P&G OTC sales up 2%, paced by Pepto, Metamucil, but offset by 6% oral care sales drop.

P&G PEPTO-BISMOL, METAMUCIL DRIVE 2% OTC VOLUME GROWTH in North America for the company's second quarter of FY 1998 (ended Dec. 31), Procter & Gamble Assistant Treasurer James Prevost told securities analysts during a Jan. 27 conference call. However, total health care volume dropped 2% because a 6% decline in oral care products sales was only partially offset by gains in sales of OTCs such as the Vicks line of cough/cold products, Pepto and Metamucil, Prevost noted.

The 6% decline in oral care sales volume compares to a strong period the year before that included the final shipment of the Crest buy-one-get-one-free promotion in October 1996, Prevost said. The latest addition to the Crest dentifrice franchise, Crest MultiCare, now has market share above 4%, Prevost added, due to a $42 mil. advertising campaign for the brand that broke in August and a September sampling program. A second Crest extension, Crest Extra Whitening, was launched in January with a $40 mil. ad budget.

By comparison, Colgate-Palmolive has earmarked more than P&G's MultiCare and Extra Whitening's budgets combined for its Total triclosan toothpaste, with a first-year ad spend of $100 mil. Prevost acknowledged that the "next several months are going to be extremely competitive," and while P&G expects Colgate to gain share, the company "remains focused" on introducing products that offer "superior value and performance."

P&G is "reasonably satisfied" with the two Crest launches, Prevost told analysts, adding that the company's goal is to keep Total's market share gain coming from third-party competitors, not Crest. At the same time, he observed, "the dentifrice business is not the most critical" for P&G. While the company "has not given up" on the oral care segment and is "committed" to getting oral care back on its feet, it "will have to see how it goes."

P&G remains optimistic about its OTC drugs business, Prevost indicated, citing the company's recent agreement with Astra Merck to develop and market an OTC version of the anti-ulcer drug Prilosec, the proton pump inhibitor omeprazole. "While the impact of this switch is a few years away, it does bode well for the continued success of our OTC category," Prevost said. Astra recently announced plans to file an NDA in the first quarter of 1999 for the Rx-to-OTC switch candidate in the form of an effervescent tablet.

IMS America audit numbers for the period January to Nov. 30 show P&G OTCs ranking tenth in dollar volume at $492.9 mil. Also according to IMS data, P&G's largest OTC product continues to be Vicks Nyquil, which generated approximately $81 mil. in sales during the 11-month period to rank nineteenth in the research firm's top 20 list of OTC drug sales.

IMS America bases its rankings on data from the Retail & Provider Perspective Audits, which tracks on a monthly basis sales of pharmaceutical, OTC and related products (such as infant formula and diabetes blood sugar monitors) by drug store chains, independent pharmacy, proprietary stores, food/drug combo stores, mass merchandisers, non-federal hospitals, federal facilities, clinics, long-term care facilities and HMOs.

P&G's antiperspirant/deodorant sales volume in North America declined "slightly" as a result of inventory adjustments, although "consumption continues to grow" behind Sure and Secret gel solids, Prevost reported. In July, P&G introduced Secret Sheer Dry with a $20 mil. ad/promo campaign and Sure Clear Dry, backed by a $15 mil. ad budget.

Procter & Gamble worldwide net sales were up 5.5% to $9.64 bil., and earnings rose 10.8% to $1.07 bil. during the fiscal second quarter, P&G said. Worldwide sales volume grew 8%. Strength in North America and Europe has allowed the company to "weather the severe economic issue" in Asia, Prevost noted. North American sales grew 7% on a 6% volume growth, and net earnings were up 15%. Sales in Europe, the Middle East and Africa rose 4% but were negatively affected by unfavorable European exchange rates. Volume increased 12%, and net earnings jumped 17% in the EMEA region.

Consolidated Latin American sales increased 18% on a 15% volume gain, with a strong performance in Mexico, Prevost noted. Net earnings rose 10%. Sales in Asia slipped 5% as a result of weaker currencies versus the strong dollar, and earnings were down 4% due to higher product initiatives. Volume was flat in the Asia Pacific region for the fiscal second quarter.