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Diaper cream's fan base grows with new owner
March 8, 2011












Boxes of Dr. Smith's Diaper Ointment sit on a production line at Mission Pharmacal in Boerne. Photo: Lisa Krantz

By Ana Ley - San Antonio Express-News

Past sterile white halls at Mission Pharmacal's Boerne plant, workers in lab coats fill jars and tubes of Dr. Smith's Diaper Ointment, a baby product with a loyal following that is growing up in the pharmaceutical arena.

Used to soothe rashes on babies' bottoms since 1963, the over-the-counter ointment was developed by San Antonio physician Dr. Forrest M. Smith Jr., who asked pharmacists Erwin Batha and Marty Rubin to create the formula. Now nearly 50 years old and under new ownership, it has become more widely available nationwide, becoming a household name for parents.

Acquired by San Antonio-based Mission in August 2009, Dr. Smith's is now available at more than 30,000 retail locations throughout the country at grocery store chains such as H-E-B, Kroger, Publix and Albertsons.
The expanded distribution network is good news to its loyal users.

Amanda Espinoza, 31, who is expecting her third baby, normally buys the ointment at H-E-B, which carries the product at most locations. In 1990, it became the first chain to offer it.

"I went on a trip and they didn't have any, so we bought some generic stuff and it didn't work," she said. "We went to three stores to find it."

"We felt that the product was the best in its class," said Mission Pharmacal President Neill "Gobie" Walsdorf, whose family founded the company. "It had a cult following that was underserved." He added that, before the acquisition, the product was only scantily available outside the state.

Raved about on parenting blogs, the ointment has an average five-star rating on customer reviews.

For nearly 30 years, Dr. Smith's was sold by Smith, Rubin and Batha out of Royal Pharmacy in Castle Hills. Then the partners formed Esrubar LP - Esrubar is a combination of letters from the partners' last names - and in the early 1990s, contracted with privately held Beta Dermaceuticals Inc. to begin marketing and distributing the ointment, helping the company expand.

At its peak under Esrubar, it was available at about 6,800 retail locations across the country at stores such as Walmart, Walgreens and Eckerd. Its availability later declined dramatically as the tiny company struggled to keep shelves stocked, said Henry Rangel, president of Beta.

Then, in 2009, Esrubar sold it to Mission. Betty Smith, 79, who took over for her husband after he died in 2006, said Mission was chosen because the Smith family knew the Walsdorfs and the owners wanted the product to continue being available after its remaining founders pass away.

"They're growing it, which is what we wanted," she said. "They're using some avenues that we didn't use."

Mission has more resources to do exactly that.

The privately owned company has revenue of more than $100 million, Walsdorf said. It employs 400 people and has been in business for 65 years. Esrubar had about eight full-time employees, Rubin said.

As a bigger company, Mission has been able to advertise the product via radio and television, which Esrubar couldn't afford to do, Betty Smith said.

Dr. Smith's packaging also has been given a makeover. The old package had a dated, monochromatic design and a rough image of Smith, who once told the San Antonio Express-News that it was a poor drawing of him. The updated packaging has a more modern look with a fresh new drawing that has a softer, more appealing image of the late San Antonio pediatrician.

"We didn't want to change it so that it wasn't recognizable," Walsdorf said. "It's still old, but clearly different."

The changes have helped.

Although Mission declined to specify revenue figures for the cream, and Rubin, on behalf of Esrubar, declined to specify revenue or distribution information about the product before it was sold, Mission said in a prepared statement that "statewide, Dr. Smith's Diaper Ointment is showing strong growth."

"After the transition to new packaging and enhanced marketing efforts, we are very pleased with the sales performance of Dr. Smith's Diaper Ointment," Michael Schwartz, vice president of sales and consumer products for Mission, said in a statement. "To date, we've seen double-digit increases in sales and a steady increase in statewide and national distribution."

"Dr. Smith wanted a good cream that would be available to everybody," Betty Smith said. "This would have pleased him very much."

Express-News archives contributed to this report.


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