Allentown Economic Development Corporation

Monthly Archives: April 2019

Specialty formulations pharmaceutical manufacturer chooses Allentown for expansion

It’s been said that everything new has been done before. And while that might be true to some degree, when your startup is one of only a handful of companies in the country doing what it does, it means your business trajectory is different from other startups.

US Specialty Formulations LLC is a contract manufacturer and one of the first 503B Drug Quality and Security Act outsourcing facilities registered with the U.S. Food & Drug Administration. It cost-effectively produces specialty formulations of pharmaceuticals in small batches for larger pharmaceutical and healthcare organizations. USSF focuses on two lines of business: specialty products such as topicals and sterile injectables for both humans and animals, and investigational drugs for clinical trials. 

The company can manufacture these critical materials from a recipe provided by a client or can develop a formula and teach the client how to produce it. But it specializes in manufacturing low volumes of a 50,000-unit batch size or smaller. “There aren’t lot of companies doing what we’re doing,” said Dr. Kyle Flanigan, Co-founder and CEO. “We make a little of a lot of things!”

USSF started business in 2013 with $200,000 from investors and loans, and by 2014 it had entered the Ben Franklin Technology Partners business incubation program at Ben Franklin TechVentures in Bethlehem as a resident company where it located its first clean room. Being part of BFTP gave the fledgling company time to test its business model of producing its product in low volumes to determine if it meets Food and Drug Administration guidelines. 

Time to expand

Now, six years later, the company is ready for its next expansion, which will be in Allentown. But before settling on a 40,000 sq. ft. building at 101 E. Lexington Street on the city’s south side, Dr. Flanigan and his business partner Dr. Garry Morefield, considered sites in Florida and Arizona, as well as other parts of the Commonwealth. 

“It was hard to find a building that met our needs,” explained Flanigan. “We’d been looking for over two years since we outgrew our current startup space and had tried to purchase three other buildings prior to this one. It’s difficult to find move-in-ready space the size we needed in the Lehigh Valley region that is between 5,000 and 20,000 sq. ft. It needed to be able to accommodate large machines, a clean room, and space to segregate materials and for process flows. And it needed to be a flexible space so we can change layout when needed based on client and production needs.” 

Flanigan and his business partner considered leasing a space, but it didn’t make financial sense to pay to make improvements to a leased building, especially expensive customizations like building a clean room. So ultimately, they opted to purchase instead.

“There are limits to the modifications you can do to a space when you don’t own it,” explained Flanigan. “And our clients often pay for important machinery and upgrades that will facilitate the production of their contracted specialty formulation. But they won’t pay for those upgrades to be done to a facility that USSF doesn’t own. So, we couldn’t execute contracts with our clients until the building sale was closed, which meant time was of the essence if we wanted to grow the company.”

Financing the purchase

Flanigan had attended a presentation on government contracts that Allentown Economic Development Corporation Program Manager David Dunn did a few years ago. Since then Flanigan and Dunn stayed in touch as the business owner began looking for a property to purchase in the region for the expansion.

In order to not tie up company cash flow for the purchase and build out, Dunn recommended that Flanigan pursue gap financing through the Pennsylvania Minority Business Development Authority Revolving Loan Fund, which is administered in the Lehigh Valley region by AEDC. In order to qualify for a PMBDA loan, businesses must be at least 51 percent owned by borrowers who are socially or economically disadvantaged. This may arise from cultural, racial or chronic economic circumstance, background or similar cause. And since USSF is minority owned, it qualified for the loan.

The loan closed on March 5, followed by the building sale which closed on March 7 with a mortgage from First Commonwealth Federal Credit Union. Build out will begin soon, with the first product is expected to be manufactured there sometime in May or June. 

“It’s good for our economy when a high-tech business like US Specialty Formulations grows out of Ben Franklin TechVentures and into ownership of their own building in Allentown,” said Dunn. “Keeping firms like this in the valley says a lot about what we have to offer. USSF’s use of the PMBDA program for gap financing helped make their building acquisition a reality and we are proud to be a part of that. We hope more small businesses consider its competitive rates and flexible structure for their financing needs.”  

Big things ahead in Allentown 

The company will move into the new building in stages as renovations are completed. A transitional clean room will be put in first, followed by the office, production, support services, and shipping and receiving areas. The entire build-out process is expected to take up to five years based on USSF’s master plan for the site. 

