Sterling Headache

The biggest drug manufacturer in the U.S., Sterling Drug Inc., last week published its first annual report since it has become one of the chief U.S. agencies for combating Nazi commercial interests in South America.

The report, showing gross sales of $53,448,000, revealed that net profits on both domestic and foreign business were down from $8,651,000 in 1941 to $7,086,000, a drop that could be explained by higher U.S. taxes. But the significant figure was profits from foreign subsidiaries other than England (mostly in Latin America), which dropped from $1,191,112 to $336,870.

The Headache. Behind those figures lies a complicated story which revolves very largely around a product which most Americans take for granted--aspirin. Back in the '20s, Sterling gave up struggling against German competition in that product in South America and concluded a cartel peace with I. G. Farben by which Sterling's two subsidiaries, Sydney Ross Co. and Sterling International, became Farben's selling agents. This combination made Sterling a chief commercial aid to the Nazis after war broke out in Europe, because Sterling had also agreed to supply I.G.'s Latin American market if I.G. itself could not deliver. In the fall of 1941 it brought down a walloping attack from Thurman Arnold. With the aid of its lawyer, ex-New Deal Fixer Tommy Corcoran, Sterling cleaned up its mess by 1) signing a consent decree; 2) agreeing to abrogate its German contracts once and for all and to compete with I.G. actively in Latin America.

The Cure. Biggest job was to persuade Latin Americans to ask for a U.S. aspirin instead of I.G.'s Cafiaspirina--a trade name that had been synonymous with aspirin below the border for 25 years. Sterling hit on the name of Mejoral (derived from mejor, meaning better in Spanish) and let fly with a terrific sales campaign that has left South Americans groggy--but full of Mejoral. During 1942 "Mejoral es mejor," Sterling's new slogan, poured from 230 radio stations in 7,000 half-hour programs, 5,200 quarter-hours, 4,700,000 spot announcements. (In parrot-loving Mexico one brilliant radio plot backfired: at a contest offering prizes for the first parrot to say "Mejoral es mejor" over the air, all the parrots got mike fright.) Mejoral religious calendars (which devout Latin Americans love--see cut), joke books, pamphlets on how to love, how to read a horoscope, how to recognize an airplane, flooded the Hemisphere; 150 sound, movie and poster trucks stormed its hinterland.

The Costs: The results of this headache hullabaloo have been spectacular in terms of sales: less than one year from scratch, Mejoral has recovered (on a yearly basis) some four-fifths of the 25-year-old aspirin market that Sydney Ross and Sterling International lost when the Cafiaspirina arrangement was canceled. But the Mejoral push has also been spectacular in terms of costs: close to $2,000,000 of hard Sterling cash went into Latin American advertising last year, using up perhaps 30% of its Good Neighbor gross. Other costs have skyrocketed too: e.g., 2,000 employes, many of them meticulously trained in the U.S., now blanket the field, v. 800 in 1941.

Considering these costs, the fact that Sterling showed a foreign profit at all last year is amazing. And on balance, the directors of the company have every right to feel pleased: they have saved their foreign outlets and done a good job for Uncle Sam as well. Nonetheless there are still some Washington officials who fear that at war's end Sterling will want to resume its old ties with I. G. Farben. And certain it is that after the war Germany (if it can) will actively help I.G. regain her markets. In that event Sterling may need active support from the U.S. Government to hold her own.

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