Player Profile: Hutchins gambled early on health of DTC market

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The direct-to-consumer pharmaceutical ad category is arguably the most explosive in recent years. But well before network and magazine executives were salivating over accounts such as Claritin and Viagra, Traver Hutchins hit the hustings pitching DTC as the next big thing to major drug companies.

In 1994, a then-33-year-old Mr. Hutchins gambled $25,000 of his savings to launch MediZine Guidebook, a DTC-heavy wellness magazine distributed free to consumers in pharmacies and doctors' offices. In the pioneering years of DTC, before the U.S. Food and Drug Administration opened the floodgates in the category in 1997, Mr. Hutchins' venture endured its share of bumps.

"Nobody knew whether there was any big future potential," said Mr. Hutchins, MediZine's president and publisher. "We were DTC before DTC was cool."

And being uncool was no easy role for the affable and charismatic Mr. Hutchins. (Now 40, he looks considerably younger, perhaps from following MediZine's healthy lifestyle advice.) Early on, MediZine struggled to turn a profit. The company broke even at the end of 1998 and then rode the late 1990s ad (and DTC) boom to a profit in 1999.

Last year, MediZine-with a circulation of 3.5 million-sold some $11 million in ad pages, up 40% over 1999. Mr. Hutchins projects a 10% jump this year despite the economy's hiccups.

This spring, MediZine purchased a main competitor, Rx Remedy, out of bankruptcy court. Rx Remedy, mailed free to subscribers who request it, was a success, but its corporate parent was hurt by Internet investments that went sour, Mr. Hutchins said. MediZine is privately held with Mr. Hutchins and magazine entrepeneur Dale Lang the majority shareholders; before launching MediZine, Mr. Hutchins sold ads for Lang Publications when it owned Working Woman and Working Mother.

Mr. Hutchins plans to keep Rx Remedy as a separate publication, though will turn it into a digest-size quarterly like MediZine beginning Aug. 6. Add Rx Remedy's 2.2 million circulation to MediZine's 3.5 million and Mr. Hutchins becomes an even more important lunch companion in the DTC industry. The two publications compete with general-market magazines Rodale's Prevention and Time Inc.'s Health-both of which have paid subscribers-for a share of the DTC pie.

In bankruptcy court, MediZine also purchased Rx Remedy's database of 1.3 million names, which it has added to its own list of 500,000. A month ago, the company used the combined registry to launch MediZine Direct, which serves as a relationship-marketing middleman for pharmaceutical companies.

MediZine now has a unified sales force selling both magazines and direct-marketing opportunities. Mr. Hutchins said sales for Rx Remedy are healthy and the company has already sold $1 million in ad pages for the upcoming issue. MediZine's three products should bring in revenues of $20 million to $25 million in 2002, Mr. Hutchins said.

The company may have the advantage operating in a category poised to ride the current recessionary conditions out better than most.

"We're delighted to be in a category that has been largely recession-proof and the reasons are clear," Mr. Hutchins said. "People continue to age. No. 2, drugs continue to have a patent life and therefore a period of time when they are heavily marketed before generic competition. Third, the way drug companies are built now is they have to rely on their blockbusters to drive earnings and there's an enormous reliance on DTC to help with that."

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