Gelatin Capsule Firm Fears Fallout From Tylenol Death
Banner Gelatin Products is afraid the Tylenol scare will give its industry a bad name.
As a maker of gelatin pharmaceutical capsules, the Chatsworth-based company worries that the recent discovery in New York of cyanide-tainted Tylenol capsules will frighten consumers away from capsules in general.
To calm consumers’ fears--and to head off a threat to its business--Banner’s executives have been rushing to point out that not all capsules are alike.
Banner’s capsules are the soft, hermetically sealed kind commonly used for Vitamin E pills. Company executives say Banner’s capsules are different from the hard, two-piece capsules used with Extra-Strength Tylenol in a crucial way: Their sealed capsules leak when they are punctured, so consumers can easily spot a contaminated product before it’s too late.
‘Unfair’ Spotlight on Capsules
Gordon K. Freshman, Banner’s president and chief executive, conceded that his company is relying heavily on its products’ “tamper-evident” quality as a selling point these days.
“We want to divorce ourselves from this whole mess as best we can,” Freshman said. “We think there’s a growing negativism about capsules and it’s unfair.”
Banner officials say it is too early to tell whether sales at their $30-million-a-year company will be hurt by the problems at Johnson & Johnson, the makers of Tylenol.
Freshman, 50, said his immediate aim is to capture business from companies that no longer want to sell hard, two-piece capsules. In fact, Banner plans to resume a 3-year-old advertising campaign in trade journals that touts its capsules as “a soft solution.”
Contacted by Pharmaceuticals
“We’re not trying to capitalize on the Tylenol situation,” Freshman said. “We simply feel we have a superior product.”
W. Patrick Noonan, executive vice president, said Banner already has been contacted by several pharmaceutical companies that use hard capsules about the possibility of doing business. Noonan said those pharmaceutical companies fear that customers may shy away from their existing products.
There are some technological problems with soft capsules, however. For example, an experiment in which the contents of a Contac capsule were put through the soft-capsule production process crushed the tiny particles, leaving a mushy mess inside the soft capsule.
Pharmaceutical industry officials maintain that the main advantage of capsules over pills is that they are easier to swallow. Surveys also have shown that many people think capsules are stronger than pills, even though industry officials say that isn’t true.
Banner is one of a handful of companies that seals oil and paste pharmaceuticals made by other companies in soft capsules. Pharmacaps, an Elizabeth, N. J., subsidiary of Iroquois Brands, and R. P. Scherer in Clearwater, Fla., are among Banner’s competitors.
Controversy in the pharmaceutical industry was touched off when capsules of Tylenol, the top-selling painkiller with about 35% of the U.S. market, were found to be contaminated with potassium cyanide in a suburb north of New York earlier this month.
Diane Elsroth, a 23-year-old Peekskill, N. Y., woman who had taken two of the poisoned capsules, died Feb. 8. Four days later, federal workers checking bottles of Tylenol capsules from retailers discovered another five tainted capsules in another bottle.
The incidents echoed events of 1982, when seven people in the Chicago area died after taking Tylenol capsules that were also laced with potassium cyanide. Noonan said there was no noticeable effect on Banner from the Chicago incidents.
Banner has been in the capsule business more than 30 years. Freshman became president and chief executive of the company--then located in South Pasadena--in 1966, taking the reins from his father, who, with several family members, had bought the company 11 years earlier.
Moved to Chatsworth
In 1968, Freshman moved the company to a new building in Chatsworth. Three years later, Freshman installed new custom-designed machines. The company started a Canadian subsidiary in 1980 that markets similar products in Canada and Europe.
Banner was bought out by an Australian food conglomerate, Fielder Gillespie Davis Ltd., last April. Freshman said he was talking with investment bankers about finding a company to acquire when Fielder came along to acquire his. The Freshman family still retains a 10% interest in the business.
The company employs 190 people in Chatsworth and 50 at the Canadian subsidiary in Olds, about 50 miles north of Calgary in central Alberta.
Early on, Banner mostly made capsules for vitamins. The youthful-looking Freshman himself takes half a dozen vitamin capsules a day. Today, 83% of the company’s products are nutritional supplements. The remainder are pharmaceuticals.
One of Banner’s main products is called Procardia, a popular heart drug that the company packages in soft capsules for Pfizer, a giant in the pharmaceutical industry. Other Banner capsules contain vitamins that the company packages for private-label manufacturers that sell to retail chains such as K mart Corp.
