Kramm recognized immediately that variety was key to the new offering's appeal. So he used some of the store's young customers as a focus group to test flavor combinations. Does sour apple clash with Zarontin? Wouldn't mixing chocolate and Biaxin only make matters worse? He continued to taste-test every concoction himself and began compiling a formulary of optimum drug and flavor recipes. In each case, the amount of flavoring had to be carefully controlled so it wouldn't dilute or destabilize the medicine. (The flavorings -- all commercial products -- were already approved by the FDA.)
Center Pharmacy, which started life in a nursing home, had always catered to elderly customers. But after Kramm placed an ad touting the flavoring service in the Washington Post, parents and their finicky offspring swarmed the pocket-sized pharmacy from as far as 25 miles away. The Kramms began stocking toys and other child-related products. Within a few years, the clientele changed from 90% geriatric to 90% pediatric. Meanwhile, the pharmacy's sales overall jumped from $600,000 to $3 million.
"When you have a baby, you have boundless hopes for them. All we could do was ask, will she talk?"
But that growth only partly salved the anxiety that Kramm felt as he watched his personal expenses mount. At the pharmacy, he was making $70,000 a year. What with medications (Hadley routinely took at least four, including ones for seizures and blood clots), operations (she needed surgery every two years because her muscles became so rigid that her feet turned in), various therapists, special equipment, and modifications to their home, the family was spending as much as $100,000 a year on Hadley alone.
Kramm and his wife worried obsessively about what would happen to their daughter after they died. "I couldn't bear the thought of her unable to support and defend herself, at the mercy of people that did not love her," says Kramm. "We needed enough money to make sure she would be taken care of for the rest of her life."
Though Center Pharmacy was solid, Kramm also fretted about its future. Huge chains such as CVS, Rite Aid, and Kroger were swallowing up or driving out smaller stores, while third-party reimbursements were spiraling downward, taking a further toll on independents. "We'd seen some of our friends go out of business," says Kramm. "I wanted a backup plan in case something happened to the pharmacy."
FlavorX is a family business because it leverages the diverse talents of Hadley's extended clan.
So in 1995 Kramm took $15,000 from his personal savings and a little more than $200,000 that his father gave him from the pharmacy's profits, and launched FlavorX as an independent company. It would sell its "systems" -- consisting of the formulary and refillable sets of flavorings -- to other pharmacies. "It was a risky thing to do because we had such large expenses at the time," says Kramm. "But those expenses were only going to get larger. We had to make it work."
Center Pharmacy is a curious seedbed for an innovative, fast-growth company. The 36-year-old neighborhood business is comfortably old-fashioned, competing on personal service rather than price. Staff and customers are on a first-name basis, home deliveries are common, and the Kramms themselves will drive to other pharmacies to pick up something for a customer if they're out of stock. They even give out their home phone numbers. "I can remember many instances," says Kramm, "when my dad would get called out in the middle of the night because a hospice patient needed a pain medication or somebody had some other emergency."
From a very young age Kramm helped out in the store, sliding fliers into envelopes, pasting price stickers on bottles of laxatives, whatever needed doing. Over the years he had absorbed his father's philosophy that having a family business is less about passing on than about pitching in. Consequently, there was no question in the entrepreneur's mind that his father would do more than just bankroll the new company. Kenny Kramm possessed business and marketing skills. But Harold Kramm understood the technical details of compounding -- the practice of customizing medicines to meet individual needs. A pharmacist himself, he knew the target market as well as anyone.
The only problem: Harold Kramm was as comfortably old-fashioned as his business. Impressed by what the flavoring service had done for Center's bottom line, he saw no need for the service -- or Kenny -- to ever outgrow the store. His son argued that it was time. They'd put in three years of development on the product and had 50 pages of flavor and medicine combinations in their formulary. (That number has now risen to more than 500 pages.) They could make life better for millions of children instead of the few hundred who patronized the store.
And, if it worked, they'd be helping Hadley. "All my decisions, at that time and since, were influenced by Hadley's situation," says Kenny Kramm. Slow growth was not an option: He wanted financial security and he wanted it soon. "I felt I had to accomplish my goals as quickly as possible," he explains. "That made me much more aggressive than may have been natural to me."
The issue came to a head in the summer of 1995. The National Association of Retail Druggists was meeting in Las Vegas, and Kenny Kramm saw the conference as the perfect opportunity to test the concept's acceptance. Harold, by contrast, saw it as "a waste of time and money," says his son. But, in a rare instance, Kenny's entrepreneurial instincts overrode his filial ones. "I told him he could either join me or I would go alone," Kenny recalls. At the conference, FlavorX's no-frills booth attracted long lines, and the embryonic company signed up its first 20 accounts. Harold was convinced, and "I guess for the first time I really was too," says Kenny.
But the real battle -- or what passes for a battle in such a polite, soft-spoken clan -- erupted when Kenny Kramm suggested FlavorX sell its system to chain stores. In Harold's eyes, it was a deal with the devil. "My father is not a fan of the chains," says Kenny. "When we started, all he wanted to do was help his granddaughter, but in the first two years something like 5,000 independent pharmacies went under. As one of the survivors, he wanted to do something for the other survivors."
