Paul Edick explains how changing the face of this pharmaceuticals company opened the door to new possibilities.

The term corporate evolution defines MedPointe Pharmaceuticals. From the point at which it acquired the pharmaceutical and diagnostic business of Carter Wallace in 2001, this New Jersey-based company rebuilt its financial structure and sales reporting systems, upgraded its facilities, and changed from a family-run public entity to a private corporation.

In the last two years, Paul Edick, CEO, transitioned MedPointe’s business platform from acquisition-based specialty pharmaceuticals to a commercial engine with developmental capabilities, carving out a unique corner of the industry. “We have a nice set of commercially marketed products growing at double-digit rates while sustaining a strong development pipeline that could realize a new product launch every year for the next five years,” Edick said. “We’ve established a truly distinct company in the specialty pharma sector by applying an open and honest culture to every aspect of our business.”

Paul Edick

By selling the diagnostic portion of the acquired Carter Wallace business and raising private equity from investors, MedPointe reduced its debt from $195 million to $75 million and restructured its debt covenants to allow for reinvestment as long as sales stay above a certain level. “A company can only obtain the kind of debt structure we have after showing healthy growth for a number of years and successfully hitting the milestones the lenders proposed when they took on the original debt,” Edick explained.

To avoid some of the common pitfalls of the larger companies in the industry, MedPointe took a step backward when developing its sales force strategy. Some pharmaceutical veterans in the company looked back to the time in which sales representatives were called “detail men” because they would meet with physicians, explain the nuances of the drugs—how they worked and why they worked—and share their clinical findings.

“MedPointe’s sales force develops relationships with their physicians centered on a common clinical understanding of the medication,” Edick said. “Combining that philosophy with a more modern approach, such as direct-to-consumer advertising, both consumers and physicians have a better understanding of the safety and efficacy of the product, and we gain their trust.”

Because MedPointe is in a different league than many larger pharmaceutical companies, integrating tried-and-true sales methods with newer marketing techniques works well. The company’s Astelin product, for example, generated one of the biggest growth years in MedPointe’s six-year history
during 2006.

“By virtue of our size, we don’t have a significant competitive advantage over companies like Pfizer; those companies will always sell more than we do,” the CEO said. “The real point is that our Astelin product, a nasal antihistamine derived from the Azelastine molecule, grew 22% year over year while other products in the category only grow in the single digits.”

Organic exploration
During the first two years after the Carter Wallace buyout, MedPointe closed the old Carter Wallace facility, moved to a new facility, invested in manufacturing, and stabilized the company’s infrastructure. Right now the company is moving into a new phase: reinvestment and exploration.

Edick said many, but not all, of the company’s allergy, respiratory, and central nervous system-based product developments are low-cost and low-risk innovations built from existing molecules. One of the more successful strategies behind MedPointe’s growth comes from a focus on developing products gathered during its life as an acquisition-based company.

One of the company’s acquisitions was Optivar, an Azelastine Hydrochloride-based ophthalmic solution for conjunctivitis. In the three years since MedPointe began distributing the product, it has grown an average of 17% annually driven primarily by the eye care specialist base of 4,000 target customers. Edick anticipates additional eye care products will continue to expand that
product division.

In the Cater Wallace acquisition, MedPointe obtained a molecule called Carisoprodol, which was first launched in the 1950s under the brand name Soma. In the past two years, the company has done a considerable amount of work to understand the molecule and why it’s so effective. Edick believes the company will be able to develop innovations, which significantly reduce side effects and improve tolerability while remaining extremely effective.

“It is a molecule we didn’t really pay attention to until the last few years, and now it’s proving to be a potential anchor for a series of new products,” he explained. “Many people use the phrase line extension, but that’s not what we’re doing. Much of what we’ve taken on involves complicated development and a better understanding of the molecule.”

For example, some of the larger pharmaceutical companies did studies to show the benefits of using an oral antihistamine and a nasal steroid, but many of those studies failed. However, MedPointe has shown tremendous clinical improvement when combining the Azelastine product with a steroid. Although product development is risky, sticking to well-characterized molecules reduces the “What if?” factor.

“That doesn’t mean we won’t acquire new products, if they fit into our business model,” Edick said. “If a molecule has one solidly marketed product opportunity and the ability to innovate, we will most certainly take a look.”

MedPointe applies the same deliberate and organized methods of growth to its molecules as it does to its family of employees. Just as only certain molecules fit into the company’s developmental model, only a certain kind of employee is recruited to join the team. “Our cultural evolution is deliberate,” Edick said. “We have a certain set of beliefs, and we put those beliefs into action. Honor, professionalism, and integrity are the base of the company we’re building."