A Missouri entrepreneur boils the lab business down to a science.

    By Ian Mount

    (Fortune Small Business) -- Shri Thanedar's job is to help companies beat the competition. His secret? Chemistry.

    Take Devro, a Columbia, S.C.-based sausage-casing manufacturer that was losing business to a rival with a shinier product. Devro called on Thanedar, whose firm, Chemir, does chemical analysis and manufacturing.

    After paying Chemir $7,000 to reverse-engineer the competitor's product, Devro developed a comparably shiny casing with a longer shelf life. "We couldn't do that ourselves," says Devro engineer Marco Hobi. "Chemir has all the state-of-the-art tools."

    It wasn't always that way. Thanedar, 54, who emigrated from India in 1979 to get a Ph.D. in polymer chemistry, bought the company in 1991 for $75,000. Back then the three-person outfit solved manufacturers' problems, figuring out why blue pills were getting yellow spots or why contact lens solution caused eye irritation.

    In 2003 Thanedar began shifting his services to meet a growing demand: helping analyze and develop new drugs. His strategy included the acquisition of seven companies, which boosted Chemir's annual revenues from $6.3 million to $60 million.

    Last year, with the recession looming, Chemir started pulling away from small biotech firms, which were short on credit, and wooing large pharmaceutical and chemical companies, which had fewer outsourcing needs but more cash. Today 60% of its business comes from conglomerates such as Merck, Monsanto and Pfizer. Thanedar expects his revenue to hold steady in this down year.

    "We saw what could be done, and we took steps," he explains. "We didn't just wait for the market and the economy to turn around."