A Lesson In Exclusivity? Claritin Falters As Generic Loratadine Sales Double

The absence of Hatch/Waxman exclusivity for Schering-Plough's nonprescription Claritin has cost the company millions in potential revenue despite the drug's position as the most successful Rx-to-OTC switch to date.

In late March, the firm announced OTC Claritin had surpassed the $1 bil. sales mark (¹ 'The Tan Sheet' March 28, 2005, In Brief).

The milestone solidified the company's "long-standing leadership position of successfully converting prescription products into major OTC brands," Schering maintained at the time.

The firm described Rx-to-OTC switches as a "core marketing strategy in which to extend the lifecycle of established prescription products."

However, generic loratadine's rapid rise has limited the brand's growth potential in the two and a half years since the launch of OTC Claritin.

Prior to the drug's switch in December 2002, Schering stated that it did not expect to receive three years of Hatch/Waxman exclusivity for the product (² (Also see "OTC Claritin Hatch/Waxman Exclusivity Not Expected By Schering-Plough" - Pink Sheet, 11 Mar, 2002.), p. 3).

The absence of exclusivity, along with Schering's federal court defeat in its efforts to keep generic loratadine off the market pending expiration of its desloratadine ( Clarinex ) patent, paved the way for a wave of ANDA and 505(b)(2) applications when the loratadine compound patent expired.

Schering filed NDAs covering Claritin tablets, syrup, RediTabs , D-12 and D-24 in 2002, and attempted to defend its patent by suing competitors McNeil and Wyeth (then Whitehall-Robins), among others, after they filed 505(b)(2) applications to market OTC loratadine.

Pressure on Schering intensified when Wyeth received approval to market Alavert over the counter in mid-2002.

Wyeth later was able to undercut Claritin's high-profile launch by introducing the competing loratadine brand at a lower price point in December 2002 (³ (Also see "Wyeth Alavert Approval Sparks Loratadine Price Wars, Fight For OTC Share" - Pink Sheet, 23 Dec, 2002.), p. 5).

Generic competition followed shortly thereafter, leading to missed sales opportunities for Claritin as private-label competitors such as Perrigo and Leiner rapidly expanded their presence at retail.

Total private-label loratadine sales roughly doubled last year, growing from approximately $63.4 mil. in 2003 to $127.6 mil. in 2004, according to data from Information Resources, Inc. (excluding Wal-Mart).

In other words, Schering may have yielded more than $200 mil. in potential revenue to private labelers over the two-year period.

For its part, OTC Claritin generated sales of roughly $419 mil. in 2004, compared to $415 mil. in 2003.

The non-sedating antihistamine brand recorded relatively flat sales of $116 mil. in the first quarter of 2005, despite significantly higher promotional spending (⁴ (Also see "Schering Prepares For “Turnaround”; Claritin Falls Flat In First Quarter" - Pink Sheet, 25 Apr, 2005.), p. 7).

Schering has bolstered the brand with several line extensions, including Children's Claritin and Claritin Hives Relief. The firm has also pursued new indications, including a common cold usage claim for Claritin D.

Although branded alternatives to Claritin have not faired as well as private label offerings, they still accounted for almost $140 mil. over the last two years.

Alavert, Claritin's foremost branded competitor, produced $56 mil. in revenues in 2004 and $81.6 mil. in 2003, according to Wyeth. Novartis' Tavist loratadine product grossed $4.4 mil. in 2003 and 2004 combined, based on IRI data.

Wyeth recently ramped up ad support for Alavert with a television ad campaign aimed at spring allergy sufferers.

In addition to Schering and Wyeth, market saturation has begun to squeeze prominent private labelers.

Perrigo recently reported lower loratadine sales due to an influx of new competitors and price erosion (⁵ (Also see "Perrigo Predicts Cough/Cold Sales Drop Due To Pseudoephedrine BTC Move" - Pink Sheet, 9 May, 2005.), p. 3).