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After a Rocky Start, Semprae’s Female Arousal Oil Gains Traction

Semprae’s Female Arousal Oil Gains Traction
Rachel Braun Scherl, President, and Mary Wallace Jaensch, CEO, of Semprae Laboratories. Photographer: Semprae via Bloomberg

In 2004, Zestra Laboratories started making an over-the-counter female arousal ointment that it sold in hundreds of Wal-Mart (WMT) stores across the country. Notwithstanding a seemingly immense market of women who experience sexual difficulties -- 43 percent in the U.S., according to an influential University of Chicago study published in the “Journal of the American Medical Association” in 1999 -- the privately held North Charleston, S.C., business filed for bankruptcy in 2008.

“The company was undercapitalized for their business model -- mass retail distribution -- and didn’t provide women with the communication or the discretion many want,” says Rachel Braun Scherl, whose Saddlebrook, N.J., business, Semprae Laboratories, bought Zestra’s assets for $2.5 million in early 2009. Scherl and her business partner, Mary Wallace Jaensch, who together had run a consumer products consulting firm for 15 years, set about resuscitating Zestra, tapping $8.5 million in venture capital.

After running 17 focus groups, they changed the packaging to mint green and purple, introduced new sizes, and altered Zestra’s earthy scent to a more neutral one. They also repriced the product, described on its website as a blend of botanical oils and extracts: Single-use three-packs are available at Wal-Mart from $8 to $9; six-packs are available through Semprae’s site for about $20, along with other price packages.

While a slew of female arousal products are sold in the U.S., only a handful are topical, hormone-free, and available over-the-counter. LibiGel, a topical medication from BioSante Pharmaceutical (BPAX) that contains testosterone, is in clinical trials. If the U.S. Food and Drug Administration approves it, LibiGel won’t be available until 2013, says Oppenheimer analyst Chris Holterhoff in New York, who follows biopharma and specialty pharmaceutical companies. He notes that demand for LibiGel could help define the size of the market for further drugs to treat female sexual dysfunction. “Assuming a very low percent of women get treated, that would imply sales of $150 million in the early years of the launch. Longer-term we could conservatively estimate $500 million-plus in peak sales.”


Since relaunching Zestra in September 2009, Scherl says the product’s biggest stumbling block has been getting its ads on TV. Only 24 of the 136 stations that responded to her submissions approved them in full, according to Scherl. (Fifty-nine stations denied them outright; 53 approved them with significant restrictions). She says the Big Three networks’ decisions not to run her ads are representative of her struggle. ABC (DIS) spokesperson Susan Sewell would not comment and CBS (CBS) spokesperson Dana McClintock would not comment on the record. NBC spokesperson Liz Fischer says the network has “no issues with the product category” but “never received the necessary substantiation we requested or did not receive a final spot that was approved for air.” Shows have also passed on running Zestra ads, including TMZ, the celebrity news show owned by Warner Bros. (TWX). Scott Rowe, a Warner Bros. spokesperson, declined to give specifics, saying TMZ “[adheres] to broadcast guidelines for advertiser content.”

Scherl believes the networks maintain a double standard for products related to female sexuality. “I asked the standards-and-practices folks at the networks and cable stations to explain their concerns. I said: ‘You’re talking about four-hour erections on “The Super Bowl.” I don’t want my ads on during “The Super Bowl.”’ I’m fine with standards, I just want them to be equally applied.” Semprae edited its ads, removing references to sex, sexuality, and arousal. In February 2011, about two dozen national outlets, including AMC (AMCX), E! Entertainment, and the Food Network, started airing one of the spots called “The Secret.” Says Scherl: “As a result of the vagueness of the message required to get clearance, it was not a terribly effective commercial.”

Does Zestra deliver on its ads’ promise of sexual satisfaction? A 2010 study of 200 women with histories of sexual difficulties paid for by Semprae and published in “The Journal of Sex and Marital Therapy” found mixed results. For two metrics, the women reported significant improvement in desire and arousal, but not significant benefit for sexual satisfaction. The researchers also used a third metric, designed to measure five areas -- treatment satisfaction, sex-life satisfaction, self perception, relationship satisfaction, and partner perception. Results showed significant benefit for all but one -- “relationship satisfaction.”


Do women have more orgasms when they use Zestra or not? Scherl says they do, but her data are anecdotal, drawing on e-mails, calls to the company’s 800-number, and feedback from sexual-health experts. Scherl says the study included a population with “many health issues, so we missed significance for orgasm by a small degree.” She says another study of healthy women is in the works for early 2012 to test for significance for orgasm. “We don’t make claims for orgasm. We make claims for satisfaction ... we say Zestra improves arousal and desire and satisfaction for 70 percent of women, which is demoed in our study. We say it increases sensitivity to touch for deep, pleasurable sensations.”

Today the 20-employee company’s strategy -- which limits Zestra sales to its website, its call center, and some 1,800 Wal-Mart stores across the country -- is working. Scherl says that because Wal-Mart requires sales of one package per week per store, “we have to be selling about 2,000 units a week.” Online sales are “growing dramatically,” she notes, tripling in the past year. Scherl expects $10 million in revenue this year, twice that of 2010.

By August, Semprae is scheduled to roll out a multimedia ad campaign with a celebrity spokesperson. The idea is to use social media to get potential customers to watch video vignettes that prompt casual conversations about female sexual satisfaction. “Better sex effortlessly -- that’s our headline,” says Scherl, “Making sex fun, enjoying something you’re doing on a weekly basis.”

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