With $3 billion in drug sales in the 12 months ending March, representing one quarter of the overall proton-pump-inhibitor market, Procter & Gamble's Prilosec OTC is heading to a front-end shelf in mid-September to be sold alongside the likes of Maalox, Pepcid Complete, Tums and Zantac 75.
The switch will take Prilosec, still the No. 6 medicine by prescription sales volume in the United States, from behind the counter and bring it to the front end, where margins are larger, the potential consumer base is greater, but where the dollar universe is so very much smaller. What may be even more alarming to pharmacy operators is the potential dampening of the entire PPI prescription drug market--the second leading therapeutic class by sales, according to IMS Health figures.
On the positive side, foot traffic through the digestives aisle is bound to increase in direct correlation to the amount of advertising that will be afforded the category.
With the significant market share that Prilosec still enjoys behind the counter, any erosion of this prescription base will translate into fewer dollars, but the impact will not be as great as was the case with Claritin.
Retailers don't seem too concerned. "[Rite Aid] management indicated that ... generic Prilosec and its successor drug, Nexium, have already cannibalized the majority of Prilosec's sales," wrote Lisa Cartwright, Smith Barney analyst, in a recent note regarding Rite Aid's June performance. Walgreens executives echoed those remarks, Cartwright said.
After the switch of Claritin, many third party payers steered their patients away from the remaining prescription medications in the non-sedating antihistamine market. This will not be the case with PPIs.
First, many health insurers already have placed PPIs on a non-formulary list, requiring doctors to try H2-blockers for their GERD patients first.
Further, Prilosec 20 mg will retain a dual status with an indication of frequent heartburn for the OTC package and keeping its indication for the treatment of GERD and other gastrointestinal problems as a prescription-only option.
P&G has estimated OTC Prilosec sales will fall between $200 million and $400 million in its first year--a pretty heady target. Should OTC Prilosec pull in just $200 million in the coming year, that would be enough to make it the volume leader, by far, in OTC antacid tablets. Johnson & Johnson/Merck's Pepcid AC, currently No. 1 in the category, generated sales of $82.8 million for the 52 weeks ending May 18, according to Information Resources Inc. Those $200 million in sales would even drive P&G past GlaxoSmithKline as the leading antacid tablet manufacturer--GSK generated $166.2 million over that time period, across its three brands, Tums, Tagamet HB 200 and Gaviscon.
One hurdle P&G must overcome if it's to reach its sales goals is educating the average consumer on how to use OTC Prilosec. Unlike antacids, or even H2 blockers, Prilosec takes between one and four days before symptoms are relieved.
One lesson learned from the switch of H2s was the importance of establishing a clear brand identity with the consumer, remarked Kathy Widmer, director of marketing for J&J/Merck.
The OTC Prilosec launch certainly will be well supported. Although the company would not reveal P&G's projected ad budget for OTC Prilosec, executives did note that the ad support would be comparable to new products P&G has introduced in the past. Comparatively, P&G spent $63.9 million last year for the launch of Thermacare heat wraps.
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COPYRIGHT 2003 Gale Group
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