SmallCapReview New Focus Stock

Pharmaceutical Formulations Inc. (PHFR)

"A turn-around story backed by a Forbes Private Top 400 Company."

 "PHFR is the second largest domestic manufacturer of solid-dose, over-the-counter Analgesics, Cough/Cold, Allergy/Sinus, Laxatives and Sleep Aid products and is now expanding into the Fiber Health Products Arena."

Websites: http://www.pfiotc.com, http://www.konsyl.com

For the complete profile including chart, please visit: http://www.smallcapreview.com/phfr.htm

PHFR Investor Highlights

• Improving financial results.

• Revenues increased 23% for 2003 to $74 million gross. 

• Over the last 3 years, revenues have grown over 45%. The Company plans to continue this kind of aggressive growth, and to do it profitably!

• Plans to move into higher margin products.

• PHFR is a major manufacturer of over 100 different types of generic over-the-counter (OTC) products.

• PHFR is the second largest domestic manufacturer of private label OTC products in the U.S., manufacturing more than 7.2 billion units annually, with additional capacity to do much more. 

• PHFR counts among its major customers such well known names as CVS Pharmacy, Wal-Mart, Costco, Target, Wallgreens, Eckerd Drugs, H.E.B. Stores, Aldi's, BJ Wholesale, Dollar General, Food Lion/Hannaford, Drug Mart, Save-A-Lot and Family Dollar among others

• PHFR also contract manufactures products for the giants of the pharmaceutical industry.

• A newly developed product, SennaPrompt by Konsyl is currently being launched supported by an extensive advertising program aimed at consumers, medical professionals and the retail trade.

• The Company is investing significantly more in upgrading and expanding manufacturing capabilities.

• PHFR plans to more than double R&D expenditures this fiscal year to develop equity-building new business.

• Signing new national retail customers.

• Signing up long-term contract manufacturing agreements with major OTC brands.

• Company entered into an agreement in the 4^th quarter 2003 with a major drug company for a new fiber product line. Part of the company's shift into new, more profitable products. This is the prime goal of the company, more profitable products. 

• The president and COO, Michael Zeher, was named a director of the Consumer Health Products Association (CHPA) in March. A member-based association representing the leading manufacturers and distributors of nonprescription, over-the-counter (OTC) medicines.  

• The Company added 68 new full time employees during 2003 and now has approximately 480 employees, an increase of 16.5% to meet current and projected demand.  

• Added Target as a new retail client with sales of $8 million for 2003.

• The company entered into an agreement in 2003 with a major drug company for API??™s for prescription strength products. 

• Company plant now running two shifts at 60% of capacity. Ample room for expansion of capacity from 1.5 million units per hour to 2.5 million.

• Existing Konsyl plant now running one shift at 70% of capacity. Significant room for expansion by adding one or two shifts.

• Successful turn-around underway.

• New, experienced and capable management.

• Over 85% of the shares outstanding are owned by the $1.6 billion ICC Industries. 

• Acquiring new, higher margin products.

• Demand for over-the-counter (OTC) pharmaceuticals to increase with aging population, the passage of the Prescription Drug Bill in 2003 and deductions for OTC drugs being approved for individuals with FSA??™s. 

• OTC Pharmaceuticals used by consumers in up markets and down. 

• International expansion, additional acquisition opportunities, and unique strategic partnering opportunities are all important parts of PHFR's strategic plans to drive and sustain profitable growth into the future.

Overview

PHFR is a 40-year old major manufacturer of over 100 different types of generic over-the-counter (OTC) products, these include analgesics (such as ibuprofen, acetaminophen and naproxen sodium), cough-cold preparations, sinus/allergy products and gastrointestinal relief products. PHFR now also markets a line of powdered dietary fiber products under their wholly owned Konsyl brand.  

PHFR is the second largest domestic manufacturer of private label OTC products in the U.S., manufacturing more than 7.2 billion units annually, with additional capacity to do much more. PHFR manufactures generic OTC products which are chemically and therapeutically equivalent to such registered brand name products as Advil, Aleve, Anacin, Tylenol, Bufferin, Ecotrin, Motrin, Excedrin, Sominex, Sudafed, Comtrex, Sinutab, Dramamine, Actifed, Benadryl, Allerest and Tagament HB, among other products.

PHFR counts among its major customers such well known names as CVS Pharmacy, Wal-Mart, Costco, Target, Wallgreens, Eckerd Drugs, H.E.B. Stores, Aldi's, BJ Wholesale, Dollar General, Food Lion/Hannaford, Drug Mart, Save-A-Lot and Family Dollar among others.

PHFR also contract manufactures products for major healthcare providers such as: Schering Plough, McNeil Consumer Products, Novartis and Pfizer among others.

PHFR can only be considered a turn-around story when one looks at the great strides the company has made in recent years. PHFR has added new and experienced management, and completed a significant restructuring in 2001 and 2002. In addition they have added numerous contract manufacturing clients to their customer base in 2002 and 2003. PHFR is currently rolling out its newly acquired national brands with a nationwide ad campaign. PHFR is growing, adding new talent, adding new clients, increasing manufacturing capacity and efficiency, and we think it is on the verge of being re-discovered by the investment community.    

PHFR enjoys the backing of ICC Industries which owns over 85% of the outstanding shares of PHFR. ICC Industries is a global leader in the manufacturing, marketing and trading of chemicals, plastics, and pharmaceutical products. ICC does an estimated $1.6 billion in annual sales.

