FAST 40: Generic drug niche grows for Cypress Pharmaceutical

Mississippi Business Journal, The, Nov 28, 2005

Cypress Pharmaceutical Inc., a specialty pharmaceutical company, based in Madison.

After selling products for other pharmaceutical companies for years, Max Draughn took a leap of faith. With only one product to sell generic cough/cold relief medicine he established Cypress Pharmaceutical Inc., in Madison.

Since that sultry July day in 1993, Cypress Pharmaceutical has found success in the generic drug niche. In August, the Madison-based pharmaceutical company was awarded the Cardinal Health Supplier Quality Award for the seventh time, becoming only one of few companies in the nation's pharmaceutical industry to have achieved this coveted award five or more times. This year, Cardinal also recognized Draughn as Vendor Salesperson of the Year.

Cypress Pharmaceutical develops, markets and distributes generic prescription and over-the-counter pharmaceutical products to the leading national pharmaceutical wholesalers, chain drug stores, distributors and other retail merchandisers. The company's more than 200 generic products and more than 20 specialty products represent a wide variety of therapeutic categories, including respiratory/coughcold, nutritional/prenatal vitamins, fluorides/dental health, women's health and pediatrics, urinary tract, gastrointestinal, analgesics, dermatological and long-term care.

Product lines are available in a variety of dosage strengths, with formulations such as controlled-release, soft gels and taste masking, and product forms such as liquid, topical and solid. The company outsources the manufacturing of its products to about 25 contract manufacturers throughout the U.S. and Canada.

"The company has been built on the high level of personal service the company provides its customers, physicians, pharmacists and patients," said company CFO Jason Sanderson. "The tone at the top permeates the entire company - the commitment to provide perfect customer service on a daily basis. The company's goal of shipping 100% of its customer orders complete, without errors, the day the order is received, has resulted in a consistent rate of 99.9% achievement for 12 years. The company's consistent focus on meeting the needs of its customers has resulted in secure, stable, long-term relationships with all of the national drugstore chains and national drug wholesalers."

In 1998, the company established a branded division, Hawthorne Pharmaceuticals. Late last year, a specialty sales force was created for that division, adding 25 jobs to the payroll. Today, about 150 people work for Cypress Pharmaceutical.

"Attracting and retaining good people and allowing them to do their job ... allows us to be more nimble and quick than many of our competitors and, in our opinion, gives us a competitive advantage," said Sanderson.

Cypress Pharmaceutical completed its third expansion last July, adding 25,000 square feet of warehouse space. Approximately 5,000 square feet of office space was added during the first expansion in June 2000. The second expansion, the following summer, tacked on another 14,000 square feet of warehouse space. The Madison facility now includes more than 51,000 square feet of warehouse space and 8,000 square feet of office space, and plans are underway this fall to add another 50,000 square feet of warehouse space. In 2003, it was named the second-fastest growing private business in Mississippi.

"As a result of its consistency in the execution of its business plan and focus on the fundamentals of operating the business, the company has achieved a cumulative annual sales growth rate of almost 50% over the last 10 years and will report gross sales well above $100 million in 2005," said Sanderson. "This growth has also resulted from the company's passionate attitude towards understanding its customers' needs and not only meeting, but exceeding those needs. The company has over 15 abbreviated new drug applications in various stages of development that will be filed with the Food and Drug Administration in the next two years that will fuel future growth."