Mix Master

Mix Master

After a career of formulating time- and money-saving pharmaceuticals at his Minnesota business, Upsher-Smith Laboratories, Ken Evenstad started blending one of the most prestigious pinot noirs in the country.

“No one—not rock stars, not professional athletes, not software billionaires, and not even geniuses—ever makes it alone,” Malcolm Gladwell writes in Outliers: The Story of Success. Gladwell, the sociology writer and media guru on business trends, isn’t the first to observe that the formula for success is complicated, requiring not just talent and work ethic, but a combustible combination of those things with milieu, patronage, timeliness, good sense, and good luck.

Ken Evenstad could be a case study in Gladwell’s book. He persevered through studies for a pharmacy degree that were disrupted by family tragedies as a young man. Then by chance, marriage put him in proximity to a business that matched his education, skills, and interests; further coincidence gave him the opportunity to buy it at precisely the moment when it dovetailed most effectively with his ambitions. His wife, Grace, helped propel him to success in the pharmaceutical field—and in another one, seemingly unrelated.

In 1969, Evenstad paid Grace’s uncle $1,500 for a languishing heart-drug business and transformed it. Upsher-Smith Laboratories, Inc., the private Maple Grove–based company, became a specialist in producing and marketing branded-generic medications for cardiac and other disorders. It now has 600 employees worldwide, manufacturing locations in Plymouth and Denver, and revenues of more than $250 million per year. Today, with Evenstad as chairman and CEO and his son, Mark, as vice chairman and president, it’s taking a new direction, developing original drugs and competing to treat neurological disorders including Parkinson’s disease and epilepsy.

But even as he built that business, in 1989, Ken Evenstad and his wife launched another venture. They bought 40 acres of rocky, stump-filled Oregon land, cleared it, planted vines, and opened a winery called Domaine Serene. Their Monogram—an estate-grown blend that Evenstad himself oversees—is definitely the most expensive pinot noir (at $225 a bottle) currently made in the Pacific Northwest, and arguably the most celebrated.

Gladwell’s paradigm emphasizes the degree to which outside factors contribute to the success of the individual. It can’t explain, though, the mysterious inner core of success—innate ability. So it comes only partway in explaining what Evenstad, a gruff, bear-shaped 66-year-old with a ruddy face and thick white hair, has done.

“My father is in tune with all sorts of things no one else can pick up on,” says Mark Evenstad. “I see it in the pharmacy business, the wine business, in investing. He has this sense like no one I’ve ever met.”

It’s possible that Ken Evenstad possesses some sort of ancient conjuring skill. Like a world-class chef or a perfumer, he seems able to blend ingredients—be they chemical compounds or grape fermentations—so that their disparate qualities form a perfectly balanced and unique new whole.

nother likely explanation is that Evenstad—in concert with Grace—is unyieldingly focused, a master of his crafts but also of shaping a reputation for success that will breed more of the same.

“Ken and Grace have been quoted as saying they’re responsible for the success of the wine industry in Oregon and winemaking techniques going back to Jesus,” says Harry Peterson-Nedry, founder of the Oregon winery Chehalem. “But the thing is, that’s probably not far off from what they believe. They’re both just born marketers.”

Evenstad makes it sound simpler: “I was just really determined, and I have good business sense,” he says with a shrug.

The truth is that his twofold career—and the powerful partnership he’s forged with his wife—is itself a unique blend, not just of the attributes that Gladwell parses, but of alchemy, audacity, and tenacity.

“We Could Do Anything We Chose”

Growing up in Baudette near the Canadian border in the 1940s “was a very modest, stable, predictable kind of childhood,” Evenstad says. “I recommend that.”

His father managed the local power plant. His mother was a homemaker and then—when her four children were all in school—an assembly line worker for a pharmaceutical company called Rowell Laboratories. Evenstad says the person he admired most as a young man was Theodore Rowell—his mother’s employer, a grassroots politician, and the richest man in town.

Due in part to Rowell’s influence, Evenstad became an avid student of chemistry. He worked part time at a drugstore during high school, then entered the pharmacy program at St. Cloud State University. He left it after less than a year; his father had died suddenly in an accident, leaving his mother and a younger brother alone. Evenstad transferred to Bemidji State the following year so he could more easily make trips home, and continued slowly taking classes toward his pharmacy degree. Soon after he made the transfer, his sister’s husband was killed in a car accident.

“My easy, ideal life had been turned upside down because of the deaths of these two men,” Evenstad says. “But I think that made me grow up really fast.”

Eventually, he transferred to the University of Minnesota, where he met Grace, a nursing graduate. They married in 1966, and she was able to support them as an RN while he finished his bachelor of science degree. He graduated the following year—and at 24, was still eligible for the Vietnam draft. So together, the young couple devised a plan: Evenstad would volunteer for public health service somewhere safe and ride out the war. They chose Alaska, because they’d heard the state was in need of pharmacists.

The maneuvering wasn’t necessary. Shortly before they were to leave, Grace discovered she was pregnant and Evenstad’s draft eligibility vanished.

