Hit or Miss

Article excerpt

OTC market growth is not problems

It's no secret that the nonprescription drug market keeps growing by leaps and bounds. A new report by Business Trend Analysts (BTA), a market research firm based in Commack, N.Y., examines some interesting factors responsible for the market's growth as well as some potential pitfalls.

For example, pharmaceutical companies have discovered that they can do much more to increase business other than just extend existing product lines. Rather than just adding new strengths or new delivery systems, such as caplets, gelcaps, and so on, they are adding new active ingredients to the nonprescription drug market. Recent Rx-to-OTC switches have contributed greatly to its growth. BTA attributes the marked growth of the OTC market in 1995 and 1996 to the Food & Drug Administration's approval of switches in the internal analgesic and antacid categories.

"As evidenced by trends in the pharmaceutical industry, it is believed that the only real chance for growth in the nonprescription drug market is the Rx-to-OTC switch. A newly reliable, available option for growth, the Rx-to-OTC switch overshadows the benefits of the line extension practice. With this option available, the game for the pharmaceutical manufacturer has become the drive to be the first to launch the product. This is the only way to carve a significant hold on the market," according to BTA.

Once products have been switched, consumer health-care companies do more than just market them to the average patient. BTA believes nonprescription drug companies have found a market in the managed care industry, but they should be wary of their new bedfellows. Complying with the desire of managed care organizations (MCOs) to keep health-care costs down, doctors have been prescribing more OTC products to their patients. On the surface, this looks like a promising deal for nonprescription drug manufacturers. However, BTA points out that many branded manufacturers may get the short end of the stick. According to the market research group, MCOs are increasingly working with private-label manufacturers to produce their own nonprescription products for members. In doing so, the MCOs not only cut costs but also increase their name recognition and their image as cost-effective health-care providers.

BTA also pointed out that pharmaceutical companies may erode their prescription markets by flooding shelves with over-the-counter products. The prescription antifungal and topical drug categories are particularly vulnerable in BTA's opinion. …