Trouble at the Plant

At the end of 1954, Dr. Robert Cutter, president of Cutter Laboratories of Berkeley, Calif., wrote in his annual report to stockholders: "We are up to our ears in the Salk poliomyelitis vaccine production. Around the middle of the year you are either going to look on this decision as being very dumb or very smart, depending on how the poliomyelitis vaccine turns out." Last week, as a result of the Salk vaccine, the company was up to its ears in the most unfavorable corporation publicity in recent years. More and more medical men were asking for a re-examination of Salk vaccine production techniques (see MEDICINE), but it was Cutter that had borne the brunt of public indignation over the early snafus, and it was Cutter's vaccine that was banned by the U.S. Public Health Service. There was some reason for this: Cutter injections were accompanied by a far higher proportion of polio cases than those of any other company.

From $15.50 to $8.75. Following the ban, the company recalled the unused 256,000 cc. of its Salk vaccine, announced that it would take a loss estimated at $1,250,000. Under the deluge of bad publicity, Cutter stock slumped from $15.50 to $8.75 a share.

Despite this, all seemed calm last week at Cutter's 20-acre Berkeley laboratory and at its $1,000,000 Chattanooga hospital solutions plant. The three executive Cutter brothers--Dr. Bob, 57, the president; Executive Vice President Ted, 53 (sales, production); Vice President Fred, 51 (research, controls)--were doing business as usual. Sales were running slightly ahead of last year's $14,850,000. The company had not discharged any of its 1,097 employees, and had, in fact, even added a new biologicals controls building to the 37 others at the Berkeley plant. Said Fred Cutter: "We are completely confident about the future."

Cutter Laboratories, born in the backroom of the late Edward Cutter's Fresno, Calif, pharmacy in 1897, is the second oldest pharmaceutical house in the country under continuous ownership and management (the oldest: Parke, Davis & Co.), and has a solid professional reputation. It pioneered commercial production of serum albumin (for shock and kidney infections), gamma globulin (the first anti-polio serum), triple vaccine (against diphtheria, whooping cough and tetanus), the Semple Rabies Vaccine (an improvement on the old Pasteur formula), and is the exclusive U.S. marketer of fibrinogen (which helps to clot blood) and bubonic plague vaccine.

But for the Grace of God. In the furor Cutter competitors, taking the view that but for the grace of God it might have been they, rallied to the embattled firm. Winthrop-Stearns's President Theodore Klumpp wired: THROUGH YOUR UNEXCELLED PRESTIGE AND REPUTATION I AM CERTAIN IT WILL WORK OUT ALL RIGHT.

Charles Pfizer & Co. offered to fly in some of its own public relations and research staff to help out. One Los Angeles drug chain notified all its doctor customers that it planned to buy only Cutter products when possible, in return received not one complaint. Another drug company president ended his letter: "Bob, I want you to know your friends are with you."

The firm's chief answer to the unfavorable publicity has been a letter to doctors and druggists from the president, which concludes: "Many of you have asked, 'How can I help?' The greatest help would be if you could urge your hospital administrator not to lose his confidence in us. He is in a tough spot. Most of his patients are people who have known Cutter only through the lambasting we have taken."

Last week, at the American Pharmaceutical Manufacturers Association convention at White Sulphur Springs, W. Va., Cutter's competitors publicly showed how they felt. They elected as their new president Dr. Robert Cutter. Said outgoing President Robert A. Hardt of Hoffmann-La Roche: Cutter officials "are men of integrity, ability and experience . . . They have our confidence."

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