Description of United Guardian Inc's Business Segments
PRODUCTS
The Company operates in one business segment, and its product lines are separated
into four distinct product categories:
PERSONAL CARE
LUBRAJEL® is an extensive line of water-based moisturizing and lubricating
gel formulations that are used as ingredients in personal care (primarily cosmetic/skincare)
products. In the personal care industry, they are used primarily as moisturizers
and as bases for other cosmetic ingredients, and can be found as an ingredient
in skin creams, moisturizers, makeup, and body lotions. The largest product by
sales in the LUBRAJEL personal care line in 2015 was LUBRAJEL OIL, followed by
LUBRAJEL CG. Some of the other varieties of LUBRAJEL sold for cosmetic use (all
using the LUBRAJEL name), in descending order of sales, are PF (including Norgel
(see LUBRAJEL PF below)), MS, DV, and NP. In addition, many of these products
are available in comparable formulations that do not contain parabens as the preservative,
and instead use a different preservative system that is preferred by some customers.
Those equivalent products are differentiated by adding the word “Free”
after the name (for example, LUBRAJEL MS Free, DV Free, etc.), indicating that
those formulations do not contain parabens.
LUBRAJEL PF is different from the other products in the LUBRAJEL line in that
it is a completely preservative-free form of LUBRAJEL. It is marketed under
the LUBRAJEL PF tradename in all geographic markets other than France, where
it is marketed under the tradename “Norgel” by Societe DEtudes
Dermatologiques ("Sederma"), a subsidiary of Croda International Plc
(“Croda”). Sederma is the Companys exclusive marketing partner
and distributor of the Company’s cosmetic ingredients in France and, along
with its parent company, Croda, is a major supplier of specialty cosmetic ingredients
to the personal care products industry. Tests have shown that this product self-preserves,
and that it aids in the preservation of other cosmetic ingredients with which
it is formulated.
LUBRAJEL NATURAL is the first product in a new line of LUBRAJEL products for
cosmetic use that are produced using only ingredients that are considered “natural”.
This product, as well as the additional “natural” products under
development (see “Development Activities” below) are based on natural
polysaccharides, which contribute moisturization, emulsion stabilization, and
emolliency to personal care products, particularly creams and lotions. LUBRAJEL
NATURAL has been certified as natural by Ecocert, a leading industry certification
organization for natural and organic products. This product is now being actively
marketed, and there were some initial small sales in 2015.
Each of the following products accounted for less than 4% of the Company’s
sales in 2015, listed in descending order of sales:
LUBRAJEL II XD is a version of LUBRAJEL that was developed to be a direct replacement
for one of the competitive products to LUBRAJEL.
KLENSOFT™ is a surfactant (a surface active agent, such as a soap or detergent)
that can be used in shampoos, shower gels, makeup removers, and other cosmetic
formulations. KLENSOFT sales have been highly variable due to the ordering patterns
of the customers for the product. In 2015 sales of KLENSOFT decreased 54% compared
with 2014, declining from $237,248 to $109,726. The Company expects the variability
in sales of this product to continue.
LUBRASIL™ is a special form of LUBRAJEL in which silicone oil is incorporated
into a LUBRAJEL base by micro-emulsification, thereby maintaining clarity similar
to the other LUBRAJEL products. The product has a silky feel, and is water resistant
while moisturizing the skin.
LUBRASLIDE™ and a related product, B-122™, are powdered lubricants
used in the manufacture of cosmetics such as pressed powders, eyeliners, and
rouges. They are used as binders for these products, increasing water-repellency
and drop strength and lowering the coefficient of friction.
ORCHID COMPLEX™ is an oil-soluble base for skin creams, lotions, cleansers,
and other cosmetics. It is an extract of fresh orchids modified by stabilizers
and preservatives, and is characterized by its excellent lubricity, spreadability,
light feel, and emolliency. Because of its alcohol solubility, it may also be
used in fragrance products such as perfumes and toiletries. Its emolliency makes
it an excellent additive to shampoos, bath products and facial cleansers. It
is also a superior emollient for sunscreens, vitamin creams, toners and skin
serums.
UNITWIX II™ is a cosmetic additive used as a thickener for oils and oil-based
liquids. It is a proprietary, unpatented product that the Company developed
in 2011 as a direct replacement for the Company’s original UNITWIX, which
is no longer being manufactured due to the raw material cost issues. The new
formula is less expensive to manufacture, and therefore can be marketed at a
lower price.
The Company believes that its ability to maintain and/or increase sales of
its cosmetic and other personal care products will depend on (a) the ability
and determination of its marketing partners, especially its largest marketing
partner, ASI, to continue to aggressively promote the Company’s products,
particularly to new customers, and to find new marketing opportunities; (b)
the Companys success in developing additional new products, including new varieties
of LUBRAJEL, as well as new applications for existing products; and (c) the
ability of the Company to find ways to compete with lower-cost imitations of
its LUBRAJEL products that have become significant competitors to the Company’s
products in the past couple of years, and which negatively impacted the Company’s
sales of these products in 2015. In particular, the Company has experienced
significant pricing pressure from LUBRAJEL imitations being manufactured in
China. The new lower-priced competitors are likely to adversely affect the Company’s
ability to continue marketing certain of its existing LUBRAJEL products at profit
margins comparable to what they have been in the past.