He wanted to settle in some quiet Midwestern town near their two families and take a job at the local drugstore. Grace said no. They had planned on an adventure, and no matter the change in circumstances, she intended to follow through.

Evenstad called Alaska’s state board of pharmacy and was hired by the board president to run a drugstore in Anchorage. Seven months pregnant with their daughter Serene, Grace packed up their tiny household and orchestrated the move.

“Alaska had been a state for only eight years,” Grace says. She is prim, dressed in a soft gray suit with tasteful jewelry and perfectly manicured nails, but assertive when she speaks. “This was a new frontier, and there were people more inept than Ken and I running the whole place. It gave me such confidence to see this. That’s when I decided we could do anything we chose.”

Well-Timed Discovery

Evenstad calls his wife a “stoic” with an independent streak. Part of the reason they moved north, he confides, was to avoid obligatory Sunday dinners with her parents.

Instead, they found themselves on the wild outskirts of Anchorage, dining with Evenstad’s patron at the pharmacy board, a California native who gradually schooled them in fine wine. The young couple had never tasted it before; they loved it. They were thriving in Alaska. But when their infant daughter developed health problems in 1968, they quickly moved back to Minnesota, and Evenstad became a staff pharmacist at a small drugstore in St. Paul.

A sleepy pharmacy job no longer suited him. “I couldn’t count pills for the rest of my life,” Evenstad says. “So I started staying late at work to experiment.”

His trials centered on potassium iodide. Doctors prescribed it as an expectorant (to help loosen phlegm and ease breathing in an emphysema patient, for example), and in those days a pharmacist had to dissolve a powder into a liquid and let it stand for an hour to make a medication that the patient could swallow. It was cumbersome and the resulting solution went bad after only a few days, so part of it would be thrown away. Evenstad wanted to solve the spoilage problem.

“It was a matter of buffering it and preserving it,” he says—and not accepting conventional wisdom. “One of the things that I learned early on is that about half the things in textbooks are wrong, and there’ve been a lot of false assumptions all along the way.” His results eventually became an Upsher-Smith product called SSKI (for shelf-stable potassium iodide).

His work “was all about meeting an unmet need,” he says. “It was about having curiosity and saying ‘I think I could do that’ and”—he echoes his wife’s confidence—“actually believing I could.”

He had developed an Upsher-Smith product, but Evenstad didn’t own the company then or even work there. That was about to change.

His first marketable drug development had nearly coincided with the birth of his son, Mark, in 1969. Grace called to tell her aunt about the new baby and discovered that her Uncle Jim was selling his business, Upsher-Smith Laboratories. The Wayzata company had been founded by Grace’s grandfather in 1919 to turn extracts of foxglove (digitalis purpurea) into a medicine that regulated cardiac rhythm and improved circulation in heart patients. (That idea was already a proven one, not a discovery; foxglove as a treatment for heart disease had been known since at least the late 18th century.)

Uncle Jim—Ken and Grace agree—was no businessman. He’d married a wealthy woman and let his company dwindle to nearly nothing. They say it was serendipity that the business dropped into their laps when it did. Evenstad traded on the company’s name and contacts to sell his new potassium iodide preparation, and worked on reviving Upsher-Smith’s reputation.

Finding a Branded-Generic Niche

His first drug development, SSKI, set the course for Upsher-Smith. It wasn’t what he calls a “patented brand”—that is, an entirely new drug—but it wasn’t merely a generic knockoff, either. It was a “branded generic”—something in between the two.

“Nonbranded generics are essentially a straight commodity-type product,” Evenstad says. Once demand for such generics exists, the opportunity also exists to differentiate one generic product from others. “The brand is really an identifier of quality manufacture,” he explains. In SSKI’s case, the “quality” came in the form of buffering and preserving, an improvement over standard potassium iodide solutions.

Within two years, Evenstad had developed another product. This one was a new form of potassium chloride (Upsher-Smith’s Klor-Con), which is used to balance the electrolytes of cardiac patients. “Potassium chloride is somewhat irritating to the gastrointestinal system,” he says. He made a less irritating, slow-release form of the drug and later, formulations that were effervescent, micro-encapsulated, powdered—each one designed to solve a problem for patients or pharmacists.

One big difference between making original and branded-generic drugs is who they’re made for, Evenstad says: “A branded generic is essentially selling to pharmacists, and patented brands are essentially selling to physicians . . . . I was selling to pharmacists, and I understood their needs and wants and desires, because I was one.”

There were other companies making branded-generic drugs. Upsher-Smith stayed focused on heart and lung disorders, but worked at differentiating itself by having a broader range of formulations or delivery methods for a given drug than its competitors did.

By the mid-1970s, Upsher-Smith had a sizable new manufacturing plant in Plymouth, an integrated line of branded-generic drugs, more than 40 employees (up from just a couple when Evenstad started), and $1 million in sales. Gradually, it added products in the categories of dermatology and women’s health.

