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J&J'S IMODIUM A-D RANKS SIXTH AMONG MOST SUCCESSFUL OTC LAUNCHES

This article was originally published in The Tan Sheet

Executive Summary

J&J'S IMODIUM A-D RANKS SIXTH AMONG MOST SUCCESSFUL OTC LAUNCHES since 1975, according to Sudler & Hennessey's annual report on Rx-to-OTC switches released on Oct. 29. J&J's loperamide anti-diarrheal, which was switched from Rx-to-OTC in March 1988, generated $ 85 mil. in factory sales in 1992 and moved to sixth among 68 products introduced by the 14 largest OTC manufacturers since 1975. The survey, which is based on data from Kline & Co., was limited to brands which experienced full-year sales. Line extensions were not considered new products. In 1992, 14 of the 15 top-grossing products introduced since 1975 were switch or switch-related products, Sudler & Hennessey noted. New York-based Sudler & Hennessey includes Upjohn's Motrin IB in the switch-related group since the product contains the switch ingredient ibuprofen and has an ethical heritage. The only true proprietary on the list, Bristol-Myers Squibb's Comtrex, is ranked fifteenth. "While only 31% of the brands introduced since 1975 were switches, these brands accounted for 80% of current year sales," Sudler & Hennessey reported. In addition, "the majority of switch brands achieved sales of $ 30 mil. or more," while "the majority of proprietaries had sales of less than $ 5 mil." Sixty-two percent of the 21 switch products launched in the last 18 years grossed more than $ 30 mil. in 1992, compared with only 6% of the 47 new proprietary brands introduced during the same period. American Home Products' Advil remains the best-selling OTC launched since 1975, with 1992 factory sales of approximately $ 320 mil., up from $ 285 mil. in 1992, according to the Sudler & Hennessey report. J&J's Monistat 7 "strengthened its #2 position" with $ 114 mil. in sales, but Schering-Plough's Gyne-Lotrimin slipped to #10 from #8 in 1991, Sudler & Hennessey reported. During 1992, Warner-Lambert's Benadryl advanced to tie Burroughs Wellcome's Sudafed for the #3 spot with 1992 sales of $ 92 mil. While Motrin IB held steady at #5, Bristol-Myers' Nuprin fell to #8 in 1992. Sudler & Hennessey cited Kline & Co. research "estimates" that Rx-to-OTC switches "will almost triple U.S. OTC sales, from $ 11 bil. today to $ 28 bil. by the year 2010." "Corporate maneuverings suggest that within the next few years Tagamet, an antiulcerant, and Zovirax, an antiviral used for genital and oral herpes, may be among the current crop of prescription drugs strongly positioned for OTC success should they win FDA approval for OTC marketing," the Sudler & Hennessey report speculates. The high success rate of switches, Sudler & Hennessey observed, is one factor contributing to such corporate alliances as the pending joint venture of Glaxo/Warner-Wellcome, which will market OTC versions of acyclovir and the H[2] antagonist ranitidine ("The Tan Sheet" Aug. 2, pp. 1-6). "What is key in the pharmaceutical industry today is having both a new-products pipeline and the ability to market products to the consumer," the agency said. "Stand-alone OTC companies are at a significant competitive disadvantage in the movement towards switches." The advantages to marketing switch products, according to Sudler & Hennessey, include: a "pre-existing consumer base and brand recognition"; a "reservoir of good will among health care professionals"; an "ethical heritage that appeals to better educated, more health-conscious consumers"; and real or perceived "product superiority or meaningful product difference." As a result, 71% of switch brands have achieved a top-three share ranking in their respective categories, while the remaining 29% hold a top-seven share, the report shows. In contrast, "OTCs introduced as pure proprietaries, without history as prescription drugs, have performed miserably," Sudler & Hennessey asserted. Nearly half of the 47 new proprietaries introduced nationally since 1975 have been discontinued, while "most of the others are failing," Sudler & Hennessey said. The report points out that 73% of the new proprietaries had less than $ 5 mil. in current-year sales, compared with only 5% of switches. "Excepting niche brands and special opportunities, new proprietaries represent significant risk," the agency concluded. Of the six proprietary OTCs with sales in excess of $ 20 mil., two -- Motrin IB ($ 87 mil.) and Pfizer's Unisom ($ 24 mil.) -- were switch related, while one -- Sandoz' Theraflu ($ 30 mil.) -- introduced a new market segment, the hot liquid category. Comtrex ($ 35 mil.), SmithKline Beecham's N'Ice ($ 23 mil.), and J&J's Pediacare ($ 22 mil.) round out the list. Sudler & Hennessey suggested that "opportunities for success with new proprietaries can be improved by providing them with an ethical aura and unique positioning." Chart omitted.
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