The company’s current staff of 12 full-time employees and consultants, will grow to 50 or more in the next five years in the new, expanded building as it begins hiring more skilled professionals for a range of positions.

“From the beginning, we at the Ben Franklin Technology Partners saw strong management, proven execution, and a high-quality product in USSF,” said Wayne Barz, Manager of Ben Franklin TechVentures, the business incubator at which USSF currently resides. “Kyle Flanigan has deep experience in tight-tolerance performance materials, which gives him the perfect background for this highly regulated and FDA-scrutinized industry. There is a strong demand for a quality-first approach to sterile injectables, and USSF is well-postured to be a winner in that industry.”

Do’s and don’ts of digital marketing for B2B manufacturers

What works for one company might not work for another. Is social media a good idea or a waste of time? How do I get started with email marketing? Is a five-year-old web site too old?

We connected with local marketing experts Andrew Stanten of Altitude Marketing in Emmaus and Lori Blatt of Blatt Communications in Allentown to get their takes on how to figure out which digital marketing tactics you should consider.

Getting started

Both marketing pros agree on one thing: don’t just jump right in and start firing off marketing tactics. Take a step back to do some evaluation, data collection, and assessment: 

  • Evaluate your target audience first to determine if it is correct. Is your customer really the end user or might it be a distributor that you need to target instead?
  • Know your customers – get inside the head of a prospective customer to know what they really want and need. Know their goals, challenges and pain points and how you can solve their problems with your product.”
  • Know the strengths of your company, product and employees.
  • Know what your competition is doing for their marketing and how their approaches might or might not work for your company and product. Your goal is to outflank them, not outspend them. 

“Consider doing a SWOT analysis of your company’s strengths, weaknesses, opportunities and threats,” said Stanten. “Depending on what you manufacture, some items have a longer sales cycle than others, usually those with a higher price tag. So, know if you sell a product that a customer will be ready to buy after only a few interactions, or one that will take more engagement to make the sale.” 

Blatt also encourages her manufacturing clients to analyze the products that they offer to determine which ones are the most profitable. “Some companies hold onto old products because they have always had them. But that’s the wrong mindset,” she explained. 

Web sites

Since most customers go online for answers today, it’s vital that manufacturers have a well-designed web site that serves as a resource. “Buyers will look online for you, so you need a presence,” reminded Blatt. “That starts with a good web site that is kept up-to-date and is search engine optimized for all of the keywords related to your product/service. Remember that often a buying decision has happened before they contact you. They have already formed an opinion about your company before the call is made or the email is sent, and your web presence is a key part of that. It’s also important to have a current web site for hiring purposes so it can communicate company culture for new hire recruitment.”

It’s a mismatch for a customer when a company’s web site design and functionality don’t match the quality of its product. If your site hasn’t been redesigned or at least updated in a few years, there’s no time like the present. Hire a professional web site designer or agency to create an optimized web site with built-in SEO that is mobile friendly.

Social media

When it comes to social media, both experts also agree that it’s worthwhile for B2B manufacturers to start with a LinkedIn business profile for building awareness and to drive traffic to their web site, but not necessarily to make a sale.

Have a plan of action in place for providing content updates on a regular basis and assigning a person on the marketing or sales team to oversee it. Some manufacturers have also found benefit from Facebook and Twitter presences but it’s better to start small with just LinkedIn initially. 

“You don’t need to get into all the social media platforms,” said Blatt. “Don’t start an account just because a competitor is doing it, or someone tells you that you should do it because it’s free. If you don’t have a plan to maintain the account, it will look worse for it go dormant after only a few posts. You don’t have to post daily but you do have to post regularly.” To help with the planning of content she recommends using free social media marketing tools like HootSuite to schedule out updates for a week or more at a time. 

“Be prepared to engage with your audience. People want to have a conversation, not to be sold. Ask yourself how you can best serve the customer. What information of value can you share? Give some thought to the type of content you want to share with followers,” said Blatt. 

