity. So a broad academic base has been a major strategic strength for us. And that’s one of the reasons that we’ve grown somewhat immune from the boom and bust of the biotech economy.”

Another strategy that has worked well for IDT has been its vertical   business approach, which includes the in-house design, fabrication   and maintenance of the 500 proprietary machines it uses to synthesize the oligos.

“It’s more of a Honda-type manufacturing philosophy, where you control all of your inputs,” Martin said. “It just sort of evolved where we had the capability to do these things in-house, and we found that we had better performance if we controlled our own inputs, so it just sort of evolved that way. And we do our own engineering and design because we found there weren’t any third-party machines that could do what we do. So it’s all part of a large system that keeps evolving.”

The company also operates an in-house training operation for its employees to familiarize them with the products and the latest technologies.

“For almost every position here, we look for a basic science degree in biology or equivalent experience, so that even if you don’t work in production you can understand the synthesis process,” Barney said.

“Even an order-entry person will do a better job if they understand the basic principles of synthesis of our product, and what customers are using it for.”

As a company, IDT has never used venture capital funding, and has   been able to make each of its acquisitions through bootstrap financing, Martin said.

Though IDT would make an attractive acquisition candidate for many large life sciences companies, an initial public offering is a more likely direction for the company, Martin said.

“There you maintain your management control, continue growing the company as you have and just let stockholders participate,” he said.

“Because there will be a limit, of course, to bootstrap financing. An IPO and a liquid stock allow one to do things you couldn’t do otherwise. We see nothing but journey ahead of us, that’s for sure.”