If corporate pride is key to a brand's success, Bayer aspirin may have a chance at redemption.
Leverkusen, Germany-based Bayer AG has been trying to win back American rights to the Bayer name since the U.S. government confiscated the company's patents and trademarks as enemy property during World War I.
In a deal announced last week, Bayer will pay $1 billion to buy Sterling Winthrop's over-the-counter U.S. drug business-including its Bayer line-from SmithKline Beecham. SmithKline agreed to buy Sterling's global OTC business just two weeks earlier from Eastman Kodak Co.
"This is a memorable event in our corporate history," said Bayer Chairman Manfred Schneider, with some understatement. "We are very pleased that after more than 75 years we will now operate under our own name again worldwide."
"Clearly, to a large extent, this is a matter of pride," said Kate Griffie, manager of the pharmaceutical group at consultancy Kline & Co., Fairfield, N.J. "But they're buying a lot more than the Bayer brand."
Indeed, when it comes to profits, the most potential may come from Sterling's other brands, including Midol analgesic, Stridex acne care and Phillips Milk of Magnesia antacid/laxative.
"These have been virtually unsupported for quite a while and still maintained leadership in their categories," Ms. Griffie said.
Bayer aspirin, on the other hand, has suffered for its lack of support. Sterling put the weight of its marketing dollars behind the launch and extension of the Bayer Select line, virtually ignoring aspirin for the last few years.
The Bayer brand (including Bayer Select analgesics but not cough/cold products) dropped 17% to $125.6 million in food and drugstore sales for the 12 months through July 31 vs. the same period a year earlier, according to Towne-Oller & Associates, New York.
Spending on the Bayer and Bayer Select lines has dwindled to far less than the estimated $65 million Sterling was spending when BBDO Worldwide won the account from N W Ayer in January. A $20 million TV campaign for Bayer aspirin begun last month was the first major effort either line had seen in months. New print ads for Midol also began last month.
Bayer, which markets the Alka-Seltzer line and One-A-Day vitamins through its Miles Inc. subsidiary in the U.S., is not known for huge advertising budgets.
But Elliot Schreiber, senior VP-corporate communications for Miles, said the company will not shy away from supporting its new brands.
"There are clearly challenges ahead, but for numerous reasons-not the least of which is the bottom line-we're more than willing to take on those challenges and to do the kind of marketing that needs to be done," he said.
Bayer plans to change the name on all of its U.S. brands from Miles to Bayer as soon as possible. No decisions have been made on advertising agencies or other specifics for the brands; BBDO, New York, currently handles the Bayer brand while Ammirati & Puris/Lintas has Midol, Stridex and Phillips.
SmithKline will retain Sterling's global brands outside the U.S., including Panadol analgesic, and still has its own portfolio of U.S. brands such as Contac cold medicine and Tums antacid.