Press Releases 1999
Press Releases 1998

January 1999 Press Releases

NBC/DOW JONES BUSINESS VIDEO FEMALE HEALTH COMPANY PRESIDENT MARY ANN LEEPER FEBRUARY 5, 1999

PETER SCHACKNOW, CORRESPONDENT, CNBC/DOW JONES BUSINESS VIDEO: This is CNBC/DOW JONES BUSINESS VIDEO.

I'm Peter Schacknow in Chicago where we continue our series of conversations with executives. Right now, we're

here with Mary Ann Leeper, who is president and chief operating officer of the Female Health Company (FHC), maker of the female condom. And first of all, thank you for being here. We appreciate it.

MARY ANN LEEPER, PRESIDENT, FEMALE HEALTH COMPANY:

It's my pleasure, Peter.

SCHACKNOW: The latest news of significance, of course, is that at the end of this week, as of the close of trading, February 5th, I believe the stock will no longer be traded on the Amex.

LEEPER: Right.

SCHACKNOW: Tell me about the circumstances that led to that and if you consider this an ongoing problem today.

LEEPER: Well, I don't consider it a problem. An issue to be managed, of course. We're going from Amex to OTC bulletin board as of February 5th. And the reason is basically we did not meet the criteria to stay on AMEX.

SCHACKNOW: The market cap criteria?

LEEPER: Right.

SCHACKNOW: The projections I've read, which were a couple of (UNINTELLIGIBLE) is that for this fiscal year, you will, in fact, reach break even or profitability. Are we still on track for that?

LEEPER: Absolutely on track. Last year, we more than doubled sales to 7.4 million. Our expectation is to certainly meet the 13 million, which is up for our profitability line for this year. And we have two major programs in place to make sure that that happens.

SCHACKNOW: We'll get to those in a moment, but for those who are keeping track of the fiscal year ending September 30th (UNINTELLIGIBLE).

LEEPER: Yes, that's right.

SCHACKNOW: OK, let's talk about the marketing of the female condom. There are many ways that you can go. I noticed that if you read the material first and foremost is the idea of AIDS prevention, which of course is very important. Kind of buried down a little bit further is the prevention of unwanted pregnancy, and either one could be a lead item. Tell me about the way you've chosen to bring it to people's

attention and which facts you bring out on top as opposed to those who come later.

LEEPER: Well, what comes out on top is the prevention of sexually transmitted diseases, including HIV, AIDS, as well as unintended pregnancy. That's how we present the product. Sexually transmitted diseases is a major, major issue in the world, certainly in the United States, although not always recognized, it is a significant issue. And, of course, in the developing world where AIDS is absolutely rampant - in certain countries, it can be as much as 25 percent of the population is HIV/AIDS positive - it's a terrible, terrible thing. And it affects not only the public health of that country but the economics of that country.

SCHACKNOW: You just brought up a very interesting point. One is that the incidents of these problems is different from country to country, and so are the attitudes towards the use of some of these products. So what's it like trying to get the product and increase the sales in those foreign markets where the combination of circumstances is quite

different than in the United States?

LEEPER: Right. Well, in the developing world, I'm not sure you're aware, we have a relationship and agreement of partnership with the United Nations Global Program on AIDS. We are also endorsed by the World Health

Organization and other type agencies like USAID, for instance. And we work with these groups to bring the female condom under the umbrella of U.N. AIDS into the developing countries. We just announced last week that we have a new order from South Africa for 1.5 million units. We have another order coming in from other countries, and that's where we've worked with under this umbrella with U.N. AIDS to bring the product information into the country. We work with the ministries of health, et cetera.

SCHACKNOW: Now I imagine, and this is backed up by the material from your company, that I read that getting people to use it the first time is a barrier, and it's a lot easier to get repeat users. How do you get over that barrier the first time to get people to use it the first time?

LEEPER: Well, I think the issue you have to divide it up. In the United States, getting them to use it the first time is an issue. It's something that you have to explain why it's important to practice safer sex in the United States.

In South Africa, that's not the issue. In South Africa, they know they have to practice safer sex. Women know and want to use the female condom. So in South Africa, what we have to do is get the product to the women who want it, and they're asking for it.

In the United States, we have to do a more education outreach program. We go to colleges, universities. We participate in all various types of programs that teach young people why it's important to take care of themselves.

SCHACKNOW: How do you handle the issue of - I imagine when you're out there marketing, it's perhaps not so much of yes versus no, although that is an issue, as your product versus another viable form of protection, which is the dynamic that most often companies...

