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Executive Summary

Rugby Labs is approaching the top spot in the U.S. retail drug business in terms of the number of prescriptions filled. The generic drug marketer reached the number two position in the industry in 1991 when 83.7 mil. retail/outpatient prescriptions were filled with Rugby products, according to market estimates by Pharmaceutical Data Services. Increasing 4.6% from just over 80 mil. prescriptions filled the year before, Rugby showed a substantial above-market growth rate in 1991. The total U.S. retail prescription market climbed 1.36% to over 1.7 bil. prescriptions in 1991, according to a March 10 summary of 1991 trends by PDS VP-Marketing/Product Development Patrick Miller, PhD. Miller delivered his overview of 1991 to a session at the National Wholesale Druggists Association Marketing Conference in San Antonio. Rugby had "very healthy, very healthy" growth in 1991, Miller declared. He predicted that if Rugby's growth pattern continues, "We are probably only one year away from acknowledging a generic pharmaceutical company as the largest pharmaceutical company in the U.S." Rugby appears to represent just under 5% of the total retail prescriptions in 1991. Rugby is the marketing arm of the privately-held Rugby/Darby/Chelsea family of affiliated companies. The group was started in 1961 by Joseph Ashkin and is still controlled by that family. Michael Ashkin, the founder's son, is president. The generic firm's ascent toward the top position in the industry has been noted for several years ("The Pink Sheet" Jan. 29, 1990, p. 7). Its climb in ranking in recent years, however, has been aided by slippage by some of the traditional leaders. The current number one firm in terms of total number of retail prescriptions by the PDS count is American Home Products with 87.8 mil. in 1991. Miller noted that AHP has been dropping in prescription volume. The 1991 prescription totals for the company were off 1.7% from the year before. Similarly, the third place company also lost ground in number of total prescriptions in 1991. SmithKline Beecham (SB) declined 6% in prescription volume to 66.3 mil. retail prescriptions, according to a chart shown by Miller during his presentation. SB's decline probably contributed directly to Rugby's gains. Miller noted that one of the important factors in SB's prescription totals was the drop-off in Dyazide volume. In August 1990, SB licensed Rugby to sell triamterene/hydrochlorothiazide made by SB. Thus the decline in 1991 Dyazide prescriptions felt by SB may have transferred in large part to Rugby. Miller also pointed out that there is a distinct trend away from the older classes of hypertensives and the previous step-care approach to the condition. He noted that both the potassium- sparing and thiazide diuretics were among the classes of products losing the most total prescriptions in 1991: potassium-sparing diuretics lost 2.1 mil. prescriptions and thiazides dropped about 1.4 mil. prescriptions. "You are also seeing a decay, a continued decay, in the step- care approach that was once the mainstay of medical practice for the treatment of hypertension," Miller said, with initial prescriptions switching to the ACE inhibitors and calcium channel blockers. Those two classes were among the fastest growing individual product groups in terms of total Rxs in 1991: calcium channel blockers were second in aggregate numbers of prescription gains (6 mil. to about 49.9 mil.); ACE inhibitors were fifth (a net gain of 2.6 mil. prescriptions). In addition to Rugby, three other generic marketers appear within the top 20 firms in terms of retail prescription volume for 1991, Miller reported. Number 13 is Goldline, which was recently purchased for $63 mil. by IVAX, the firm run by the ex-head of Key Pharmaceuticals, with just over 35 mil. Rxs (down 4.7%) ("The Pink Sheet" Jan. 6, T&G-5). Number 14 is the Ciba-Geigy generic marketing arm, Geneva Pharmaceuticals (about 34 mil. prescriptions), and number 18 is Mylan (approximately 33 mil. prescriptions). The PDS exec focused on a firm just out of the top 20 as a further example of the rapid volume gains being turned in by the generic marketing firms. At number 21 on the PDS, just behind Abbott Labs, is Apothecon, the recently-formed generic marketing arm for Bristol-Myers Squibb. "A company that nearly bumped Abbott out of the top 20 is a company that didn't exist two years ago, called Apothecon," Miller said. He pointed to its development into a leading prescription volume company as a sign of the consolidation of the generic market." Apothecon has a sales force of 100 representatives and markets only products manufactured by Bristol-Myers Squibb. Miller said the growth of Apothecon and the other generic firms is the wave of the future in the generic market. "We have been talking about consolidation occurring in that industry for a long time," Miller said. "To the extent to which consolidation occur, that feeding frenzy [of price competition by the follow-on generic marketers] will abate. We will probably begin to see some moderation in the discount. The discount won't go away. We will begin to see some moderation." While slipping in terms of overall prescriptions, Wyeth-Ayerst does have one of the most rapidly growing and largest volume products in the U.S. retail business in Premarin. Miller noted that Premarin was the second largest product by prescription units in 1991 with nearly 22 mil. Rxs. At that level, it represented approximately one quarter of all AHP retail prescriptions in 1991. Premarin was ranked fourteenth by dollar volume among U.S. products in 1991, Miller indicated, with sales of $307 mil. (at pharmacy acquisition cost). The product lagged only Merck's Mevacor in percentage sales volume increase for the year (30.3% v. 35.5%). The conjugated estrogens class of which it is a primary component was one of the top gaining classes with an added 2.7 mil. prescriptions in 1991. The J&J companies experienced a precipitous drop in prescription volume in 1991 due to softness in one of their primary markets (oral contraceptives) and the OTC switch of the vaginal antifungal miconazole. Johnson & Johnson ranked sixth among companies in terms of prescription volume with 55.7 mil. prescriptions in 1991, off about 8 mil. prescriptions from 1990. A good deal of that decline could be attributed to the loss of 8 mil. prescriptions in the vaginal antifungal class with the switches of miconazole and clotrimazole to nonprescription status. J&J did not lose as many sales from that switch as the prescription figures would indicate. The oral contraceptive class also lost 2.7 mil. prescriptions in 1991, PDS reports. J&J does not have an individual product in the PDS top 20 products by retail dollar volume (see box at left for the top 10 in 1991). However, its Tylenol combinations compete in the codeine combo group, which is the largest prescription class, with 64.9 mil. Rxs in 1991 (up 3.7%). Acetaminophen with codeine combos ranked third in product prescription volume with approximately 20 mil. prescriptions.

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