Magazine article Drug Topics

Rising Tide

Magazine article Drug Topics

Rising Tide

Article excerpt

If industry analysts are correct, the Rx-to-OTC switch trend should continue in intensity--even accelerate--in the coming months.

This year, Pepcid AC (famotidine) and Tagamet HB (cimetidine) became available over the counter. Three other prescription drugs await OTC approval: ketoprofen, ranitidine, and ketoconazole. If they are approved by Dec. 31, a new record will have been established for the number of Rx-to-OTC switches occurring within a given year. According to the Nonprescription Drug Manufacturers Association (NDMA), approval of the five drugs would almost double the annual switching average, which has been at 2.6 since 1976.

Nils Johannesson, Ph.D., M.D., a manager at the market research firm of Coopers & Lybrand, New York, believes that Rx-to-OTC switches will account or 80% of the growth in the OTC market. The growth will result not only from OTC switches but from product lines that manufacturers will build around the switched products. According to Johannesson, extra-strength and special formulas, as well as different flavors of the switched drugs, will evolve and increase the presence of new OTC drugs. "You need exposure [in a drugstore]. You need to be visible, so, ideally, you would like to see a whole range of things in there. If you have switched one product but it's standing there alone and hidden, you will be tempted to build a bigger line to occupy a couple of shelves," he explained.

There are two main forces driving the increase in Rx-to-OTC switches, Johannesson noted. The first is the desire of drug manufacturers to protect their interests when drug patents expire. If the companies can get their products approved for OTC distribution, they can profit from the branded OTCs and eliminate the traditional generic competition.

However, this plan of action is not without its share of risks and complications. Though the OTC market is a very lucrative one, it is also a very costly one to enter. The money that a drug manufacturer must spend on consumer advertising far exceeds the amount it must spend promoting the drugs to health-care professionals.

Consumer promotion is also a game of hit or miss, Johannesson pointed out. Though marketers try to hit the target audience, he said, they cannot be sure that expensive advertising will always reach the intended customer. "The Rx business is very much a pull business. You create the interest and awareness through the physicians, and they pull the business through. On the OTC side, you have to push. You have to fill the pipeline, the trade, the distribution channels. …

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