Firm adapts as drug makers stop ordering giveaway pens

The Record (Hackensack N.J.) (MCT) - Critics of drug makers' overly aggressive marketing tactics applauded when the pharmaceutical industry last year said it would no longer inundate doctors' offices with Lipitor coffee mugs, Zoloft note pads and Viagra pens.

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Carl Cetera, president and co-owner of Cotapaxi Custom Design and Manufacturing, was crestfallen.

His company made those Viagra pens for Pfizer Inc. It also made Nexium and Crestor pens for AstraZeneca _ millions of them.

"If there's a drug out there, we did it," Cetera said in a recent interview at the company's three-story headquarters in downtown Carlstadt, N.J. "They were 75 percent of the business," he said.

But the bulk orders from drug makers came to an abrupt halt last summer when the Pharmaceutical Research and Manufacturers of America, an industry advocacy group, announced a change in its voluntary code of conduct on gift giving. The handing out of branded promotional items to doctors was no longer acceptable under the new code, unless the items are educational.

As a result, Cotapaxi's sales fell 47 percent to $16 million last year from $30 million in 2007. Cotapaxi is not alone. Companies such as Bic and 3M also have lost sales because of the new industry guidelines, said Anne Lardner, senior manager of public affairs for the Promotional Products Association International.

"Our estimates indicate we are due to lose about a billion dollars in revenue in 2009," she said.

Cetera says the setback taught him not to rely too heavily on one type of customer. He's working to develop different products and break into new markets. He kept as many employees as he could, letting go only a dozen of the more than 200 who work in sales and administration in New Jersey, and about 20 out of the 250 who work at a California warehouse and distribution center.

Instead of focusing on taking orders of 2,500 pens or more, Cotapaxi is gearing up to sell pens in smaller quantities to a broader range of customers. The company has reached out to the NCAA, the PGA and the Cartoon Network about possible licensing agreements. For the first time, the manufacturer will begin next month targeting mom-and-pop restaurants and pizzerias that may want custom pens to promote their businesses.

"Even in a recession, people still have to market their products," said Cetera, who started the company eight years ago. "We'll weather the storm."

Cotapaxi _ named after a volcano in Ecuador _ doesn't make only pens. It also holds patents on dozens of products ranging from a magnetic pill box to a so-called "tapeler" combination stapler and tape dispenser. It has made travel cups to promote the HBO series "The Sopranos" and coaster sets to tout the Showtime series "Dexter." The company also recently became exclusive distributor of a plastic drinking cup designed to eliminate the gag reflex when swallowing a pill. A relative of a Cotapaxi sales manager owns the patent.

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But pens with free ink-cartridge refills and wrap-around graphics _ designed in Carlstadt and made in a company-owned factory in China _ will remain the main product, Cetera said. "My pens are my biggest love," he said. "It's the most-used promotional product in the world. It touches the most hands."

He believes it's not too late to get on the Barack Obama election commemoratives bandwagon. Obama pens went on sale this month on the company's Web site. A metal pen sells for about $20 and a plastic one for about $10. Other product ideas include gift pens with Christmas and Fourth of July themes and "save the date" pens that brides-to-be can send with wedding announcements.

Diversification is the top priority, Cetera said, adding: "We want to make sure if one industry stops buying, we won't have to scramble."

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