Moore Medical Corp.

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Moore Medical Corp.

389 John Downey Drive
P.O. Box 1500
New Britain, Connecticut 06050
U.S.A.
(860) 826-3600
Fax: (860) 223-2382

Public Company
Incorporated: 1969 as Optel Corp.
Employees: 450
Sales: $289 million (1995)
Stock Exchanges: American
SICs: 5122 Drugs, Proprietaries & Sundries; 5047 Medical & Hospital Equipment

A leading distributor of health-care products, Moore Medical Corp. sells approximately 13,000 pharmaceutical, medical, and surgical products through direct mail, telemarketing, and a small field sales force. During the mid-1990s, Moore Medical fulfilled orders at four regional distribution centers located in New Britain, Connecticut, Jacksonville, Florida, Lemont, Illinois, and Visalia, California. Through these facilities and through two telemarketing centers in Connecticut and California, where the majority of the company’s orders were processed, Moore Medical catered to a nationwide customer base, serving approximately 90,000 customers. The bulk of the company’s business was derived from sales to either professional health-care practitioners or wholesale customers who purchased Moore Medical products for resale. Although Moore Medical was founded as a wholesaler of brand name pharmaceuticals, the company was moving in a different direction during the 1990s. Higher-profit-margin generic pharmaceuticals and medical and surgical supplies were the company’s chief areas of focus as it completed its first half century of business and embarked on its second. As a result of the new strategy adopted during the early 1990s, Moore Medical’s sales were declining during the first half of the decade, but its profits were on the rise. In 1995, the company recorded $2.3 million in net income on $289 million in sales compared to $645,000 in net income on $306 million in sales in 1990.

Late 1940s Origins

Established in 1947, Moore Medical began as a mail-order distribution business housed in the back room of a local drugstore. Originally, the company’s product line comprised brand name pharmaceuticals that were sold to independent drug stores throughout the country, a customer base that the fledgling drug wholesaler targeted through unconventional means. Typically, companies of Moore Medical’s ilk during the late 1940s marketed their product lines through catalogs—a medium Moore Medical would later use—but early on the company placed advertisements in trade journals and printed sales information on post cards, which were then mailed to prospective drug store customers.

With its foundation in the wholesale drug distribution business established, the company slowly began to broaden the scope of its business, making its first noteworthy move more than a decade after its formation. Cosmetics were added to company’s product line in 1960, when H. L. Moore Drug Exchange, as the company was then known, employed roughly a dozen employees. Entry into the generic pharmaceutical business had also been completed, giving the company two facets to its business as the 1960s progressed.

By the end of the decade, Moore Medical was supported by a promising generic drug trade and its more than 20-year-old brand name wholesale business, enterprises that began to draw the attention of interested buyers from the national business community. Such interest touched off a period in Moore Medical’s history that saw the company’s control pass from one new owner to another. Holbrook, Massachusetts-based Parkway Distributors acquired Moore Medical in 1969 and superintended the company’s development for the next six years, until Levitt Industries acquired Parkway Distributors in 1975. Three years later, Levitt Industries merged with Optel Corp., a company based in New York that was founded in 1969 as a liquid crystal display (LCD) designer and manufacturer. It was at this point that the name Moore disappeared from the corporate ranks of U.S. businesses, but its departure was only temporary. In October 1985, Optel changed its name to Moore Medical Corp., ushering in an era in the health care distributor’s history that witnessed the New Britain company reposition itself for growth during the 1990s and the 21st century.

During the years of fluttering from one parent company to another, Moore Medical had started to merchandise medical and surgical products, one of the most important product lines during the company’s existence in the 1990s. Other developments that took place in the wake of the name change from Optel to Moore Medical also played a part in the company’s operation during the 1990s. In July 1986, Moore Medical moved to 389 Downey Drive, the address of company headquarters during the 1990s, and two years later acquired West-Ward Pharmaceutical Corporation. The acquisition of West-Ward Pharmaceutical, completed in January 1988, gave Moore Medical a generic drug manufacturing division, something new for the New Britain company.

Years had past since Moore Medical had relied on post cards and advertisements in trade journals to generate business. The company, like numerous other drug wholesalers, began to distribute catalogs delineating its product lines, thereby adopting the approach use by its competitors, but in one other respect Moore Medical was unlike many of its competitors. Typically, drug distributors were manufacturers as well, but for years Moore Medical did not possess any pharmaceutical production capabilities. The acquisition of West-Ward Pharmaceutical Corp. gave the company manufacturing capabilities, but Moore Medical did not hold on to the generic drug manufacturer for long. Its divestiture marked the beginning of a new strategy for Moore Medical during the 1990s, signaling the start of a period in the company’s history that moved the drug distributor and marketer toward products with higher profit yields.

New Strategy Adopted during the 1990s

West-Ward Pharmaceutical was sold in 1991, a year that saw Moore Medical change its market approach and adopt a new strategy to carry the company through the 1990s. For years Moore Medical’s management had focused its efforts on increasing the company’s market share, a strategy that at times meant sacrificing profitability. Concurrent with the sale of West-Ward Pharmaceutical, this strategy was abandoned, as management revised its pricing policies and began to shape the company into a distributor whose hallmark qualities were low prices and quality service. Specifically, the company became less aggressive about competing in the brand name pharmaceutical market, where Moore Medical had first fought for business during the late 1940s. Despite its link to Moore Medical’s first days as an enterprise, the brand name pharmaceutical business offered low profit margins to competitors during the early 1990s, something the company’s management was intent on avoiding in the new decade ahead.