LEEPER: For us, it's yes versus no. In other words, practice safer sex or don't practice, yeah, because in the United States, for instance, there are approximately 52 million contracepting couples, but only 15 percent of them are using barrier methods. So in the United States, what we have to do is get to all those people who aren't using barrier methods, who are at risk. That's about 22 million people who are at risk to sexually transmitted diseases. One in three college students today who are sexually active have a sexually transmitted disease, one in three. It's a terrible, terrible statistic, because it's not just for the moment, it's not something that has untoward effects. It can lead to

infertility, it can lead to cervical cancer. Sexually transmitted

disease is a major issue I the United States.

SCHACKNOW: How do effectiveness rates when used properly compared to other forms of protection?

LEEPER: Oh, they're the same. They're comparable, yeah, absolutely.

SCHACKNOW: How about - Will alliances with major companies perhaps be in the future that aren't in fact now that might help you market? I know you have people helping you now, but how will that go forward?

LEEPER: We're constantly interacting and working with different companies. For instance, we are working with a major male condom manufacturer/distributor in the United States coming up in the spring break. We'll be going to different sites where the young kids go for their spring break with this male condom manufacturer, and we will be

jointly promoting those - Prevention is what we're going to be talking about: male condoms and female condoms.

SCHACKNOW: That's interesting. Do people that you would be working with either in reality or potentially worry this is sort of cannibalize sales of their products, or can you put it as more vague cooperative? You can use both and get extra protection?

LEEPER: Well, no, no, no. You don't use both at the same time, but what we have found out is that for some people, they trade off. One night they'll use the male condom, the next time, they'll use the female condom. So that's one piece.

The other piece is that we don't bleed from the male condom market. What we do is we enhance protection. So either we are increasing the number of couples - In other words they weren't using anything, and now they like the female condoms so they're going to use it, or they do this trade off thing.

What studies have shown, both in the United States as well as in the developing world, that when the female condom is available, there is increased protected sex. In other words, people are taking better care of themselves because there is a female condom, and that's where the whole issue is in terms of benefits to global public health. You increase protection, you decrease cost, public health costs.

SCHACKNOW: I realize that the company was formed with the intent of marketing the female condom, so this question may seem sort of odd, but any plans for an extension of the product line to sort of, you know, spread out the revenue base and enhance the chances of profitability?

LEEPER: Well, the first thing that we're doing is we're developing a second generation product, which we hope will affect cost of goods, in other words, lower cost of goods. That's definitely a motive. And then from there, we'll go into other products for sure.

SCHACKNOW: What kind of fee would you anticipate without (UNINTELLIGIBLE) and say, "OK, this is it"? What would you have in mind?

LEEPER: OK, obviously, we're very interested in peri-menopausal, post-menopausal type products, and we're also interested in prenatal. So kind of at the beginning and the end of the whole gamut. Women's health. I mean, we are very, very, very, very dedicated and committed to helping

women stay healthy around the world. Those are our goals.

SCHACKNOW: OK, and one final question from an objective point of view. What kind of milestones or events should people look for perhaps later this year that will signify type of progress that you would like to see?

LEEPER: Well, there's two things we have to keep an eye on this year. One is the approval of the female condom in Japan. This will be very, very pivotal, some very large market. We have to be there. We have to get in there, and we're at the end stage of approval. They are partners.

We're at the end stage of approval. Should be on the market this year. Very, very important.

Second pivotal point is the expansion of the U.N. Aids program into the developing world. As we bring in more countries and expand the programs in the countries where it's already available. Two key points.

SCHACKNOW: OK, we appreciate your time today and look forward to updating with you again.

LEEPER: I enjoyed it. Thank you.

SCHACKNOW: Mary Ann Leeper, president and chief operating officer of Female Health Care joining us here today in Chicago. I'm Peter Schacknow, and this is CNBC/DOW JONES BUSINESS VIDEO.

Copy: Content and programming copyright 1999 CNBC/Dow Jones Business Video, a division of CNBC/Dow Jones Desktop Video, LLC. No portions of the materials contained herein may be used in any media without attribution to CNBC/Dow Jones Business Video, a division of CNBC/Dow Jones Desktop Video, LLC. This transcript may not be copied or resold in any media.

 For more information about The Female Health Company toll-free via fax,

Also, visit the Company’s web site, www.femalehealth.com.

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