Growing organically in this way, by 2001, Upsher-Smith had more than $100 million in annual sales and 300 employees. Evenstad, at its helm for more than 30 years, was preparing for a leadership transition.

Formulations of Another Kind

Mark Evenstad started out in marketing at Upsher-Smith and later moved into business development and licensing responsibilities. (The company has developed some of its products through licensing agreements. The hot-flash treatment Divigel, for instance, was developed by a European company, but Upsher-Smith bought licensing rights and did the clinical studies necessary to get market approval in the United States.) In 2001, he became vice chairman of the company, and in 2002, president as well.

Rather than continuing to expand Upsher-Smith’s branded-generics business, Mark Evenstad announced in 2007—after he and his father led a two-year strategic-planning process—that the company would turn its research efforts toward developing original pharmaceuticals. Specifically, it would develop breakthrough drug therapies for neurological disorders such as Parkinson’s disease, epilepsy, and Alzheimer’s disease.

“Some of the things we considered were demographic trends and diseases of high unmet needs. I like to define it more as ‘diseases of the family,’” Mark Evenstad says. As caregivers, he explains, entire families are affected by something like Parkinson’s. And while “the patient population fits perfectly for a company of our size, seeking to grow four- or fivefold, it is not a large enough patient population to attract big pharma.”

His father hasn’t been hands-on in the lab for a long time, he says, but has “very significant formulation ideas and formulation direction” that the company’s 30 or so R&D scientists work on.

Meanwhile, Ken Evenstad is blissfully tucked away in the Xanadu that he and Grace built on their acreage in Oregon’s Willamette Valley, growing grapes and blending and bottling wine.

The couple went on every wine-related vacation they could during the 1970s and ’80s. They traveled through Europe doing tastings, spending weeks in the south of France, and planning some day to start a little vineyard. Today, they own 450 acres on three estates, all near each other in the Dundee and Eola hills, with 165 of those acres planted as vineyards.

They started Domaine Serene soon after they bought their first acreage in 1989, but the winery, named for their daughter, operated at a loss for the first 19 years. It took until 1992 to plant vines, and until ’95 for the first harvest. The Evenstads hired good people, including master winemaker Ken Wright. And over the next decade, they produced a series of consistently top-rated pinot noirs, as well as a unique, rich white wine called Coeur Blanc made from pinot noir grapes. Jay Miller, who writes reviews for Robert Parker’s Wine Advocate, has awarded several of the Evenstads’ wines 90 points or more.

“Domaine Serene is willing to do whatever it takes to make a high-quality wine,” Miller says. “Their wines are all produced from estate fruit, that is, grapes they have grown in their own vineyards. The wines reflect the vintages from which they were produced. As in Burgundy, no two years are alike; each has its own quirks and personality.”

What differentiates their wines, says Grace, is attention to detail. The Evenstads insist on dry farming—meaning they do not use irrigation—because this method produces deeper tap roots and healthier vines. They also strive for a very low yield: around 1.78 tons of grapes per acre (others produce 2 to 5 tons). On four or five passes through the vineyards each year for “green pruning” by hand, they remove clusters of grapes so the remaining ones have more space and food to grow, and develop more concentrated flavors.

Domaine Serene ferments each block of grapes separately—not only according to the type but the growing conditions, such as elevation, direction, and amount of sunlight. That means working with more than 200 individual pinot noir fermentations. The Evenstads age their wines on site for at least 15 months. They say these winemaking practices were unprecedented when they arrived in Oregon.

“We get a concentration of fruit character, both aromatically and on the palate, that the Burgundians [French winemakers] are lucky to get every 10 years,” Ken Evenstad says. “But we get it year after year. That’s because we do things here in a way no one will, because it’s so expensive and labor intensive.”

The Evenstads are so committed to this view that in June, they sued their departing winemaker—Tony Rynders, who had worked with Domaine Serene for 10 years—claiming he took proprietary practices and company information with him when he left. At press time, the suit was not settled.

Of the Evenstads’ claims, Peterson-Nedry says, “There’s very little in this industry that isn’t known and practiced by a lot of people, well in advance of when Ken and Grace arrived.” Wright, who left Domaine Serene in ’98 to concentrate on his own brand, concurs. “There’s a lot of ego there,” he says. “I guarantee you Ken and Grace do not spend more on their vineyards than I do. And there are quite a few brands in Oregon that perform as well as Domaine Serene. They just aren’t priced as high.”

But if the Evenstads have moxie and a razor-sharp sense of what the market will bear, they indisputably possess great ability as well. In a blind tasting, three of their wines beat wines of the same vintages from Domaine de la Romanée Conti, “which is considered the epitome of Burgundy pinot noir,” Ken says.

They have built the life they want with a formula of its own. They share an office, employ both of their children (Serene manages the family foundation), support children’s charities and conservative causes, and live one-third of the year each in Minnesota, Oregon, and Florida. As for other ingredients, one is key.

“Marry the right person, that’s the real secret,” Ken Evenstad says, gazing at his wife. In agreement, she nods. Once.