published Sunday, January 13th, 2013

Chattem sales top $1 billion

Chattem, Inc., CEO Zan Guerry, right, holds a bottle of Rolaids as he is photographed with Blair Ramey, senior vice president of corporate development and media, executive vice president Robert Long and executive vice president John Stroud in the company's corporate office building in St. Elmo.
Chattem, Inc., CEO Zan Guerry, right, holds a bottle of Rolaids as he is photographed with Blair Ramey, senior vice president of corporate development and media, executive vice president Robert Long and executive vice president John Stroud in the company's corporate office building in St. Elmo.
Photo by John Rawlston.
  • photo
    Demetrius Brown works on the production line at the Chattem manufacturing facility on South Broad Street.
    Photo by John Rawlston.
    enlarge photo

PRODUCT PIPELINE

Among Chattem's recent or planned key products:

Rolaids

Allegra anti-itch creme

ACT dry mouth lozenges

Balmex adult rash creme

Gold Bond men's lotion

Gold Bond spray powder

Gold Bond diabetic lotion

Icy Hot advanced therapy

Source: Chattem

Three years ago, Chattanooga-based Chattem was churning out eight to 10 new products and line extensions annually.

Today, 12 to 15 entries are brought to the market each year, and that's helping push Chattem revenues to new highs.

For the first time in the company's 134-year history, Chattem's annual retail sales have topped the $1 billion mark, said chief executive Zan Guerry about the business that makes over-the-counter medicines such as Allegra, Gold Bond and Icy Hot.

That figure is up 7 percent from a year ago. In an interview at the company's St. Elmo headquarters, Guerry said Chattem has begun working on its newest product acquisition, Rolaids, to add even more sales.

Chattem, the U.S. consumer health care arm of French drug-making giant Sanofi, announced last week it plans to breathe new life into antacid Rolaids. The stomach med was pulled from shelves by former owner McNeil shortly after two 2010 recalls involving manufacturing problems.

Guerry said that later this year, Rolaids should hit stores with new packaging and advertising that's "a little more modern."

"It won't be your grandmother's Rolaids so to speak," he said.

Chattem officials said Rolaids will go head-to-head with Tums, which they said is a $200 million-a-year brand.

"Tums is more about flavor. [Rolaids] is more about relief," said Guerry. "We're not over-confident but optimistic it will get a good reception."

John Stroud, a Chattem executive vice president, said retailers are looking for more product rollouts to bring people into their stores.

Rolaids will "bring new people back to the category," he said.

Plans are to use a third-party maker for Rolaids outside Chattanooga in the immediate term. But there are opportunities to add new packaging in Chattanooga and more personnel to the 650 people the company employs.

"Anything we can do in Chattanooga, we do," Guerry said.

Chattem rolled out Allegra as a nonprescription allergy product a couple of years ago, and it has started producing the liquid suspension version of the medicine in the city.

Robert Long, Chattem's chief financial officer, said Chattem packages as much of its products as possible in Chattanooga, and it does all the transportation out of the city.

"We are hiring in the sales and marketing area," he said, adding the company has hired more than 125 people in the past three years and invested about $35 million.

Officials said Allegra sales have surpassed $300 million annually.

"It's one of the top 10 over-the-counter brands in America," Guerry said.

Chattem is introducing an Allegra anti-itch creme as an extension of its flagship product as it challenges market leader Claritin.

Guerry said Sanofi's top brass, including CEO Chris Viehbacher and Global Operations President Hanspeter Spek, are "very supportive and helpful" of Chattem's efforts to grow. Sanofi purchased Chattem almost three years ago for $1.9 billion in cash.

Guerry said Chattem could have made two or three acquisitions in the past year, but it's disciplined in its approach.

"They'd have us be at one-and-a-half billion [dollars]," the CEO said. "They've trusted us to do the right thing."

Blair Ramey, Chattem's senior vice president of corporate development and media, said Chattem evaluated 32 potential product acquisitions last year and closed on just the Rolaids deal.

He said Chattem applies robust screening, though he added that it's "actively listening. We're in the market."

Guerry said Chattem's other top brands are showing growth as well.

"We have five $100 million-plus brands," he said. "All of our top products are up over a year ago."

Guerry, 63, said he's still enjoying running the company, which he has headed since 1990 when he succeeded his father, Alex.

He said there's the "reality of the clock," but that Chattem is a fun business.

"We have a good team," he said. "Our team of talented people is exploding."

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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