For the 1990s, management instead concentrated its efforts on higher-profit-margin generic drugs and the expansion of its medical and surgical supply business. The new approach meant lost sales, but increased profits, a function of Moore Medical’s strategy for the 1990s that was borne out in the financial figures posted by the company during the first half of the decade. Between 1990 and 1995, annual sales dipped from $306 million to $289 million, recording a six percent slip. The company’s net income during the first five years of the 1990s, on the other hand, increased exponentially, rising from $645,000 to $2.3 million in 1995, a 260 percent leap.

In retrospect, the financial totals recorded between 1990 and 1995 pointed to the validity of the new strategy embraced in 1991. The intervening years, however, told the tale of Moore Medical’s progress with its new plan before industry analysts could point to the five-year financial figures. With its hopes on expanding its medical and surgical supply business and its generic pharmaceutical business, Moore Medical’s management moved forward in 1991 endeavoring to improve the company’s marketing and distribution systems. A new distribution facility in Visalia, California, opened in March 1992, replacing the company’s outmoded warehouse in Hay ward, California, which was half the size of the new Visalia building. Further additions to the company’s distribution center network were in the offing as Moore Medical restructured itself for the coming years, tailoring its operations and marketing approach to reflect the changing focus of its business.

In 1993, Moore Medical divided its customer base into three groups: independent pharmacies, pharmacy chains and specialty retailers, and health-care professionals working in non-hospital settings. By this point the company sold more than 12,000 products to 66,000 customers and derived its revenue from the sale of generic pharmaceuticals, medical and surgical supplies, and brand name pharmaceuticals. To generate business, Moore Medical marketed its products through a small field sales force, catalogs, and telemarketing. Although two years earlier the company had decided to put less effort into developing its brand name pharmaceutical products, Moore Medical had by no means abandoned the business. Brand name pharmaceuticals continued to contribute substantially to the company’s bottom line, but the future rested on the growth of the prescription generic drugs sold under the “Moore” label and the over-the-counter prescription generic drugs packaged by manufacturers under the “Valumed” trademark.

Company Perspectives:

The mission of Moore Medical Corp. is to market competitively priced health-care products with delivery and service standards that meet or exceed customer expectations. Our goal of increasing share in the markets we serve will be achieved through a team of motivated employees that work in an environment that encourages the realization of their full potential. Through excellence in marketing and service, we will achieve growth in value to the benefit of customers, employees and shareholders.

The expansion of Moore Medical’s medical and surgical supplies business also figured heavily into the company’s future. With a product line that included disposable products, diagnostic tests, instruments, and rehabilitation equipment, and everything from hospital gowns and bandages to stethoscopes and latex gloves, Moore Medical’s medical and surgical supplies business was a much-used source for professional healthcare practitioners across the country. The company had been involved in this field for roughly 20 years by the 1990s, but during much of that time the sale of medical and surgical supplies represented a small percentage of Moore Medical’s total sales. In 1990, for instance, medical and surgical supplies sales contributed only slightly more than 10 percent of Moore Medical’s revenue volume for the year, a percentage that the company’s management hoped to increase in the years ahead. Toward this goal the company achieved considerable success, as more resources were funnelled into the medical and surgical supplies segment of Moore Medical’s operations. In 1995, the sale of medical and surgical supplies ranked as one of Moore Medical’s most important businesses, accounting for more than one-fifth of total revenue volume for the year.

By the mid-1990s, the changes initiated in 1991 had delivered their desired effect, but further changes were still to come as Moore Medical sought to position itself for the future ahead. A new, 60,000-square-foot distribution center was opened in Jacksonville, Florida, in March 1995, an addition that improved the company’s service in the Southeast. Later in the year, management reorganized Moore Medical’s operations into eight business units, each concentrated on a particular market type. Five of the new business units created during the latter half of 1995 were structured to serve markets that addressed professional practitioners administering health care. The remaining three units were charged with marketing products that were purchased for resale.

By this point, nearly 50 years into its corporate existence, Moore Medical ranked as a leading, national distributor of medical and pharmaceutical supplies, its high industry standing owing to an effective combination of competitive pricing and helpful service. During the mid-1990s, Moore Medical was focused on the markets that were expected to yield the highest profits and selling and distributing health-care products to more than 20 targeted customer groups. By 1995, the company was selling 13,000 products to roughly 90,000 customers and marketing its pharmaceutical and medical/surgical supplies through the conventional industry methods. The company continued to rely on a small field sales force, two telemarketing centers in Connecticut and California, and catalogs, but as the late 1990s neared Moore Medical adopted a new marketing approach.

In 1996, after one year of development, Moore Medical began shipping CD-ROM and diskette versions of its 350-page, full-color catalogs. Shipments of the CD-ROM and diskette versions of Moore Medical’s catalogs began in July, with both formats featuring an on-line ordering system that confirmed inventory and pricing 24 hours a day.

It was a move that firmly positioned Moore Medical as a company responsive to the needs of its customers. Mark Karp, the president and chief executive officer of Moore Medical at the time, noted as much, describing the technological changes that had affected the company’s clientele.“The PC,” Karp said in July 1996, “is a central part of virtually every clinic, pharmacy, office, EMS organization or institution these days.... as more and more organizations move toward a paperless environment, Moore Medical wants to be 100 percent responsive to the health care market’s need for simplification.” With this focus on service and the company’s intent on distributing high-profit-margin products characterizing its stance during the mid-1990s, Moore Medical charted its course past its 50th year of business and into the late 1990s.