HOT OTCs: Blockbuster Switches and Niche Items Drive OTCs
Two blockbuster Rx-to-OTC switches and a handful of niche products dominated the OTC market in 2003. As in other years, switches made the biggest splash, and 2003 was the year when 2 blockbuster crossovers made a difference?Claritin (loratadine), launched in the fourth quarter of 2002, and Prilosec (omeprazole), launched in September 2003.
"It was a huge year for OTCs," said Laura Mahecha, health care industry manager for Kline & Co, a health care consulting group. "The impact of Claritin and Prilosec has been tremendous. Innovative niche products and products with interesting delivery systems continued to drive the category and will next year as well."
"Rx-to-OTC switches were the biggest story of 2003," agreed Kyle Lentz, industry analyst at Hamacher Resource Group. "When you take 2 drugs in the top 5 of prescription sales and move them to over-the-counter status, sales will be huge. Throw in the fact that insurance companies decided not to cover loratadines or change their copay status, and there will also be a huge bump in sales."
Lentz said that another factor driving sales of Claritin and Prilosec was an increasing willingness of patients to use funds in flexible spending accounts to cover the costs of the products. "Now that the government has allowed these OTC products to be covered under flexible spending accounts, customers are willing to pay the cost of a full month's worth of pills," he said.
The switch of Procter & Gamble's Prilosec, which commands 1/4 of the prescription proton-pump-inhibitor market and has prescription sales of more than $3 billion, had a huge impact on the gastrointestinals market. Gastrointestinals are among the most productive categories for drugstores. They contributed just over 10% of total OTC sales among independent drugstores, according to Hamacher's Lentz.
In fact, Hamacher ranks the category's sales third among independent drugstores?right behind cough/cold and analgesics. "Since Prilosec's introduction to the OTC market, the product's sales have skyrocketed, leading many analysts to believe that this product can become 1 of the top 10 brands in the OTC market," Lentz said.
Independent pharmacists concur. "There's no question that Prilosec is hot," said Jeff Scott, a pharmacist at Middleport Family Health Center in Middleport, NY. "In many cases, it's still covered by patients' insurance, so it's flying off the shelves."
Sharlea Leatherwood, owner of 3 pharmacies in Kansas City, Mo, said that, although sales of Prilosec have been strong, she still sees a market for histamine2 (H) antagonists. Because of the switch of Maximum Strength Pepcid AC, the first prescription-strength H2 blocker on the market, H2s will get a boost. "There's still growth there," Leatherwood said.
Claritin affected the always-active cough/cold/allergy segment. "Cough and cold fared very well," said Hamacher's Lentz. "After 1 full year of Claritin sales, the cough and cold tablets subcategory saw a 31.2% increase over the previous 52 weeks. Sales in drugstores posted a percentage increase of 40%." Lentz said that Claritin now ranks number 1 in the category, with a market share of 16.7%.
The category also got a boost from the introduction of Wyeth Consumer Healthcare's Alavert, another loratadine product, which posted some pretty good numbers in 2003, according to Lentz. Alavert, which hit retail shelves in the last weeks of 2002, was priced 20% below Claritin, contributing to its quick success.
Another niche product that had legs in 2003 was Knight-McDowell Labs' Airborne Effervescent Health Formula, a natural formula of herbal extracts and vitamins touted as a prophylactic for colds. Consumers were advised to take the product before spending time in crowded environments, such as airplanes or offices.
New Delivery Systems
New delivery systems also found a ready audience in the cough/cold category. Cold sufferers snapped up personal steam products and nasal sprays as an alternative to traditional OTC products.
CNS's Breathe Right Vapor Shots, which enable a patient to turn a cup of boiling tap water into a personal vaporizer for about $6.99, was a hit. Vicks also introduced a vaporizer product, the Vicks Personal Steam Inhaler, a machine with a price tag of about $20.
Matrixx Initiatives Inc's Zicam line, which offered 3 new delivery systems for its zinc products last year, continued to be a favorite with consumers. Zicam Cold Remedy Oral Mist, Zicam Cold Remedy Chewables, and Zicam Cold Remedy RapidMelts were quickly embraced by cold sufferers. The Quigley Corporation also introduced a nasal delivery product, Cold-Eeze Cold Remedy Nasal Spray, which contains aloe vera, hyaluronan, and 3.36% weight-by-volume zinc gluconate.
It also was a big year for home testing kits. Consumer Choice Systems Inc introduced an at-home UTI Home Screening Test, which tests urine for an imbalance of nitrates, indicating a urinary tract infection.
Several manufacturers brought ovulation- testing kits to market that use saliva rather than urine. When biochemical and hormonal changes due to ovulation take place in the body, a woman's saliva forms a "ferning" pattern when dried?a pattern that can be detected when the saliva is magnified and viewed with an ocular lens.
This personal mini-ovulation microscope technology has been used for years in Europe to detect ovulation. Several models have recently been cleared by the FDA for sale in the United States and have been making their way to retail shelves. Maybe MOM's Mini Ovulation Microscope and Dynamic Health Products' Ovulite are 2 products that were introduced in 2003.
In addition, Inverness Medical Innovations introduced the Clearblue Easy Digital Pregnancy Test, the first pregnancy test to display results in words. By eliminating the need for women to interpret lines, the test should make test results easier to read.
More news in the category came from Embryotech Laboratories Inc's FertilMARQ, a home diagnostic test for male infertility. The test determines whether sperm concentration is above or below the standard concentration.
The first aid and external analgesic categories also were active, with interesting new products introduced throughout the year. "There were a lot of swabs and wipes and liquid bandages that created interest in the category," said Kline's Mahecha. She cited Gold Bond's sprays and wipes and Johnson & Johnson's Band-Aid liquid bandages as items of particular interest.
Thermal patches continue to drive the external analgesic segment. Bengay and Icy Hot introduced patches in 2003, and Bayer introduced Muscle and Joint Cream. "Bayer, known for its internal analgesics, entered the already crowded external market, and that's notable," Mahecha commented.
Mahecha said that another product to watch is LDS Consumer Products' Wartner Wart Removal System, a product that uses cryotherapy to freeze warts. "Cryotherapy is similar to liquid nitrogen, which is used by physicians to remove warts," she said. The category may be following the path of tooth-whitening products, allowing patients access to technology similar to that which is used by professionals.
In oral care, Lentz said that, going forward, the segment to watch would be enamel care products. "Enamel care is the next big wave, as manufacturers develop products that repair and replace damaged enamel," said Lentz. "The oral care wars are going to continue in 2004, with significant introductions from Crest, Colgate, Arm & Hammer, and Sensodyne."
Ms. Sax is a freelance writer based in Ridgewood, NJ.