Small Pharma

Atley Pharmaceuticals, a drug sales company reinventing itself as a value-added reseller, is enjoying unprecedented growth.

by Peter Galuszka

John Henry Attkisson maintains a stern demeanor as he raps out his no-nonsense orientation. Fourteen conservatively dressed men and women pay rapt attention during the Atley Pharmaceuticals, Inc. sales training program. At one point, a cell telephone rings in a woman's purse. The trainee looks terrified but keeps her cool as she quickly shuts it off.

Attkisson ignores the cell phone as he lays out what it takes to sell for Atley. Personal appearance is critical. No facial hair. Dark suits and white shirts for men. No low-cut blouses or mini-skirts for women. “We sell pharmaceuticals and nothing else,” he says with conviction. "Be courteous and professional, and become the most respected drug salesperson in your territory. Attitude separates mediocrity from excellence.”

Positive attitude and high standards are the essence of Atley Pharmaceuticals, a fast-growing drug company operating out of a building in the woods north of Ashland. Atley sells a line of affordable drugs -- Atuss, QDall and Sudal -- that relieve symptoms related to cough, colds, allergies and pain, providing benefits, such as special time-release mechanisms, that the big pharmaceutical firms don't match.

The company's niche is investing in drug-delivery technologies that optimize the effect of molecules already accepted in the medical marketplace. For instance, Atley formulates its QDALL allergy and cold medicine so it needs to be taken only once a day. The drug delivers an antihistamine and a decongestant during the day but only the antihistamine at night, allowing the cold sufferer to stay on the job and get a good night’s rest.

Furthermore, QDALL only has 100 milligrams of pseudoephedrine, while other brands may have up to 240 milligrams, notes Senior Vice President Dave Hajek. The distinction is important because it gives doctors and patients more options and the ability to tailor therapy to the unique needs of each patient.

Atley also charges about one-third to one-half of what the major pharmaceuticals do for comparable products. "The company can do that," says Hajek, "because its own cost-structure is so lean – a result of focused and appropriate marketing, no company-owned laboratories and a bare-bones sales staff.”

“Atley is an exciting company," says Dr. William H. Barr, Professor of Pharmacy at the VCU Medical Center, who is conducting research that should help better understand how certain medicines are absorbed in the gastrointestinal tract. "They are very aggressive and are expanding very rapidly.” 

Attkisson’s salad days in the field gave him clear ideas about how to run his company. His is a decidedly no-frills approach. The company has a 20,000-square-foot headquarters building and a warehouse a few miles away. There are no drug labs, saving enormous overhead. Atley outsources its R&D, mostly to Virginia Commonwealth University.

Atley positions itself as an underdog scrapping with Big Pharma. Drug companies, charges Attkison, "spend millions of dollars in unneeded marketing expenses, inducing doctors to prescribe their products and in direct-to-consumer advertising that encourages consumers to ask their physicians for a specific prescription. All the while, sick people are stuck with prescription bills that are higher than they need be.”

Attkisson shuns publicity and wins sales through hard work and reputation. Atley reps offer doctors limited samples and rely on personal relationships of trust for more sales. Salespeople, who must adhere to Attkisson’s strict codes, work strictly for commissions and use their own cars. As the company’s website puts it: “Atley’s emphasis on traditional values is a reflection of the owners’ belief that the company has an obligation to providers to treat their time as an important asset and [ensure] that they and their patients benefit from interactions with sales people.”

Providing differentiated products at low cost is another part of the Atley mantra. The company positions itself between Big Pharma and the low-end generic manufacturers. The pharmaceutical giants spend billions of dollars on laboratories, researchers and up to 12 years developing new drugs that they hope will some day be billion-dollar blockbusters. At the other end of the spectrum are generic drug makers who sell brand-name drugs stripped down to their essential compounds.

“Atley is in the middle,” says Jim McDermott, vice president of product development and marketing. “Our plan is to leverage drug-delivery technology and reformulate molecules that are known to be safe and effective in order to improve their value to patients.”  Eventually, Atley would like to gain approval for compounds whose active ingredients have never been sold in the United States. 

For now, Attkisson plans to stick to cough and cold medicines because it is a lucrative niche. The company is exploring ways to use time-release in more sophisticated ways.” We’ll go more deeply in those areas,” says McDermott. “We’ll have more complex products.”

Research at the VCU Medical Center involves using percutaneous tubes to gauge how much medicine collects in a patient’s colon in order to advance understanding of how medicine is absorbed by the blood stream. At some point, says Dr. Barr, the company might maintain a presence at the Virginia Biotechnology Research Park near VCU’s medical campus.

The company uses the home base for more than R&D. Most of the firms that serve Atley -- financial services, law firms, accountants and logistics -- are located nearby in the Greater Richmond region or in Virginia.

Attkisson gives them one example. When he was struggling through the early years of his company, he was on the road selling its drugs. He wanted to break into the Hopewell market, and pharmacists told him that one particular physician held sway for what sold in town. The doctor, however, was famous for being impervious to drug “detail men” or salespeople.

Attkisson says he made monthly calls on the doctor’s receptionist for two years. Each time, he was unfailingly polite, but got nowhere. One summer day he paid his usual call and noticed that the office was very hot. The receptionist said he was working with a repairman on an air conditioner on the roof.

As he left, Attkisson saw a ladder going up to the roof. He pondered the consequences, took a swallow and climbed up the ladder where he introduced himself to the doctor and made his pitch. He finally got his sale.  

-- January 6, 2006