Bayer Rid Pediculicide Marketing Begins With Mousse Launch

Bayer Consumer Care's inaugural marketing efforts for the newly acquired Rid brand will focus on Maximum Strength Rid Mousse aerosolized foam lice treatment, which began shipping June 22.

The company expects to run print and TV ads as well as consumer promotions for the brand extension during the "back to school" season.

Bayer acquired the Rid line of pediculicides from Pfizer on June 20 under the terms of Pfizer's merger with Warner-Lambert, which markets the Nix line of lice treatments. The Federal Trade Commission required the divestiture for merger approval (¹ (Also see "Pfizer/Warner-Lambert" - Pink Sheet, 29 May, 2000.)).

Rid Mousse, available in 5.5 oz. cans, contains the same active ingredients found in other maximum strength Rid products - pyrethrum extract equivalent to .33% pyrethrins and 4% piperonyl butoxide. Indicated for treatment of head, pubic and body lice, the mousse was approved by FDA March 7 under an "NDA Deviation" (² (Also see "Pfizer Rid Mousse Pediculicide Approved Under "NDA Deviation"" - Pink Sheet, 13 Mar, 2000.)).

All Rid products, including the mousse, initially will still bear the Pfizer name. New packaging indicating Bayer's ownership will be phased in gradually.

Bayer plans to retain the Rid name, but will evaluate aspects of the line such as packaging, advertising, marketing strategies and new product potential.

Recent concerns about growing resistance of lice to permethrin- and pyrethrum-containing OTC pediculicides largely are due to improper usage, Bayer maintained, adding it plans to deliver to consumers the clearest possible directions for use.

Labeling indicates Rid Mousse should be used on dry hair, as opposed to lice-treatment shampoos which generally must be applied to wet hair. Advertising likely will emphasize the mousse's non-drip formula.

The Rid line expands Bayer's consumer health portfolio, which includes Genuine Bayer Aspirin and Aleve analgesics, Alka-Seltzer cough/cold remedies and One-A-Day vitamins.

According to FTC filings, Bayer and Pfizer entered into an asset purchase agreement April 11. Although financial details were not publicly disclosed, Bayer acquired the formulas, trademarks and patents related to the brand, as well as a small quantity of finished goods inventory. No employees or facilities were involved in the deal, and Rid will continue to be made by third-party contract manufacturers.

FTC's divestiture requirement is not surprising. In its analysis of a proposed consent order, the commission notes Rid and Nix combined hold a 60% share of the $150 mil. U.S. OTC pediculicide market.

Data from Chicago-based Information Resources, Inc. show Pfizer led the lice treatment category with sales of $45.4 mil. and a 29.5% dollar share for the 52 weeks ending May 21. Warner followed with $45.2 mil. in sales and a 29.4% dollar share. Private label treatments ranked third with sales of $26.5 mil.

In its analysis, FTC concludes that absent a divestiture, the merger most likely would lead to "unilaterally anticompetitive effects in the OTC pediculicide market by eliminating the actual, direct and substantial competition between Pfizer and Warner and allowing the combined firm to raise prices."

The commission cites "significant barriers" to entry and expansion in the OTC lice treatment market, including R&D, manufacturing and sales costs. "Existing private label and small branded suppliers of pediculicides are not likely to effectively reposition themselves in order to counteract a post-merger price increase because of their minimal market presence, lack of scale economies and lack of consumer brand loyalty," FTC maintains.

The Pfizer/W-L merger closed June 19 following same-day FTC clearance of the companies' proposed consent decree; the merger is expected to be completed after a 30-day public comment period. Based on June 19 stock prices, W-L had a market capitalization of $116 bil. Pfizer's stock closed the day down 3/16 to 46-3/4 and closed at 45-15/16 June 23. The combined entity has a market valuation of $302 bil. and expects to generate revenues of roughly $31 bil. in 2000.

Pfizer's Warner-Lambert Consumer Group, based at W-L's Morris Plains, N.J. offices, will house such brands as Listerine and Plax mouthwashes, Halls cough drops, Zantac 75 H2 antagonist, Sudafed and Actifed cough/cold products, Benadryl antihistamines, Rolaids antacids, Quanterra supplements, BenGay topical analgesics, the Visine eye care line and Desitin and Neosporin skin care products.