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This article was originally published in The Tan Sheet

Executive Summary

R.P. SCHERER WILL SUPPLY LIQUI-GELS FOR "HALF DOZEN" OTC PRODUCT LAUNCHES in fiscal 1994, the Troy, Mich. soft gelatin capsule manufacturer noted in its recently released fiscal 1993 annual report. While Scherer is not disclosing its OTC partners, the company indicated that at least one of the upcoming OTC softgel launches will be in the general analgesic category. Currently, Scherer manufactures ibuprofen in soft gelatin capsules for the Australian OTC marketplace. Scherer reported that its softgel caps sales "are growing most rapidly in the highly competitive, multi-billion dollar OTC drug market, where the value-added characteristics of softgels have become increasingly recognized." The company predicted that "there will be attractive opportunities for softgels because their product features and differentiation capabilities meet the needs of a range of customers." Sales of softgels for all its pharmaceutical products grew more than 50% in 1993, Scherer reported. Recently, a spate of softgel products encapsulated by Scherer, including Bristol-Myers Squibb's Comtrex, Burroughs Wellcome's Sudafed, and Robins' Robitussin and Dimetapp, have been introduced to the over-the- counter market ("The Tan Sheet" June 28, p. 4). A number of these products make use of Scherer's Scherersol proprietary liquid formulation technology for encapsulation. For the 12-month period ended June 1993, dollar sales for softgel dosing forms of OTC cough/cold and allergy/sinus medications grew 51% to nearly $ 80 mil., according to Information Resources, Inc. subsidiary Towne-Oller. During that same period, sales for all other dosage forms in the category remained flat. Scherer's U.S. sales, which include pharmaceutical and dietary supplement softgel caps, hardshell caps, and other delivery systems, rose 30% to $ 86.7 mil. in fiscal 1993, while overall corporate sales totaled $ 398 mil., up 18%. Scherer said it controls approximately 90% of the worldwide softgel market. Of Scherer's softgel sales, 53% were to pharmaceutical manufacturers for both prescription and OTC products and 37% of the company's sales were to dietary supplement manufacturers. Scherer reported that "more than 70 new health and nutritional products, many requiring special formulations, were developed and introduced into the market during the past year in support of client companies." Scherer also points out that the dietary supplement market "was boosted recently by new scientific evidence" supporting the protective benefits of antioxidants, especially liquid vitamin E. "The propensity of better-educated consumers to self-medicate is expected to result in a continuing strong demand for both OTC as well as health and nutritional products," Scherer said. Several other OTC marketers have recently introduced softgel versions of established cough/cold brands, including Procter & Gamble (NyQuil, DayQuil and Vicks Formula 44), Schering-Plough (Drixoral), and Pfizer (Unisom). Banner Pharmacaps reportedly supplies softgel caps to P&G for NyQuil and DayQuil. In addition to softgels, Scherer also manufactures two-piece hardshell capsules that "deliver powdered, beaded and granular compounds." Calling itself "one of only three manufacturers in the world of [the] popular dosage forms," Scherer said that its hardshell capsule unit "achieved record sales during fiscal 1993, led by a double digit sales advance at its North American operations." The company also has operations in Europe and Latin America.

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