In the Shadows

In the ranks of U.S. business thrives a shadow industry whose presence is largely ignored by businessmen and talked about only discreetly by its managers. The industry is forbidden by law to advertise to consumers in publications or by direct mail; its products are the center of perpetual controversy, and their sale is severely limited in at least two states. Yet they are bought by some 15 million Americans, who--though they seldom advertise their purchases--spend, according to one industry estimate, about $200 million a year for them. This evasive but popular business is the contraceptive industry--and it is growing so fast that it is growing out of the shadows. The industry today splits its sales among 20 companies, and is in the midst of a technological revolution that is rapidly attracting new firms.

People have always tried to find ways to prevent birth, from the froth collected from the mouths of camels in ancient Egypt to the clumsy rubber devices for men that accounted for most contraceptive sales in the U.S. until the late 1930s. About that time Margaret Sanger started the trend toward contraceptives for women by convincing major companies that there was money to be made in jellies and diaphragms; in World War II, the men's side of the business profited mightily from Armed Services educational campaigns. Today the major emphasis is on a recent development that has made contraceptives for women the biggest part of the business and promises to transform the entire industry: birth control tablets.

Pills for Men. The Chicago drug firm of G. D. Searle & Co., the first to sell an oral contraceptive, put its Enovid tablets (by prescription only) on the market only two years ago. Searle's sales jumped $12 million the first year, and 1,000,000 women users have since pushed sales to about $18 million a year. Last week New Jersey's Ortho Pharmaceutical subsidiary of Johnson & Johnson--already the nation's largest producer of vaginal contraceptives--entered the lucrative market with its new Ortho-Novum birth control tablets. The company expects that Ortho-Novum will raise total sales of oral contraceptives to nearly $25 million in 1963 and bring a 30% boost in Ortho's sales.

Just about every major drug company in the U.S. is working on some sort of birth control product. Some of the drugs being tested may make the first oral contraceptives--which must be taken 20 times a month at a total cost of $3 --seem as ancient as camel froth. Indianapolis' Eli Lilly & Co. is experimenting with pills that have to be taken only once a month, and Ortho is working hard on a vaccine. Emko, a subsidiary of St. Louis' Sunnen Products, has won the endorsement of the Planned Parenthood Federation for an aerosol foam preparation that effectively prevents conception for up to an hour.

Aside from the new products, there is still an $80 million-a-year retail business in diaphragms, jellies and other feminine hygiene products--a field dominated by Ortho, New York's Holland-Rantos and Chicago's Milex. Prophylactics for men still account for $85 million a year in sales, led by New York's 83-year-old Julius Schmid, Inc.. Youngs Rubber Corp. and Dean Rubber Co. But Sterling Drug's Sterling-Winthrop Research Institute is testing a pill designed for men.

High Profits. The contraceptive industry has developed and grown despite many legal restrictions and social taboos, and the adamant opposition of the Roman Catholic Church, which forbids its communicants to use contraceptives. The industry's ads have long appeared only in medical journals, though the Christian Herald recently accepted an ad for Emko's aerosol foam. Probably no industry has ever depended so heavily on word-of-mouth advertising--or has done so well at it. Profits average about 12% of sales and sometimes go as high as 20%.

The contraceptive industry's outlook is for ever greater business. International concern over the population explosion, a free and easier society, and promotional efforts to instruct the public in family planning have diminished much of the opposition. Manufacturers believe that they have tapped only 20% of the market for contraceptives. They expect to reach much of the rest with new, cheaper and more convenient products. Oddly enough, they also count on a population that is steadily rising, despite their efforts, to give them new customers.

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