FlavoRx, formed after founder Kenny Kramm's second daughter was born with cerebral palsy and balked at taking anti-seizure medicines, offers a flavoring system for pharmacies to make bitter prescription medications taste more like bubblegum, licorice or watermelon.
Last year, the company dipped deep into its pockets and spent more than $200,000 to make a commercial, then laid out an additional $600,000 to air it in five markets during the winter cough/cold season. A huge outlay, considering company revenue for the fiscal year ended June 30 was $750,000.
The company said the spot, which features a boy being chased by what appears to be a bully but is really his mother armed with medicine and a spoon, was successful enough that this winter it will more than double its media budget to $1.5 million, providing it can raise the money.
FlavoRx said it plans to spend the remainder of the fall approaching investors to garner financial support for the December-March ad push and other expenses. The private company, which one day may go the initial public offering route, raised $1.3 million last year and hopes to bring in some $4 million this time.
Using a dot-com-type model, the company's ad agency, Goldberg Marchesano Partners, Washington, took reduced fees in exchange for a 1.2% stake in the company.
For FlavoRx, the ad has a dual goal: to help boost both sales and distribution. The spot increases sales by driving people into pharmacies that offer the product -- with a tag naming participating pharmacies -- while serving to encourage other pharmacists at nearby chains to urge their corporate offices to allow them to stock the product.
Currently, FlavoRx is available in more than 1,500 chain stores and 1,000 independent pharmacies. The product also is available in 50 hospital pharmacies, and the company has further spread its wings overseas to Australia and New Zealand and will soon offer its line in the U.K. In addition, the company recently launched a product line to flavor veterinary medicines.
But the challenge is getting the word out to consumers. "The commercial informs and educates the public about what FlavoRx is," said Woodie Neiss, the company's chief financial officer. "Then people will go into the pharmacies and request the service."
"The whole goal is to really push it out there and force the chains to act faster," Mr. Kramm said.
Markets where the spot ran last winter included Las Vegas; Raleigh-Durham, N.C.; Roanoke-Lynchburg, Va.; and Seattle. This winter, Chicago; Richmond, Va.; and possibly Detroit are on the target list. The spot's tagline is, "We make medicine a lot less yucky."
RETAIL COST: $3
Adding FlavoRx to a prescription can add about $3 to the cost, and that expense is not covered by insurance. But it may be just what the doctor ordered in the pediatric medicine market.
Marketers increasingly have been looking for ways to offer products that make it easier for children to take their medicine, relieving them and their parents. Medicinal lollipops, dissolving tablets and bubblegums are some of the solutions. But those are mostly for over-the-counter treatments.
FlavoRx helps with prescription drugs such as antibiotics that children are often given for ear infections and other maladies. Some children who have chronic illnesses like Mr. Kramm's daughter must take the medicine for more than several days; ensuring they take it can be critical.
Hadley Kramm, now 8, was diagnosed with cerebral palsy soon after she was born. She suffered repeated seizures and was given medication to control them. But she balked at taking the medicine because of its awful taste.
Faced with "life or death," Mr. Kramm and his father, Harold Kramm, owner of an independent pharmacy in Washington for almost 40 years, worked like mad scientists to devise a flavor that could be added to make the medicine palatable. Soon, they had a mixture Mary Poppins would be proud of. And Hadley was taking her medicine, giving her family peace of mind.
Over time, Mr. Kramm developed a 300-page guide for pharmacists to sweeten a variety of medicines with some 42 flavors ranging from apple to peppermint to vanilla.
"It was kind of like cooking," Mr. Kramm said. "It was fun to find a way to cover up the awful medications."
The Kramms began by offering the flavoring option to customers in their pharmacy. As their business grew in the early 1990s, at a time when independent pharmacies were struggling to stay afloat as national chains were trying to force some out of business, the Kramms began offering FlavoRx to other independents.
Soon, the other pharmacies saw their revenues grow, too. Word of mouth worked to their advantage as frustrated parents would often drive 20 to 30 miles to visit a pharmacy offering FlavoRx.
Still, the Kramms refused to sell FlavoRx to chain pharmacies. Harold Kramm remained loyal to his fellow independent pharmacists and viewed FlavoRx as a way for them to outfox the chains.
"It's been a tremendous tool for us as a competitive edge to provide a service that's really needed," said Bruce Roberts, owner of Leesburg Pharmacy in Leesburg, Va.
GIANT FOOD'S ULTIMATUM
But in 1998, an executive with a Washington-area chain, Giant Food, said if FlavoRx didn't sell to them they would develop something to compete against it. The Kramms relented.
Since then, FlavoRx has been on an expansion kick. The deal with Giant led to placements in other chains owned by Giant-parent Royal Ahold. The product is increasingly available in stores owned by Kroger and Albertson's. And CVS is expected to begin offering FlavoRx in February.
Also, FlavoRx just hired a five-person contract sales force that specializes in chain placements to help it grow.
FlavoRx's expansion has led to a rapid increase in revenues. The company said it expects $7 million in revenue for the fiscal year that ends June 30, an enormous jump from $750,000 the previous year.