Some Ohio companies prosper from fears of pandemic H1N1 flu

By ROBERT SCHOENBERGER

Plain Dealer Reporter

Around Ohio, companies that serve the health-care industry are working feverishly to prepare for the worst.

Gojo Industries Inc., the Akron maker of Purell hand sanitizer, has tripled production – and still can’t keep up with demand. In suburban Columbus, hospital supplies distributor Cardinal Health has started rationing some items and is trying to get its hands on more masks, gloves and pharmaceuticals. And in Cincinnati, Meridian Bioscience is processing big federal orders for flu test kits.

At Gojo, the shift in orders has been dramatic.

Gojo spokeswoman Angela Watkins stressed that the company doesn’t expect a shortage of Purell this fall and winter, but demand is causing the company to expand production at its Cuyahoga Falls plant. The company is hiring workers through its Web site, Gojo.com, as quickly as it can. Still, orders are shipping late, and some customers are having to make do with different size bottles than they ordered.

“Even with increased manufacturing capacity, there is a limit to how much we can produce in a short period of time,’ Gojo President and Chief Operating Officer Mark Lerner said in a letter to Customers a week before last.

One Gojo customer having trouble getting Purell is Bruce Sherman. His company, GymValet of Beachwood, sells products to fitness centers for sanitizing gym equipment. Wall-mounted Purell dispensers are a key product.

“I call in to my supplier, and everything is backordered,” he said.

With sales inquiries up about 50 percent this year, Sherman said, “We are seeing a definite increase in contacts and sales due to the H1N1 scare.”

Steris Corp., the Mentor infection prevention and decontamination company, also has increased production of the surface cleaners and hand sanitizers it sells to hospitals and other health-care facilities, spokeswoman Robin Baum said.

Steris has grown quickly in recent years as health care facilities stepped up sterilization programs to combat staph infections and other hospital-borne diseases, said Elliot Schlang, managing director of Cleveland equity research company Great Lakes Advisers.

Now, the company could also benefit if a widespread flu outbreak leads to crowding at hospitals. “Any focus on infection obviously helps the sales of sanitizers,” Schlang said.

For Cardinal Health in Dublin, finding enough of the products hospitals and health-care providers are stocking up on has become a challenge. Customers are ordering more sanitation supplies and pharmaceuticals, forcing the distribution company to work with multiple manufacturers to meet demand, company spokeswoman Tara Schumacher said.

“It’s another level of complexity, but it’s what we do,” she said. “It’s part of our business to have pandemic preparedness plans.”

In some cases, that means rationing supplies, something Cardinal calls its fair share allocation principle. If one customer orders twice as much hand sanitizer, for example, while others order only 20 percent more, that one large order could swamp the system, creating shortages elsewhere, Schumacher said.

Cardinal’s allocation system doles out scarce supplies based on last year’s order levels, guaranteeing customers at least that much, she added.

Even if the flu outbreak doesn’t live up to the hype, Cincinnati’s Meridian Bioscience still stands to benefit, said Schlang of Great Lakes Advisers. The company makes diagnostic test kits and recently won a large federal contract to make a test for the H1N1 virus.

In a report last month, Meridian said it expects its fiscal 2010 earnings to be as much as 20 percent higher than in fiscal 2009, which ended Wednesday. But that projection did not take into account any increase in sales of test kits for the flu.