Pink Sheet is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By



Executive Summary

Procter & Gamble is taking over the guts of Rorer's OTC business and will market Maalox antacid, the analgesic Ascriptin and the laxative Perdiem as part of a "long-term strategic alliance" announced by P&G and Rorer on March 13. P&G is getting exclusive U.S. marketing and distribution rights to Rorer's OTC brands, which should dovetail nicely with P&G's Pepto-Bismol and Metamucil and subsidiary Rich-Vicks' Percogesic. International rights are under negotiation for selected markets, the companies noted. Rorer will continue to manufacture and own the brands. * The shift to P&G's marketing forces will mean the discontinuation of Rorer's OTC sales and marketing departments. About 80 people in the 130-person OTC sales force will be cut; Rorer will attempt to shift the remaining 50 or so to other jobs within the firm. The company will continue to control professional detailing of its OTC brands. Describing the deal's raison d'etre in a nutshell, P&G Chairman and CEO Edwin Artzt said: "P&G gains entry into a core OTC category with a leading antacid brand with no major upfront capital investment. Rorer gets access to one of the best OTC marketing organizations in the business." Rorer Chairman and CEO Robert Cawthorn said the agreement "maximizes the potential of Maalox" by giving the antacid wider distribution and marketing strength. Maalox is the leading antacid, with a 15% share of the U.S. market, and 1989 domestic sales of $110 mil. Worldwide revenues from the market leader were $215 mil. last year. Ascriptin sales were $40 mil. and Perdiem had 1989 revenues of $16 mil., both mainly from the U.S. For P&G, it indicates a decision to focus its attempt to break into the drug business on the consumer-promoted area where it can flex its marketing muscle and experience. From the Rorer perspective, the move relieves the company of the burden of trying to compete it an accelerating OTC antacid/GI product category. Rorer's pending French connection with Rhone-Poulenc makes its long-term prospects of staying in the Rx field more viable. With the J&J-Merck Consumer Products business just beginning its efforts with the former ICI antacid, Mylanta, the OTC gastrointestinal product is ready for major activity. An immediate likely result of the battle between the seasoned J&J and P&G marketing efforts could be an explosion of the OTC antacid market, estimated at about $750 mil. for 1989. While a forceful entry by P&G may prove an early test for the J&J-Merck alliance, the real threat may be to the pending Rx-to-OTC efforts -- especially these that cannot combine a recognized traditinal brand with the new Rx switch product. Glaxo's ranitidine co-development effort with Sandoz, for example, may find the going toughter if both P&G and J&J are entrenched in the market by the mid-1990's. Maalox was rejeuvenated in the U.S. antacid market by the "Maalox moment" campaign which began in July 1989. The campaign is backed by an ad budget of over $30 mil. A recent market study by POV Inc. estimates that the boosted budget would push Maalox into the number two position in terms of ad support in the antacid market in 1989, "versus the #4 or #5 position it usually has occupied." POV points out that Maalox will have to maintain that high ad support in the face of the changes in the antacid market. In return for Maalox, Ascriptin and Perdiem, Rorer will gain the rights to the oral gastritis and ulcer drug De-Nol (Pepto-Bismol's cousin colloidal bismuth subcitrate), and three other gastrointestinal compounds in early stages of development. P&G licensed North American rights to De-Nol from the Dutch firm Gist-brocades N.V. in August 1988 and the drug is currently in Phase III U.S. clinicals. Rorer's Cawthorn alluded to future cooperation on Rx-to-OTC switches between the two firms. He noted that the agreement "may lead to other product opportunities for each company in the years ahead." * The Rorer partnership is the fifth drug development and marketing agreement for P&G in recent years and the second in less than a month. Most represent efforts by P&G to get the rights to successful Rx treatments that may be amenable to the consumer OTC market. In March 1988, P&G and Syntex formed a joint partnership initially to market the analgesic naproxen as an OTC but with the possibility of expansion into other marketing and research agreements. Two months later, P&G signed a deal with Upjohn to develop improved formulations of topical minoxidil (Rogaine). In August of that year came the Gist-brocades agreement. Most recently, on Feb. 15, the company announced an agreement in principle with Alza covering periodontal disease products. Following on the heels of the March 12 definitive merger agreement between Rorer and Rhone-Poulenc (see related item below), the P&G/Rorer strategic alliance reinforces the rationale behind the the French firm's merger of its pharmaceutical operations with Rorer. Rhone-Poulenc Senior Exec VP and Health Care Sector President Igor Landau blessed the arrangement: "We like this agreement. It is consistent with our concentrate first in the U.S. market on developing and strengthening our ethical business. But," he added, "it also allows us to concurrently grow the Rorer OTC product line and initiate an attractive collaboration with one of the best companies in the world in consumer products." P&G will get royalty payments for new ethical products should they pan out. Both firms will "share in the growth of the business," the companies noted. The partnership agreement is subject to approval by the Federal Trade Commission and Justice Department for anti-trust considerations. The trnasition is expected by late summer.

You may also be interested in...

Part D Discount Liability Coming Into Focus: CMS Releases Drug Cost Data

Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011

FDA Skin Infections Guidance Spurs Debate On Endpoint Relevance

FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials

Shire Hopes To Sow Future Deals With $50M Venture Fund

Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth



Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts