Icy Hot Patch: A Hot Performer for Chattem

Chattanooga, TNThe voluntary recall by Chattem Inc of its high-profile line of Icy Hot Pain patch must have been frustrating for a company that looked to the product with so much promise when it was launched in 2001. However, the company could not deny the fact that users were complaining of severe burns and skin irritations, and had little choice but to commence an urgent recall this past winter.

Critics maintain the company waited too long to pull the trigger, with adverse event reports coming in as long as 14 months before the recall was announced. The Icy Hot Patch is air-activated, and is designed to start off cool, then evolve to a sustained but gentle heat, replicating the long-held belief that icing a sore muscle first, followed by heat therapy, is the best way to ease the pain and soothe sore, aching muscles. Directions suggest that a patch can be worn for up to eight hours safely.

However, users of the Icy Hot Patch have been reporting incidents of first, second and third-degree burns. Others have reported skin irritations, and still others have had problems with removing the patch, noting that there is an adhesive used to hold the patch in place. Skin that is irritated, either by a burn, or a reaction to the adhesive or both would naturally be irritated further in any attempt to remove the product.

In a conference call last month with the financial community, Chattem officials indicated they are studying the product and doing continued testing, in an effort to re-launch Icy Hot Patch soon. "What we are dealing with is one, out of 10,000 or 100,000 people find some way to usually don't use it correctly and get some degree of heat issue," Chattem CEO Zan Guerry said. "It is hard to screen for that."

Guerry went on to say that the company did post-recall testing on 500 individuals and found no problem at all. Adverse reactions, however, appear to emerge when the product is used across a wider cross-section of the population. Chattem officials maintain that one person in every 10,000 or 100,000 do not use the product correctly and get some degree of heat issue.

'Kelly' experienced just that, although the jury is still out as to whether her problem stemmed from the heat, or the adhesive. "I bought this product and used it and it burned my arm really bad, Kelly writes. "It was blistered so bad I had to go to the doctor. He said he could hardly believe it, he thought I might be allergic to the glue."

CEO Guerry also raised the adhesion issue during the April conference call. "A lot of people we found probably didn't know how to take adhesive off very well, which kind of surprised us. Again, we saw none of that. So we are looking at all those variables as rapidly as possible."

That's hardly surprising, given the success of the Icy Hot brand for Chattem. "We are looking at what we think would be significantly reduced side effect issues while trying to maintain efficacy," said CEO Guerry, in comments attributed to the transcript of the conference call. "So we are spending -- it is one of our top three or four priorities because it was the, excuse the expression, hottest brand in the category while it was out there."

Chattem was certainly feeling bullish about the prospects for the Icy Hot Back Patch when it was launched in 2003. On March 20th of that year the company announced the signing of NBA basketball sensation Shaquille O'Neal to a three-year endorsement deal relating to its Icy Hot products. While terms of the agreement with O'Neal were not disclosed, Chattem CEO Zan Guerry was quoted as saying, "the Icy Hot Back Patch is perhaps the most significant new product launch in Chattem's history. We will be backing it with a $12 million advertising campaign starting in July..."

It should be noted that Chattem spent half that amount—six million—on the urgent voluntary recall of the Icy Hot patch. Even so, with the Icy Hot recall reverberating through the headlines, the company enjoyed a strong first quarter for 2008, announcing on April 8th that shares closed at $70.35, up $2.60. Quarterly net income was $14.9 million, compared with $13.7 million a year ago. Total net revenue for the quarter was reported as $120.8 million, up 19.8 percent from the same period in 2007..

As the company goes through the motions of straightening out whatever it is with the patch that is adveresly affecting some people, and contemplate a re-launch of the product, it appears the company is in a sound financial position. That's good news for anyone contemplating an Icy Hot Patch lawsuit.