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Milestones in Elkhart.

Alka-Seltzer and One-A-Day vitamins helped keep Elkhart's Miles Laboratories healthy for more than 100 years. There's more to the story.

If you can remember the Great Depression of the 1930s, you probably remember an announcer selling Alka-Seltzer by telling you over the radio--to "Listen to it fizz."

And Baby Boomers can recall chuckling at TV commercials featuring a middle-age Italian-American man choking down his wife's inedibly spicy meatballs, clearly demonstrating his need for the effervescent stomach antacid.

More recently, after Alka-Seltzer was extended into the cold remedy market, you may have watched TV ads showing football fans braving cold, snowy weather with confidence that Alka-Seltzer Plus Cold Medicine would relieve their symptoms.

The success of Alka-Seltzer, which celebrated its 60th anniversary last year, is a major reason why its manufacturer, Miles Inc., has been a mainstay of the Elkhart economy for decades. Currently, Miles is the second-largest employer in the South Bend-Elkhart metropolitan area, behind only the University of Notre Dame.

In the Elkhart area are headquarters of a number of Miles business units. The Consumer Healthcare Products and Dental Products units--which are part of the company's larger Pharmaceuticals Division--are based in the Elkhart area. In fact, most of the company's consumer health-care products are manufactured in Elkhart. Also, two business units of Miles' Diagnostics Division--the Urine Chemistry and Diabetes units--are located in the Elkhart area. And Miles' Haarmann & Reimer Corp. Food Ingredients Division is located in the area as well.

Although its headquarters moved to Pittsburgh Jan. 1, Miles Inc. executives in Elkhart believe the 108-year-old company has a bright future in the marketplace and in Indiana.

For one thing, it is not just "the Alka-Seltzer company."

In consumer health care, Miles has its One-A-Day, Flintstones and Bugs Bunny vitamin brands, and in diagnostic instruments, its Glucometer diabetes-care products are the most widely used self-testing systems in the world. And the Haarman & Reimer division is a major manufacturer of citric acid.

A bottle of Dr. Miles' Restorative Nervine would have been recommended to anyone thinking the tiny company founded in Elkhart in 1884 would grow to become what it is today.

Fortunately for Miles Inc.'s founder, Dr. Franklin Miles, two of early Elkhart's most successful entrepreneurs, Albert R. Beardsley and George E. Compton, had enough nerve to invest time and money in his fledgling firm.

Dr. Miles' father owned a drugstore, so, perhaps he felt it was logical to blend his own remedies, such as "Nervine," for his patients. It was not a get-rich-quick scheme, as Dr. Miles did not found the Miles Medical Co. until nine years after he opened his practice in Elkhart.

The new company didn't exactly make a big splash, either. As William C. Cray wrote in Miles 1884-1984, A Centennial History, the founding of Miles Medical "did not pass unnoticed, but it was small compared to the two starch mills, two knitting factories, three flour mills and six paper mills that were started in Elkhart in the post-Civil War period."

While Dr. Miles formulated Nervine and other home remedies primarily out of his belief that the functioning of the nervous system was the key to good health, it was the Comptons and the Beardsleys who provided the company with the financial and marketing strategies needed to carry on into the 20th century.

After George E. Compton and A.R. Beardsley bought into the company, Dr. Miles paid less attention to the day-to-day operations of the drug business. Chronic bronchitis eventually led to Dr. Miles' departure from Elkhart in 1906 to Fort Myers, Fla., where he was a neighbor of Thomas Edison, and conducted agricultural experiments which led to the development of Southwest Florida's fruit- and vegetable-growing industries.

George E. Compton, co-owner of a general store, owner of a flour mill, active in banking and real-estate development, became the treasurer of Miles Medical in 1887. On several occasions during the early years, he plowed additional equity into the company so it could meet expenses.

A.R. Beardsley, who made a fortune in the starch business, became general manager of Miles Medical in 1890. He also provided the company with capital during times of need, and persuaded his nephew, Andrew H. "Hub" Beardsley, to tag along as a bottle washer. Hub Beardsley joined Miles, eventually attained the position of chairman and is regarded as the "second founder" of Miles.

Even during the early years, marketing was as important to Miles Medical as chemistry. As Cray writes, the company employed "more pressmen than chemists." It printed calendars, almanacs and "little books" which provided useful information, homespun jokes, and, of course, touted Miles' products.

But Hub Beardsley and his younger brother, Charles, took Miles' early advertising and promotional campaigns to new levels.

It was Hub Beardsley, Miles chairman from 1925-36, who believed Miles' Nervine product needed an improved formula and more-modern appearance. Nervine, which in the days before government regulation of the drug industry was sold as a treatment for everything from heart palpitations to stomach aches, eventually became Alka-Seltzer. Miles still markets a product called Nervine, but it is a sleep aid rather than an antacid.

The first step on the road from Nervine to Alka-Seltzer occurred in 1927, when Beardsley hired Maurice Treneer, a British chemist and tablet-making expert. Beardsley actually gave credit for Alka-Seltzer's formulation to Tom Keene, the managing editor of the local newspaper, the Elkhart Truth.

