American Home Products opened in 1926 when a group of managers from Sterling Products and Household Products combined their resources to buy small companies as cheaply as possible. The company name itself never became a brand, but many of its products have become household names through years of advertising, including Black Flag, Woolite, Chef Boyardee, Easy-Off and Anacin.
During the 1930s, the company acquired Anacin, Bisodol Co. (Bisodol laxative), A.S. Boyle Co. (Old English floor wax), Kolynos Co., (Kolynos dentifrices), Wyeth Chemical Co. (Hills nose drops, Jads salts), Midway Chemical Co. (Aerowax), Preparation H hemorrhoid ointment, Three-in-1 Oil and Black Flag insecticide.
Through the early 1930s, AHP maintained a modest advertising budget, but its spending rose sharply in 1934 as it moved into radio sponsorships with Blackett-Sample-Hummert. By 1936, the company had become the No. 8 advertiser in network radio, according to Advertising Age figures, a rank it held for the rest of the decade. Total AHP radio spending rose to more than $2.5 million in 1937 and remained at that level until World War II.
In the 1940s AHP added Heet, Freezone, Mystic hand cream, Neet depilatory and George Washington coffee. It also bought Canadian marketer Ayerst Laboratories, completing the foundation of its prescription drug business, and Chef Boyardee Quality Foods.
By the mid-1960s the company had five core businesses: prescription drugs, over-the-counter drugs, foods, housewares and household products. At the time, it marketed the largest line of foods, drugs and household brands of any U.S. company, and it has continued to be a leader in prescription and over-the-counter drugs.
"American Home Profits"
By the early 1970s, AHP had developed a reputation as a company that was run on an old-fashioned, hard-nosed, dollars-and-cents basis. Its sales expenses remained virtually frozen at 3% for several years, and its profits held steady at 10% for about 15 years. Expenses were so minutely tracked that, according to a company history, employees had to buy tickets to attend the AHP Christmas party. Wall Street loved it?some financial analysts dubbed the company "American Home Profits." While it maintained high levels of advertising spending?in the mid-1980s its ad budget was approximately $412 million?its tight-fisted ways sometimes became more than its ad agencies could tolerate.
In the 1980s, AHP bought Sherwood Medical Group, a medical supplies company; Bristol-Myers Co.'s animal health division; and A.H. Robins Co. (Robitussin, Dimetapp); and, in 1994, acquired American Cyanamid Co. for $9.7 billion, creating one of the world's largest prescription drug companies.
AHP started to divest itself of businesses unrelated to healthcare in the 1980s, selling Ecko Housewares Co. and candy maker E.J. Brach & Sons, and in the 1990s, the Boyle-Midway household products subsidiary and its food business.
Checkered advertising history
Throughout its history, AHP has been a low-profile advertiser, often using its own in-house shop, John F. Murray Advertising. Other shops have included BSH, J. Walter Thompson Co., Y&R Advertising, Grey Advertising Worldwide and Ted Bates & Co.
Overall, agencies have not created particularly memorable advertising for AHP brands. An exception was Bates' "hammer in the brain" spots for Anacin, created in the mid-1950s by Rosser Reeves, Bates' legendary chairman., The spots, with the tagline, "Fast, fast, fast relief," ranked 19th on the Advertising Age list of top100 advertising campaigns of the 20th century.
AHP and the Federal Trade Commission have disagreed more than once over AHP's advertising in the analgesics category. In 1958, the FTC questioned claims from AHP, in ads from Bates, and four other analgesics marketers, charging that there was no truth to the claims that one brand relieved headaches faster than another. In 1961, the FTC again brought complaints against AHP's analgesics advertising, but the charges were dropped in 1965 after a long entanglement in procedural arguments at the federal agency. Later run-ins over Anacin advertising lasted through the 1970s and 1980s.