The Company believes that there is still potential to expand the sales of its
LUBRAJEL line of products through product modifications, additional claim substantiation,
and geographic expansion. The Company believes that its strong brand identity
and reputation for supplying quality products will be advantageous in its efforts
to compete with the growing number of lower-cost imitations of its products,
but that it will still be necessary to be more competitive with its product
pricing in order to maintain and grow its market share.
MEDICAL
LUBRAJEL RR and RC are both gels used primarily as lubricants for urinary catheters.
Both are special grades of LUBRAJEL that can withstand sterilization by gamma
radiation, which is one of the methods of terminally sterilizing medical and
hospital products. LUBRAJEL RR was the original radiation-resistant LUBRAJEL
product. LUBRAJEL RC was developed specifically for one customer that packages
the product in unit doses as a catheter lubricant for many manufacturers.
LUBRAJEL LC was developed for a specific customer who required a product suitable
for oral use, to be used in a line of mouth moisturizers that it markets.
LUBRAJEL MG is the original form of LUBRAJEL, developed as a medical lubricant
in the 1970s. It is used by many medical device manufacturers for lubricating
urinary catheters, pre-lubricated enema tips, and other medical devices.
LUBRAJEL FLUID is a very low viscosity form of LUBRAJEL that was developed to
provide superior lubrication in water-soluble products. It was specifically
developed, and is currently being used, as a replacement for silicone oils in
pre-lubricated condoms. The Company has only one customer for this product,
and while sales in 2015 increased compared with 2014, these sales did not contribute
significantly to the Company’s overall sales.
LUBRAJEL BA is a LUBRAJEL formulation that was specifically developed for
ASI for an oral care use. ASI is actively promoting this product. Sales of this
product are not yet a significant contributor to the Company’s revenue,
and it is too early to project whether or not it will become a significant product
for the Company.
LUBRAJEL TF is a medical lubricant specifically developed for a global medical
products company. Initial sales of this product began at the end of 2012. Although
the Company is still hopeful that sales of this product will increase, sales
of this product to date have been lower than expected due to the customer’s
uncertain marketing plans for this product.
PHARMACEUTICAL
RENACIDIN® is a prescription drug product that is used primarily to prevent
and to dissolve calcifications in urethral catheters and the urinary bladder.
Since 1991 it has been marketed as a ready-to-use sterile solution in 500mL
glass bottles. It currently has regulatory approval only in the United States.
The product had been manufactured for the Company under a long-term contract
with a major U.S. drug company. That supplier experienced two production curtailments
in the past five years, which resulted in a decline in RENACIDIN sales. As a
result of those curtailments, the Company lost sales opportunities due to inventory
shortages. In order to compensate the Company for its lost sales the Company
and its supplier entered into a settlement agreement whereby the supplier reimbursed
the Company for the profit it lost during the curtailment periods. The final
reimbursement payment under that settlement agreement, in the amount of $24,402,
was received by the Company in the first quarter of 2014.
The Company’s contract with its RENACIDIN supplier expired in the first
quarter of 2015. In 2013, in anticipation of that contract expiration, the Company
began working with a new supplier to produce RENACIDIN in a smaller, more user-friendly
container. The new product is a sterile, single dose, 30 mL plastic bottle that
was engineered to dispense the product directly into an indwelling catheter,
eliminating the need to use a separate syringe to extract a small amount of
product from the current 500mL bottle. The change to a new supplier and new
packaging required a new submission to, and approval by, the United States Food
and Drug Administration (“FDA”). The Company submitted its application
to the FDA in August 2014 in the form of a supplement to its previous New Drug
Application (“NDA”) for RENACIDIN, and received final approval to
market the new product in December 2015. Prior to the expiration of its previous
supply agreement for the 500mL bottles the Company had purchased sufficient
inventory to last until it received FDA approval for the new product. The Company
expects to begin selling the new single-dose 30mL bottles in April 2016, around
the same time that it expects to sell off its remaining inventory of 500mL glass
bottles. The Company is optimistic that this new, more user-friendly bottle
will enable the Company to increase its sales of RENACIDIN over the next few
years, and intends to actively market the new product beginning in April 2016.
CLORPACTIN® WCS-90 is an antimicrobial product used primarily in urology
to treat infections in the urinary bladder. It is also used in surgery for treating
a wide range of localized infections in the peritoneum (the lining of the abdominal
cavity), as well as the eye, ear, nose and throat, and sinuses. The product
is a powder that is mixed with water by the end user and used as a solution.
It is also a powerful disinfectant, fungicide, and deodorizer. Sales of CLORPACTIN
have been very consistent from year-to-year.
The Company’s pharmaceutical products are returnable only at the discretion
of the Company unless (a) they are found to be defective, or (b) they are outdated
(but not more than one year after their expiration date, a return policy that
conforms to standard pharmaceutical industry practice).
INDUSTRIAL
DESELEX™ Liquid is a sequestering and chelating agent that is used primarily
as a replacement for phosphates in the manufacture of detergents. It also has
some use in personal care products as a chelating agent in shampoos and body
washes.
THOROCLENS is a chlorine-based cleanser manufactured and packaged by the Company
for a small company in New England that resells the product to its customers.
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