For That Great Feeling

Elkhart, Ind., is quite a town. It has 40,000 inhabitants -- and 40 millionaires. It is the site of an early Indian battlefield, the musical-instrument capital of the U.S., the center of more mobile-home makers (50) than any other spot on earth. Elkhart also has a special relationship with -- and dependence on -- the upset stomachs, nervous headaches and run-down feelings of the nation. It is the home of Miles Laboratories, maker of two of the world's most popular household remedies, Alka-Seltzer and One-A-Day Brand vitamin capsules. The histories of Elkhart and Miles are so intertwined that even the town newspaper, the Elkhart Truth, got its start as a medical journal promoting Miles products.

On the Rocks. A lot is happening around Miles these days--besides, that is, the tornado that barely missed the company on its way through Elkhart last week (see THE NATION). Once a narrowly based, family-owned business, Miles has transformed itself into an expansion-bent producer of more than 200 medical and pharmaceutical items, with 18 plants in the U.S. and abroad, sales in 101 countries. Last year it started new drug and chemical plants in France, Venezuela and Guatemala, bought up three new companies. Last week Miles announced that it will double the size (cost: $6,000,000) of its Elkhart citric-acid plant, whose production has already made Miles Laboratories the second U.S. producer of citric acid (after Pfizer), with sales to the companies that make everything from baby formulas to salted nuts and frozen fish.

Miles is even bringing change to its basic product, Alka-Seltzer--an efferescent antacid compound of aspirin, bicarb of soda, citric acid and mono-calcium phosphate. It has added to its traditional blue-labeled bottle handy tinfoil packs of Alka-Seltzer that can fit into pocket or purse, is test-marketing ginger-and citrus-flavored versions of the tablet. To convince people that they do not have to drink a gallon of water with Alka-Seltzer, the company is also suggesting in its ads that they adopt the habit of downing Alka-Seltzer "on the rocks," with only a touch of water.

Stiff Tonic. Miles got started on all this activity as the result of a king-sized headache of its own. Founded in 1884 by Elkhart Physician Franklin Miles, who started off with a liquid sedative known as Dr. Miles' Nervine, Miles remained a small company until the early 1930s, when it brought out Alka-Seltzer. Though archrival Bromo-Seltzer had already been marketing an effervescent powder for years, Alka-Seltzer soon moved ahead to become a dyspeptic nation's favorite (it now outsells Bromo-Seltzer 4 to 1). After packaging powdered coffee and lemon mix for K-rations during World War II, Miles Laboratories became in the postwar years the world's largest seller of multivitamin tablets. Nonetheless, though prospering, the company itself showed a decided lack of pep by the mid-1950s.

Management Consultants Booz, Allen & Hamilton prescribed a stiff tonic: cut down on relatives in the management, diversify, set up separate divisions, expand overseas, sell stock to the public. Miles took the advice, lured outside talent into its executive ranks, acquired an enzyme and a dermatological firm, built four new foreign plants in four years, brought out several new products, including Chocks, a flavored, chewable vitamin for children. Booz, Allen predicted that Miles could thus double its sales and profits in ten years; Miles has actually done the trick far faster. Its sales have climbed from $51.5 million in 1956 to $118.5 million last year, and profits have nearly tripled, to $6,900,000.

This strong performance is being pushed by a top command descended from the company's 19th century owners: Chairman Walter R. Beardsley, 59, who controls 20% of the firm, and President and Chief Executive Walter Ames Compton, 54, a Harvard-trained physician. A breeder of Chukar partridges, a leader in the fight to save the American chestnut tree, and a collector of Japanese swords, Oriental rugs and historical bells and whistles, Dr. Compton has few habits that require the frequent use of his chief product. That does not seem to bother him. He has strongly moved Miles into clinical testing devices and other profitable fields --and he also collects interesting facts. One fact in his collection: the world is consuming Alka-Seltzer at the rate of 56 million tablets a week.

This file is automatically generated by a robot program, so reader's discretion is required.