PHFR has expanded beyond private label and contract manufacturing. This past year, the company entered the branded arena with the acquisition of Konsyl Pharmaceuticals http://www.konsyl.com/. Now, and into the future, the company is focusing on providing significantly more in the growing consumer health products markets.

The Company's new President and COO, Michael Zeher,  has a deep background in international marketing which we believe will inevitably lead to expansion in that arena. From a recent letter to shareholders the COO states "International expansion, additional acquisition opportunities, and unique strategic partnering opportunities are all important parts of our strategic plans to drive and sustain profitable growth into the future." 

PHFR is evolving into a sophisticated organization that is providing value in every aspect of its business. The company and its 480 employees are celebrating over forty years of history and building a strong foundation. A very informative letter concerning the future of PHFR from the President and COO can be read at http://www.pfiotc.com/about/president.htm

PHFR is a major manufacturer of over one hundred different types of solid-dose, over-the-counter (OTC) pharmaceutical products. Available product forms include tablets, caplets, gelcaps and capsules. Primary health care categories include internal analgesics (e.g., equivalent to Bayer?® aspirin and Advil?® ibuprofen), cold/allergy/sinus (e.g., equivalent to Benadryl?®, Sudafed?® and /Tylenol?® Cold) and stomach remedies (e.g., antacids, travel sickness).

The products are sold nationally, primarily under store-brand labels and, to a lesser extent, under a control label, Health Pharm?®. These products are sold through mass merchandisers, grocery and drug chains, convenience stores and warehouse clubs.

PHFR continually develops new OTC products for its customers based on branded products that have achieved a significant sales level and warrant a store-brand version. PHFR also assists its customers with the promotion of their products. Offering innovative marketing programs tailored to build on specific client's strategic goals, PHFR has a fully equipped graphic design studio to develop and design product packaging, in-store and promotional materials and advertising. This in-house service ensures a rapid turn-around time from initial customer contact to marketing and product delivery.

Through its wholly owned subsidiary, Konsyl Pharmaceuticals http://www.konsyl.com/, PHFR has begun increasing its presence in the branded pharmaceutical market with new higher margin products under the Konsyl brand.  Konsyl is a 35-year manufacturer of powdered dietary natural fiber supplements. The first of such newly developed products , SennaPrompt?„? began shipping to retailers and distributors in May of 2004. The roll-out of SennaPrompt?„? will be supported by a national television, print, and radio advertising program with a strong promotion program geared to consumers and medical professionals.

There are two other significant segments of PHFR's business. PHFR is a contract manufacturer of branded OTC products for a number of the most recognized pharmaceutical companies. The company can provide a complete turnkey operation for OTC products that meet the customer's specifications, from formula development through finished packaged product. This service is a cost-effective way for the customer to produce their lower volume products. Such manufacturing contracts are only entered into after a detailed review and audit of PHFR's facilities by the prospective customer. Qualification by branded pharmaceutical customers reflects the high standard and full compliance maintained within PHFR's manufacturing operation. PHFR is a major supplier of bulk pharmaceuticals to repackers and small private manufacturers.

PHFR occupies two buildings in Edison, New Jersey: A state-of-the-art FDA-approved 220,000 square foot cGMP (compliant manufacturing facility) and a 92,000 square foot distribution center for its finished products. PHFR continuously upgrades its manufacturing facility in order to maintain the company's commitment to have the most modern and efficient plant in the industry. In addition, the company has built new laboratories for research and development and quality control. To take advantage of these investments, the professional staff of the company has grown correspondingly.

PHFR is strategically positioned to take advantage of the dramatic changes taking place in the healthcare industry. PHFR's growing strength is evidenced by the steady expansion of its product lines, while remaining a low-cost producer. The company has the resources available to develop generic equivalents of prescription-to-OTC switches and the company continues to expand research and development of its OTC line.

PHFR is currently off the radar screen of many investors, but it is growing, adding new talent, adding new clients, increasing margins, increasing manufacturing capacity, hiring new help, acquiring new products, and we think it is on the verge of being re-discovered by the investment community.  

We believe that with the contacts and relationships added through the Konsyl addition and its founder Mr. Frank Buhler, and the addition of former Lander president Michael Zeher, the company is poised to expand even more rapidly in the coming year. Given his global marketing experience and ICC??™s global presence, we believe that Mr. Zeher plans to guide PHFR into the global OTC pharmaceuticals arena, and to capitalize on the ability to introduce new and more profitable products through their Konsyl brand, with backing from the $1.6 billion ICC Industries. Shares of PHFR trade on the OTC:BB under the symbol PHFR, currently for less than $0.50

FORWARD LOOKING STATEMENTS

This report may contain forward-looking information and should be read in conjunction with the company's 10-K and quarterly and periodic reports on forms 10-Q and 8-K as filed with the Securities and Exchange Commission.

Disclaimer 

SmallCapReview.com feature stock reports are intended to be stock ideas, NOT recommendations. Please do your own research before investing. It is crucial that you at least look at current SEC filings and read the latest press releases. For continuing coverage of PHFR, please sign up for our free newsletter, SmallCapReview.com News. Information contained in this report was extracted from current documents filed with the SEC, the Company website and other publicly available sources deemed reliable. For more information see our disclaimer section, a link of which can be found on our website. This document contains forward-looking statements, particularly as related to the business plans of the Company, within the meaning of Section 27A of the Securities Act of 1933 and Sections 21E of the Securities Exchange Act of 1934, and are subject to the safe harbor created by these sections. Actual results may differ materially from the Company's expectations and estimates. This is an advertisement for the above mentioned company. The purpose of this advertisement, like any advertising, is to provide coverage and awareness for the company. The information provided in this advertisement is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country.

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