Schmid Laboratories, maker of Ramses and Sheik condoms, is a subsidiary of London International Group, which is traded on the London Stock Exchange and as a U.S. over-the-counter stock. An article in Sunday's Business section incorrectly characterized its ownership. (Published 2/21/87)

Spurred by the public discussion of condoms as protection against the deadly AIDS virus and other sexually transmitted diseases, the once static market for condoms has taken a dramatic turn.

Food chains such as Giant Food and Safeway Stores that have for years sold condoms in their pharmacy departments are for the first time testing sales alongside health and beauty products in their Washington area supermarkets.

Investor interest in companies that make condoms has created "absolute hysteria" in the stocks of the major publicly traded U.S. companies, according to one investment analyst.

Stock in Carter-Wallace, makers of Trojan condoms, with 55 percent of the U.S. market, was selling near $50 a share a year ago. Friday, the stock closed up $6.50, at $146.50 a share on volume of 223,500. Mentor Corp., a small pharmaceuticals company that began making condoms just last fall, has seen its stock jump from $17 a share to $43 a share in a month. Nearly 2.5 million shares of Carter-Wallace changed hands Friday, while 2.9 million shares of Mentor were sold.

Suddenly, the once smirked about condom is the darling of the market. "It's a combination of so many forces," said Lynn Pauls, a pharmaceuticals industry analyst for E.F. Hutton. "It's a worldwide health issue on the one hand. On the other, you have a tremendous surge of interest from the media. You have the leading physician in government {Surgeon General C. Everett Koop} essentially saying the moral issue {of birth control} must come second to the public health."

The two largest manufacturers of condoms in the United States -- Carter-Wallace and Schmid Laboratories, which produces Ramses and Sheik -- had for years concentrated marketing efforts on major U.S. drugstore chains. Now they are reaching out to convenience stores and grocery stores and are spending millions on television, radio and print advertising, much of it targeting women, who, some marketing studies show, buy 40 percent or more of the condoms now sold in this country.

New competitors are quickly entering the field. Several new companies are importing condoms from Japan, where the birth-control pill has never been approved and the condom is the No. 1 birth-control method. The U.S. condom market, where 325 million condoms were sold at retail for more than $175 million last year, has the potential to double over the next three to four years, said Pauls.

But at least one leading U.S. maker of condoms is cautious about the potential for market growth because of the interest in condoms as protection against AIDS.

"That's crystal-ball stuff," said Paul A. Tateo, marketing director for the privately owned Schmid Laboratories, whose Sheik and Ramses brand condoms rank second in U.S. sales, behind Trojans. "Number one, we're selling preventative stuff, and that's a tough sell. Someone first has to believe that they're in danger. What we're talking about is a total change in the consumer's attitude."

Asked about the effects of the surgeon general's interest in condoms, Tateo replied, "Well, the surgeon general also told people to quit smoking."

"Market research shows some change in attitude toward condoms," said David Mayer, whose Mayer Laboratories will be introducing condoms imported from Japan in the spring. "But most people still look at them as an ugly little necessity."

Emphasis on the condom as a protection against AIDS, which usually is transmitted through the exchange of body fluids in sexual intercourse or through blood products, has made a difference in the way condoms are marketed.

Several companies are now specifically targeting an audience of single, upscale women who are concerned about sexually transmitted diseases, including AIDS. Mentor, a Minneapolis drug company, addresses the issue in advertisements in such magazines as Savvy, Self, Ms. and Psychology Today. The company has developed a condom with an adhesive strip that seals to the skin and forms a water-tight barrier that prevents the exchange of body fluids.

The consumer who buys the Mentor brand will pay more for what the company and the FDA have said is extra protection. The price at one local drug store was $9.49 for a box of six condoms, compared with other brands, which cost $8 to $9 for boxes of 12.

Mentor's market research has shown that between 40 percent and 70 percent of condoms sold today are purchased by women who are concerned about the unhealthy side effects of spermicides and the birth-control pill and who are interested as well in protection against sexually transmitted diseases.

Although Mentor's toll-free number to answer consumer questions about its condoms has generated 10,000 calls since its inception in September, other condom manufacturers express doubt about the company's research.

"Our research says maybe 15 percent are bought by women," said Susan Smirnoff, a Carter-Wallace spokeswoman. "There certainly seem to be more reasons women should consider them as a birth-control option . . . but, so far, the behavior hasn't happened."

Some financial analysts caution that investing in companies such as Carter-Wallace and Mentor does not constitute a investment solely in condoms, since condom sales represent only a small percentage of their profits. At Carter-Wallace, for example, the Trojan brand made up only about 13 percent of $450 million in sales in fiscal 1987.

In addition, the big companies are not banking on the AIDS virus to fill their coffers because someday, said Tateo, there may be a vaccine or cure for AIDs.