Sonoma County health products maker NeilMed building room to breathe with headquarters expansion project

NeilMed Pharmaceuticals Inc., the company best known for its nasal rinse formulations, is starting a second major growth spurt at its Santa Rosa base of operations to keep up with sales growth domestically and in emerging foreign markets.

Begun 22 years ago in a 170-square-foot physician’s office with two employees to supply a few Santa Rosa drug stores. Today, NeilMed has 440 employees plus facilities in 17 countries to supply stores in 30 nations.

The privately owned company doesn’t reveal its financial performance, other than that sales have grown annually, usually at double-digits percentage rates.

Under construction now at its headquarters on Aviation Boulevard near Charles M. Schulz–Sonoma County Airport is a two-story storage and distribution building. And in planning is a large new manufacturing facility to be built in an empty field just to the south.

Together those buildings, which are set to employ 70 to 80, are intended to give the company more operational breathing room to keep store shelves stocked globally and especially in new markets while working around supply-chain challenges.

“Our fast-growing areas are China, Japan, South America, Central America, and Mexico,” said Dr. Ketan Mehta, 66, CEO. A pulmonary and critical care physician, he founded the company with his wife, Nina, 61, who is president of the company.

But China’s continued campaign to stamp out the spread of the coronavirus has complicated movement of products in and out of ports there.

“We believe in always supplying to the retailers. We do not like products to not be on the shelves,” Dr. Mehta said. “So even if you take the loss, we'll take the loss and put it on the shelf by air cargo. We use a lot of air cargo to make sure that we are not out of sight or out of mind.”

NeilMed also receives raw materials for products then ships out finished items for foreign markets through the California ports of Oakland and Long Beach. Both encountered delays in moving through cargo last year and recently with a brief labor dispute.

Because of that, the company has increased how much in raw materials and finished products is on hand.

“We stocked up one year of raw materials initially, and now we’re going to two years — 18 months for sure,” Mehta said. “And we stock up our international locations for six months of sales.”

And that’s where the new 60,000-square-foot Santa Rosa warehouse comes in. Pacatte Construction of Santa Rosa is set to complete it in February. At 53 feet high, it’s unusual in height for the airport industrial area.

The company is seeking permits from the county of Sonoma to build a 105,000-square-foot manufacturing building just south of the company’s main offices at 601 Aviation Blvd. It will be designed to have more automated production than even what’s in use currently round the clock nearly seven days a week.

In that way NeilMed is among other local manufacturers that have brought in more automation to allow for increased production without substantial increases in labor. For example, laboratory testing supplies maker Labcon in Petaluma has invested over $50 million into robotics and other automated manufacturing. But finding technical staff to program the equipment has been challenging as the labor market has tightened.

“We need those, but they are difficult to get,” Mehta said. “We train our existing staff as much as possible. And people who are doing that work (automation programming) get obviously a bit more burdened.”

Previous labor issues

It’s been a decade since NeilMed ran into challenges with its workforce.

In 2009, Teamsters won a union certification vote at NeilMed, and five dozen union members walked off the job the following year for six months, alleging unfair treatment and bad working conditions. That resulted in an early 2012 National Labor Relations Board ruling that a union representative be allowed back to work after a picket line incident.

Different from today, much of the goods assembly work at that time was by hand. The workforce in Santa Rosa had swelled to over 400 as the company added product lines and major national distribution agreements with Rite Aid, CVS and Costco Wholesale in the preceding three years. Sales also had started moving beyond North America, to the United Kingdom, Ireland, New Zealand, Australia and Singapore.

Today, the Santa Rosa workforce numbers about 325. Beyond that, there are about 80 workers in a 90,000-square-foot South Plains, New Jersey, East Coast manufacturing and distribution facility opened in 2020. In 2016, NeilMed opened a 35,000-square-foot manufacturing facility in the Los Angeles suburb of Ontario then in 2020 leased another 100,000 square feet in that city for warehousing and distribution.

Beginnings in Santa Rosa

NeilMed started in Dr. Mehta’s former physician office on Farmers Lane in January 2000 with an idea for a balanced mix of sodium chloride salt and sodium bicarbonate soda that would help prevent burning and stinging when flushing out nasal and sinus passages.

From the first sale of six boxes of the solution at what’s now a CVS drug store on Fourth Street in east Santa Rosa, the Mehtas marketed the product to ear, nose and throat physicians as well as to allergists to suggest to their patients after treatments and surgery or for acute or chronic allergies.

Sales expanded in 2000 to individual Safeway and Rite Aid stores in California until the product reached a wider audience at national trade show later that year. In 2004, CVS picked up products for 400 stores in four Western states, and Meijer drug store chain picked it up for the Upper Midwest. The following year Walgreens carried it in the Sacramento area then expanded placements nationwide.

By that time, NeilMed expanded to a facility on Tesconi Circle in Santa Rosa, and in 2006 it relocated to its current 55,000-square-foot headquarters at 601 Aviation. In 2009, a 120,000-square-foot building next door was leased for manufacturing.

“I like Santa Rosa, so even though I have other options, I would like to create more here,” Mehta said.

Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.