During a flu epidemic late in 1928, Beardsley marveled at the fact that the newspaper seemed to be the only company in town without a large number of employees out sick. Keene explained he was able to get the paper out because he kept his employees filled with an elixir of aspirin and bicarbonate of soda. Those were to become the two key ingredients of Alka-Seltzer (the other is citric acid). It was Treneer who perfected the technique for the mass production of the effervescent compound in tablet form.

Brought to market in 1931, Alka-Seltzer could have vanished, as countless consumer products do every year, without the marketing genius of Charles Beardsley, who eventually rose to the position of president in 1944 and chairman in 1947.

It was Charles S. Beardsley's bold decision to invest--during the depths of the Great Depression-in a new advertising medium, radio, which propelled Alka-Seltzer on to the national scene.

Listeners to the "Saturday Night Barn Dance," which became a "Who's Who of Radio" during the 1930s and 1940s, were told to "Listen to it fizz!" as two Alka-Seltzer tablets were dropped into a glass of water. It provided listeners with a feeling for the effervescent action which makes the pain reliever fast-acting.

As times changed, and new technology became available, the advertising campaigns for Alka-Seltzer had to adapt. The Speedy Alka-Seltzer cartoon character advertising campaign became the first important television campaign. An example of simple, straight-forward design, "Speedy" was two Alka-Seltzer tablets, one for the body and one worn as a hat, holding a magic wand, representing fast relief. The voice of diminutive actor Dick Beals also played a crucial role in the success of the Speedy campaign, which was launched in 1952 and moved on to TV in 1953.

For almost a decade, Speedy was Alka-Seltzer.

The 1960s and 1970s required new campaigns, including the so-called "Stomachs Montage," which was the first TV commercial to subtly weave humor into the sales pitch. Later came the award-winning humorous slice-of-life entries known in the advertising industry as "Groom's First Meal" and "Restaurant."

In the 1980s, the newer Alka-Seltzer Plus Cold Medicine product, an example of the "line extension" strategy, helped maintain Alka-Seltzer's strong market position. In fact, in 1988, Alka-Seltzer Plus Cold Medicine sales (now around $100 million a year) surpassed the original Alka-Seltzer antacid sales.

Continued creation of new advertising campaigns will remain essential to the success of the product, says Werner Spinner, president of Miles Consumer Healthcare Products. For example, the early campaigns promoting Alka-Seltzer as a treatment for hangovers or overeating would not be as acceptable to today's health-conscious consumers.

Few consumer products have lasted 60 years, and the profits generated by Alka-Seltzer provided Miles with the financial resources to diversify into other areas. Key players in the diversification effort were Arthur L. Beardsley, brother of Hub Beardsley, and Dr. Walter Ames Compton, grandson of George E. Compton.

Arthur L. Beardsley became the chairman and president upon the death of his brother in 1936. He guided the company as it moved from its old headquarters in downtown Elkhart to the 130-acre complex it still occupies on the northwest side of town.

And he hired Dr. Compton to the newly created position of medical and research director. It was Dr. Compton, who became president in 1964 and chairman in 1973, who saw vitamins as a suitable field for Miles, since he viewed vitamin supplements as "insurance" for good health. His idea is elegantly conveyed in the name of Miles' 50-year-old vitamin product: One-A-Day.

The work of Dr. Compton, Treneer and chemist Jonas Kamlet on an effervescent tablet for testing sugar in urine led the way for Miles' entry into the field of diagnostics and patient self-testing products.

It was also Dr. Compton who realized during the 1970s that Miles, a New York Stock Exchange-listed company at the time, did not have enough financial resources to remain independent and mount a competitive pharmaceutical research effort at the same time. The friendly acquisition of Miles in 1977 by Bayer AG of Leverkusen, Germany, was the result. As of Jan. 1 this year, all Bayer-owned companies in North American were grouped under the name Miles Inc., with Miles headquartered in Pittsburgh.

The restructuring required the relocation of about 10 senior management people--a tiny number when you consider Miles employs around 3,000 in the South Bend-Elkhart metropolitan area. But otherwise, it's "business as usual" at Miles' Elkhart-area operations, says David M. Hillenbrand, senior vice president in Elkhart.

The "new" Miles gives managers at the company's more than four dozen "sites" a significant amount of decision-making authority, and that is particularly true at Elkhart, Miles' largest site and one of the German parent company's largest investments in North America, says Hillenbrand.

Hillenbrand, an American whose father, Martin, was U.S. ambassador to West Germany from 1972-76, says the German parent company wants to develop more American executives--but they have to have a thorough knowledge of the German language, among other things.

The fact the German parent company's managerial needs are different in North America is reflected in Hillenbrand's educational background.

Instead of earning an MBA from Harvard or another Ivy League school, Hillenbrand, 45, earned master's and doctorate degrees in Germanics from the University of Washington. His first job after completing his doctorate was at Bayer AG's headquarters in Leverkusen.

