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J&J’s MONISTAT 7 IS SECOND MOST SUCCESSFUL OTC BRAND LAUNCHED SINCE 1975; NINE OF TOP 10 NEW BRANDS ARE Rx-TO-OTC SWITCHES, SUDLER & HENNESSEY REPORTS

Executive Summary

J&J's Monistat 7 OTC antifungal is the second most successful new OTC brand launched since 1975 based on the product's first nine-and-a-half months of marketing, according to sales and market share data from Kline & Co. compiled in a report from the ad agency Sudler & Hennessey on the success of Rx-to-OTC switches. Presenting the report at a Sept. 15 symposium sponsored by the Nonprescription Drug Manufacturers Association, Sudler & Hennessey Exec VP Arthur Rosen reported that Monistat 7 generated sales of $90 mil. in 1991. Monistat (miconazole 2%) was launched in mid- March 1991 for the treatment of yeast infections. Schering- Plough's Gyne-Lotrimin (clotrimazole 1%), which had several months in lead time over Monistat, moved to the eighth best-selling OTC brand introduced since 1975 in its first year of marketing with $63 mil. in sales. Rosen called the performance of the two Rx-to-OTC topical antifungal switches "extraordinary." Rosen added: "Our whole field is expanding as brands switch. Here is a whole new category and look what has happened in just one year to those two brands." Nine out of the top 10 OTC brands introduced since 1975 are Rx-to-OTC switches, the Sudler & Hennessey report shows. If Upjohn's Motrin IB is considered an Rx-to-OTC switch instead of a new proprietary brand, all of the newer top 10 products are from switches (see chart below). The objective of the Sudler & Hennessey report was to "evaluate the relative sales performance of Rx-to-OTC switches versus new proprietary brands," Rosen said. The study considered a universe of 66 OTC brands, including 20 switches and 46 new proprietary brands, introduced by the 14 largest OTC marketers in the U.S. since 1975. However, nutritionals, diagnostics and contact lens solutions were not considered by the study and line extensions were excluded because they, by definition, are not new brands, Rosen explained. "We had to make some ground rules, so switch brands were defined by us as the first brand out of the gate -- that would be Advil and Nuprin, but it would not be Motrin IB which [was introduced] five years later," Rosen said. He noted that "some people" had suggested to Sudler & Hennessey that Motrin IB and Pfizer's Unisom be considered switches. American Home Product's Advil ibuprofen brand, with $285 mil. in 1991 sales, "is the most successful OTC introduced since 1975," Rosen pointed out. He noted that Bristol-Myers Squibb's Nuprin ibuprofen, prior to last year, was the second most successful new OTC brand, but the product fell to fifth on the Sudler & Hennessey list in 1991 where it tied with Motrin IB with $74 mil. in sales. The 20 switch products, which represent about 30% of the OTC brands launched since 1975, generated 78% of the $1.5 bil. in 1991 sales from the 66 new brands considered in the study, Rosen observed. The report also looked at the number of brands generating more than $30 mil. in 1991 sales, $5 mil. to $29 mil., or less than $5 mil. Rosen noted that nearly two-thirds of the switch products had sales of more than $30 mil. in 1991 versus only 7% of the new proprietary brands, while only 5% of the switch products had sales of less than $5 mil. compared to 69% of the new proprietaries. "Of the 46 new proprietaries introduced since 1975, 30 had sales of $2 mil. or less and 18 have already been discontinued," Rosen pointed out. Only six new proprietaries produced more than $20 mil. in sales in 1991, headed by Motrin IB and followed by BMS' Comtrex ($41 mil.), Sandoz' Thera-Flu ($33 mil.), Pfizer's Unisom ($24 mil.), SmithKline Beecham's N'Ice ($24 mil.), and J&J's Pediacare ($22 mil.). "Two of these -- Motrin IB and Unisom were switch related ...[so] that leaves two brands, Comtrex and Thera-Flu, as the most successful true proprietaries introduced since 1975," Rosen noted. "For those who can remember beyond 1975, you pretty much add Nyquil [and] Excedrin and then you are counting four brands perhaps introduced since 1960 that were truly brand names and truly big successes." Measured in terms of market share, Rx-to-OTC switches also have significantly outperformed new proprietaries, Rosen observed. He noted that "70% of the switches are in a top-three share position right now even though some of them are only out of the gate a year or less." Among new proprietary brands launched since 1975, Rosen indicated that only Unisom is among the top three products in its respective market category. In addition, while only one Rx-to-OTC switch brand has failed to achieve at least the seventh spot in its respective category, over two-thirds (70%) of the new proprietary brands have a share ranking below seven. Rx-to-OTC switches also promise a better return on ad spending, the Sudler & Hennessey report shows. The report looked at three market categories -- allergy brands, cough/cold brands and pain relievers -- and found that 1991 sales of switch products "were significantly higher than combined first three-year consumer/professional spending," while 1991 sales of new proprietaries "were significantly lower." For example, $117 mil. in 1991 sales from the switch allergy products were generated by $24 mil. in first three-year promotional spending versus $4 mil. in 1991 sales from $15 mil. in spending for the new proprietary brands. Sudler & Hennessey Senior VP and Consumer Research Director Norma Birnbaum suggested that Rx-to-OTC switches fit into the "adoption curve theory" of consumer targeting. Birnbaum discussed a consumer survey conducted by Sudler & Hennessey of 8,600 respondents covering 118 brands in seven categories that showed that "switches are gravitated to by the innovators and early adopters." She noted that several factors involved with consumer purchasing of Rx-to-OTC switches "inherently...fit in very well with the innovator and early adopter," including: the "aura of science" surrounding such products; the likelihood that better educated and more health conscious consumers "are going to understand what switches are about"; and a greater comfort level with "weighing the benefits and the possible risks" associated with a recent prescription-only pharmaceutical. Birnbaum indicated that a key factor in the success of Rx-to- OTC switches is their ethical heritage and the ability of marketers to highlight the product's prescription history. However, she suggested that new proprietary brands can create "illusions of ethical heritage" via packaging, a prescription- sounding brandname and advertising.
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