In 1973, the FTC opened yet another investigation into Anacin ads touting the remedy's use for the relief of tension. After six years, FTC administrative law judge Montgomery Hyun ruled that consumers still believed the advertising even though the company had stopped making such claims in 1973. He ordered AHP to spend $24 million?an average one-year ad budget for Anacin at that time?on corrective ads disclosing that "Anacin is not a tension reliever." The FTC insisted that ads for all AHP products meet the tests applied by the U.S. Food & Drug Administration and the medical community to substantiate drug effectiveness.
AHP's Preparation H hemorrhoid treatment also has had a checkered history with the FTC. In 1967, the FTC ordered stringent limits on claims for Preparation H made in advertising created by Murray; three rival products were also included in the order. The order prohibited the four advertisers from claiming that their products did anything more than provide some "temporary relief of pain and itching" associated with some types of hemorrhoids. AHP appealed, and in 1967 the 6th Circuit Court of Appeals upheld most of the FTC order. In November 1968, in response to the court, the FTC noted there had been at least eight instances over the previous 30 years when the federal agency had challenged ads for Preparation H.
In the late 1970s and early 1980s, AHP was involved in several historic two-season buys on NBC, notable because they demonstrated the growing power of the television media market. In 1978 AHP signed a $100 million deal; in 1982, it committed to a three-year buy valued at $250 million.
In August 1992, AHP's Wyeth-Ayerst Laboratories lost a battle with the National Advertising Division, the self-regulatory arm of the Council of Better Business Bureaus, over claims for its SMA infant formula. It then appealed its case to the National Advertising Review Board. The board, however, enjoined AHP to modify claims for SMA made in brochures distributed to doctors' offices that said the brand was "closest to mother's milk" and would produce better health results than competitors' products. The review came after rival Mead Johnson challenged AHP's claims.
New analgesic entries
During this period, AHP also entered new categories in the pain reliever market. In 1984, AHP launched Advil, a non-aspirin pain reliever. Ads for the new product were created by Y&R. By 1985, Advil had performed well enough to cause concern at Bayer Corp., which marketed Bayer aspirin, and at Bristol-Myers, which had Nuprin. By 1989, Advil had overtaken Nuprin in sales. In August 1995, AHP launched the first of a new generation of pain relievers in the U.S., ketoprofen, with agency Partners & Shevack. But the product further fragmented the already crowded $2.5 billion analgesics market, and by 1998 it was in trouble, with double-digit sales losses.
In January 2000, AHP launched a $10 million ad campaign targeting the up to 6 million users of the popular fen-phen diet-drug weight-loss combination, which had been withdrawn from the market in September 1997 after patients using the prescription drug combination of fenfluramine and phentermine developed heart and lung problems. The effort, from Tierney & Partners, urged those who had used AHP's Pondimin (fenfluramine) and Redux (dexfenfluramine) to call a toll-free number or go to a special Web site for further information about a class-action suit against the company. A year later, in January 2001, AHP took a $7.5 billion charge against its fourth-quarter earnings, saying it had settled 80% of the lawsuits filed by fen-phen users.
By the end of the 20th century, AHP was the 45th-largest U.S. advertiser, according to Advertising Age, with 2000 ad spending of $571 million on losses of $2.37 billion. Its top-spending brands were: Advil, $82 million; Centrum, $57 million; and Premarin, $37.9 million.
In 2003, the company changed its name to Wyeth and became the ninth largest pharmaceutical company in the world, with $12.6 billion in sales in 2003. It has five blockbusters in the market: antidepressant Effexor XR (venlafaxine), Enbrel (etanercept) for rheumatoid arthritis, Protonix (pantroprazole) for heartburn, pediatric pneumonia vaccine Prevnar, and hormone replacement therapy Premarin (conjugated estrogens).
It also is one of the few pharmaceutical companies to have a strong pipeline. At its June 2004 research and development update for analysts, Wyeth said it had 68 projects, including seven potential blockbusters in late-stage development.