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Executive Summary

The success of Warner-Lambert's Halls and Beecham's N'Ice exemplify the opportunities available in mature markets for targeting younger consumers, the consulting firm SRI International noted in a recently published report on respiratory care products. Both OTC throat products were launched in 1980-1981. "The ingredients [of Halls and N'Ice] are not new, but the name, packaging and advertising/promotion have been successful in competition with such well-established brands as Ludens, Smith Brothers, and Vicks," SRI pointed out. The Menlo Park, Calif.-based market research/consulting firm said it "believes that this is a good example of companies astutely recognizing that a market (albeit, a small one) was ready for the introduction of a new product directed toward a new generation of consumers/patients." The $15,000 consulting report is entitled "Dynamics and Opportunities in Respiratory Disease Management". At an analyst meeting a year ago, Warner-Lambert reported that worldwide 1985 sales for Halls were $200 mil. The company said the product's marketshare in the U.S. was "better than 50%." SRI estimated the U.S. throat preparation market at $65 mil. in 1985. N'Ice and P&G's Vicks Throat Drops each have between 5% and 15% of the U.S. market, according to SRI projections. The SRI report goes on to suggest that "similar opportunities may exist in other segments of the respiratory market (especially the cough/cold segment)." SRI attached the caveat, however, that in such cases "market shares are only being exchanged, and real growth may be modest or nonexistent." For example, SRI noted that "new R&D activity seems to be lacking" in the throat preparation area, and it "expects no real growth in this category over the next ten years." SRI predicted that the market would grow at a compounded annual rate of 4% for the next ten years -- to $80 mil. in 1990 and $100 mil. by 1995. In the OTC chest rub/inhalent market, Procter & Gamble, through its Rich-Vicks subsidiary, dominates the U.S. market and has leading positions in France and Italy, the SRI report notes. According to SRI, P&G's Vicks Vaporub has a greater than 50% share of the U.S., followed distantly by Mentholatum with between 15% and 30% of the market. The OTC chest rub/inhalent market in 1985 was approximately $25 mil. in the U.S., and the report projects market growth at roughly the rate of inflation, or approximately 4% annually, to $30 mil. in 1990 and $35 mil. in 1995. The Western European market is estimated at $25 mil. and is expected to remain flat over the next ten years. P&G's Rich-Vicks acquisition has given the company significant marketshare positions in the U.S. and in all the major Western European countries with the exception of the U.K. P&G is second in total respiratory drug sales (both Rx and OTC) in the U.S. to Schering-Plough, according to SRI, and is in the top ten companies in respiratory product sales in West Germany, Italy and France. Commenting on the U.S. chest rub/inhalent market, SRI said that "in view of the recent acquisition of Richardson-Vicks by Procter & Gamble, we can expect that the Vicks line will continue to be aggressively promoted. However, SRI is not aware of major pharmaceutical R&D effort in this area; nor is real growth in sales expected over the next ten years."

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