More digital marketing

In addition to having a good web site, companies should also consider email marketing, a blog, and online videos:

  • Email marketing – good for communicating company updates such as new hires/promotions, new products/services/programs, important reminders, upcoming trade shows or events, and more. Experiment with A/B testing to determine what information and designs your customers respond to best. Use retargeting features built into most email marketing programs for brand reinforcement over a longer sales cycle. 
  • Blog – good for positioning your expertise in the industry as a thought leader. Write “how to” posts and articles with steps that readers can follow or share helpful tips or advice. Based on your web site, a blog can also help with SEO.
  • Videos – good for showcasing new products/services while also positioning your company as a thought leader in your industry. Can post to a company YouTube channel and embed videos on your web site.

Blatt offered this final piece of advice: “Marketing is a marathon. Figure out a plan. Be patient. Give it time to work. But always look for what’s next on the horizon too.”

Two local manufacturers talk marketing tactics

What better way to know what marketing tactics B2B manufacturers are using than to ask two of them what works for them? 

Meet Carla Ott, President-Owner of Otterbine-Barebo, Inc. located in Emmaus, her company is a leader in pond and lake management for over 60 years and produces water aerating fountains. And meet Ken Horton, CEO of Vizinex RFID in Bethlehem, maker of radio-frequency identification tags for medical devices, weapons, data centers, and other asset tracking purposes. 

We asked them about the tactics they are currently using to promote their products, what tactics they’ve experimented with in recent years that didn’t work out as they wanted, and what some of their biggest marketing challenges are.

Current marketing tactics

For Vizinex, an integrated marketing approach is the way to go. They diversify their marketing by engaging multiple tactics including paid digital advertising with Google Ads, LinkedIn and in industry publications. There is also email marketing, web site optimization, and social media, as well as more traditional marketing tactics like public relations and networking. 

Otterbine also takes a comprehensive approach that ranges from a quarterly newsletter and monthly eblasts to distributors, to presentations and training sessions by an external sales force and generating sales leads for distributors by connecting them with potential customers. An advertising co-op program also allows marketing funds to be used for a variety of promotions such as mailers, car wraps, and digital marketing.

The company has seen a high rate of success with targeted display ads that lead customers into an email drip campaign. “We start by educating potential new customers on our products, giving them enough information to select the best one for their specific needs, and then by the final email we ask them if they’d like a quote,” explains Ott. “We have a 70 percent close rate on quotes generated from this campaign.” Drip campaigns targeted to specific user groups such as landscape architects and golf course superintendents are also utilized.

What did you try that didn’t work?

“LinkedIn ad campaigns for B2B businesses that specifically targeted mid-to-bottom of the funnel conversions – like requesting a demo – haven’t worked for us,” explained Horton. “What does work are LinkedIn campaigns that target top of the funnel conversions – like a guide download – which get much better results.” 

Because getting end-user leads without a software or integration partner has not yielded sales for the company, this year Horton and his team are focusing on developing systems integrator relationships who will build an entire system that includes Vizinex products.

For Otterbine it was Google display ads that didn’t work, which the company started on their own and admits they didn’t know how to configure properly for maximum effectiveness. “We didn’t know how to read the analytics and couldn’t figure out how to improve our rankings on search engines,” said Ott.

So, they hired Altitude Marketing, a digital marketing agency also located in Emmaus, which specializes in B2B clients. The agency started with a review of the company’s web site, followed by search engine optimization. It then researched keywords for Otterbine’s market and are now testing them with Google keyword search ads to see which words get more engagement. 

How are you using social media?

Both companies use several social media channels to promote their brand and product messaging, as well as to stay in front of customers and to share industry news. 

“Vizinex combines Twitter, Facebook and LinkedIn to follow and engage with new and existing target companies and industry publications we want to stay top of mind with, and also to drive traffic to our web site,” said Horton. 

Despite having a presence on Twitter, Facebook and Instagram (they’ll be adding LinkedIn to the mix soon), Ott said that her company’s social media engagement has been somewhat limited lately. “We are focused on creating more marketing opportunities via social media in 2019,” she explained. “At this point the primary benefit we receive from it is brand awareness.”

What has been your biggest marketing challenge lately?

While attracting quality leads and targeting end users has been the biggest marketing challenges for Vizinex of late, for Otterbine, it has been not having an ecommerce web site to sell its products when many of its competitors do, since it helps their SEO rankings on key search engines. Ott says her company also faces challenging working with their distributors to create webpages with the Otterbine brand and message to help sell their products to end users, as well as assisting them with the local marketing efforts. 

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