Elkhart is where a significant amount of growth will occur. The company has announced plans to build a new, $60 million tablet-making plant in Elkhart, and a significant amount of diagnostics research and development will continue in Elkhart.

"Of the five categories of diagnostics-clinical chemistry, diabetes, hematology, immunodiagnostics and urine chemistry--we're share leaders in diabetes and urine chemistry," Hillenbrand says.

In addition to diagnostics, there should be many positive developments coming out of Miles prescription and non-prescription drug businesses, says Spinner, the Consumer Healthcare Products president.

Miles plans to reinforce the market positions of Original Alka-Seltzer anti-acid and Alka-Seltzer Plus Cold Medicine, along with extending them into new market niches.

Consumers are more aware of the slight differences in the set of symptoms commonly called a cold, which means the illness "is becoming a generic term," Hillenbrand says. Consequently, there will be increasing differentiation and wrestling over niches among the manufacturers and marketers of cold and flu remedies, he says.

"To create a megabrand like Alka-Seltzer is an amazing accomplishment," Spinner says. "It's horrendously expensive to establish a new over-the-counter brand."

But non-prescription drugs offer great returns at less risk than trying to develop new prescription drugs in the research laboratory, which is why Miles will continue to put great emphasis on its over-the-counter drug business.

Getting government approval to switch prescription drugs to the non-prescription market should be another source of consumer health-care growth in Elkhart, says Spinner, a graduate of the University of Cologne, who joined Bayer AG in Germany in 1974.

Elkhart will become the center of Miles' tablet-making in North America, and the company continues "exploring several compounds" with enough volume potential to justify building a new plant.

It is "premature" to speculate about the number of jobs that would be created upon completion of the new tablet plant. But Hillenbrand adds, "All of our businesses here (in Elkhart, Mishawaka and South Bend) are profitable and growth-oriented. Investing in infrastructure year-in and year-out is the key to sustaining growth and the decision to consolidate all solid-dose manufacturing here bodes well for the future of Elkhart."

Dr. Miles Comes to Elkhart

In the early 1880s, a country doctor in the bustling town of Elkhart, Indiana, began bottling "Restorative Nervine," his own preparation that had proven useful in the treatment of a number of chronic illnesses. He sold his medicine in small quantities at first, yet orders came from as far away as Philadelphia. For several years he managed sales out of his home office. But as his practice grew and his reputation spread, this obscure effort--known under the name of Miles Medical Co.--proved to be the seedling of a corporate enterprise whose products would someday be household words.

Dr. Franklin L. Miles was 38 when he founded the company that was to become Miles Laboratories Inc. He had behind him 12 years of preparatory and university education in the natural sciences, civil law and medicine. Already he had established himself as a specialist in the care of eye and ear problems.

Soon after commencing medical practice in Chicago in 1874, he had come to believe that the nervous system exerted much more influence on disease, both acute and chronic, than was usually supposed. He had begun a series of original investigations and subsequently kept detailed records on as many as 30,000 cases in an effort to substantiate his theories.

The newly settled physician moved his office from Chicago to Elkhart in 1875. It was 1884 when he and two businessmen founded the Miles Medical Co., and 1890 when he started "The Grand Dispensary" for treating patients by mail. Chronic bronchitis forced him to leave the company in the hands of able managers and move to Florida in the early 1890s. There, as a neighbor and friend of Thomas Edison and Henry Ford, he began a second career in horticulture.

He remained active in his company business, retaining the title of president until he died in 1929. He lived to see it emerge into the modern era of pharmaceutical research. Just shortly before his death, word had reached him of a promising new effervescent medication then in preliminary tests: Alka-Seltzer.

The Origin of Alka-Seltzer

When the Dr. Miles Laboratories, in 1928, were making Dr. Miles Effervescent Nervine Tablets, we had an expert chemist, especially skilled in effervescent products, making these tablets.

In December 1928, an epidemic of colds and influenza struck our country. It was estimated that 50 percent of the population were affected, in some way or other. Although this epidemic was milder than the previous one in 1918, it was serious, nevertheless.

At the height of the epidemic, the Dr. Miles Laboratories had 25 percent of its employees out, at one time or another, on account of this scourge.

One morning, I went over to the office of the Elkhart Truth. The managing editor, Mr. Tom Keene, told me that not one of their employees had lost any time on account of the colds and flu. When I asked him why, he said that when a member of his staff showed signs of coming down with a cold, he brought him into the office and dosed him with aspirin and bicarbonate of soda, with instructions to continue until he was free from symptoms.

When I returned from our Laboratories, I asked our chemist, Mr. Maurice Treneer, if he could make an effervescent tablet containing bicarbonate of soda and aspirin, and he said he could. In about a week, he brought down some very satisfactory samples.

We used these tablets around the office and the Laboratories, with very gratifying success, in January.

This is the origin of Alka-Seltzer. It was primarily used for colds, and has now become almost the universal remedy.
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Title Annotation:includes related articles; Elkhart, Indiana
Author:Kurowski, Jeff
Publication:Indiana Business Magazine
Date:Nov 1, 1992
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