Cough-cold switch products add to category sales

Rx-to-OTC switched products still dominate the cough-cold and allergy categories. A recent report on the category from Mintel International revealed that recent Rx-to-OTC switches in the allergy category did not cannibalize sales of existing tablet products, instead they boosted the entire segment.

Retailers have been getting a similar lift from the OTC version of the recently switched Zyrtec. “The December 2007 launch of an OTC Zyrtec will continue to bump the category up in 2008/2009,” said Laura Mahecha, industry manager for Kline & Company’s healthcare practice. McNeil Consumer Healthcare’s Zyrtec was switched in November 2007, just in time to land on store shelves for the 2008 allergy season. “The Zyrtec switch was definitely huge,” said Kyle Lentz, health and beauty aids analyst for the market research company Hamacher Resource Group.

Unlike many other switched products, Zyrtec was not granted exclusivity by the Food and Drug Administration, so the market is wide open for private-label cetirizine HCI products. “The OTC version of Zyrtec was not given three-year exclusivity, so we had private-label products right out of the gate. CVS, Walgreens and Wal-Mart store brands have already hit the shelves, and we expect more,” Mahecha said.

Lentz said Hamacher’s planograms recommend that stores stock one private label “compare to” for count-size SKU of Zyrtec. “Private label is definitely strong in Zyrtec,” he said.

Competitor Schering-Plough’s Claritin, another Rx-to-OTC switch that has owned the category for some time, now has a fight on its hands. Schering-Plough is the category leader, according to Mintel, with category sales at $441 million in 2007. “Claritin drove a lot of growth in the category last year, the brand was up 15 percent. I think there will be a lot of competition between the two brands,” Mahecha said.

“Claritin is definitely losing share to Zyrtec,” Lentz said. “I expect to see more advertising and more line extensions from the brand.” Schering recently introduced Children’s Claritin Grape Chewable tablets.

Going forward, Schering may look to its Clarinex brand, an allergy prescription product with a slightly different formulation, as a possible switch in 2009 or 2010 when the product goes off patent. “There’s not a lot of difference between Claritin and Clarinex, and it could cannibalize Claritin sales, but it will be interesting to see what Schering does in the next year to 18 months,” Mahecha said.

The allergy eye care segment is still riding on two switched products introduced in 2006. Bausch & Lomb’s Alaway and Novartis Pharmaceuticals Corp.’s Zaditor, two drop products specifically for allergy relief, have performed well. “Typically eye care products are a small part of the category, but we saw some nice growth there,” Mahecha said.

Most of the action in the cough-cold category has been in line extensions. “There’s a lot of activity in ease-of-use, such as chewables or dissolvable strips, as well as one-a-day dosages,” Mahecha said. Mintel’s research shows that consumers prefer longer lasting formulas and multi-symptom products.

The market has been strong for cold/allergy/sinus products, with dollar sales in the drug channel up more than 15 percent for the 52 weeks ended July 13, 2008, according to Information Resources Inc. Tablets account for 65.2 percent of the cold/allergy market, according to Mintel.

Sales of private-label products account for nearly 15 percent of sales. In addition to category powerhouse brands, Adams Respiratory Therapeutics’s Mucinex has become a huge player with one brand. The brand is poised to become bigger still since Adams was acquired in 2007 by Reckitt Benckiser.

Launched in 2004, Mucinex has become a power brand in the category. The company’s Mr. Mucus ads and the product’s corner on the 12-hour expectorant market have helped the brand grow 22 percent from the first quarter of its fiscal year to June 2008.

For the 52 weeks ended July 13, IRI data showed that dollar sales of Mucinex DM tablets jumped nearly 30 percent, and dollar sales of Mucinex D rose 40 percent. “I’m not sure what the new owner will do with the line, but I expect we’ll see more new products coming from them,” Mahecha said.

The children’s segment of the category took a hit last October when all manufacturers voluntarily recalled all infant cold formulas following an FDA advisory panel’s finding that children’s cold, flu and allergy products are possibly ineffective and unsafe for children ages 6 and under. Mintel analysts see the possibility of further restrictions on children’s remedies in general as a significant threat to growth in the market. “The concern has been about products for children under [age] 2, but it may extend to children under [age] 6 and that will have a big effect on this year’s cough-cold season,” Lentz said. On Oct. 2, the FDA will host a public meeting to discuss the issue.

Lentz said the recall has led to a surge in popularity of natural products—a segment that has already been on the rise. “There’s been a wave of newer, natural products in the kids and adult segments,” he said. Mahecha warned that even natural products are subject to tough scrutiny. Knight-McDowell recently settled a $23 million class action suit for falsely claiming its Airborne product cures and prevents colds. “That might have some spillover effect on herbal brands like Cold-Eeze and Cold-fx,” she said.

One area of growth has been saline-based, all-natural nasal washes. “We’ve seen a boom in sales of NeilMed Pharmaceuticals’ NasaFlo Neti Pot since it was featured on Oprah,” Lentz said. “The numbers are incredible; it’s really a hot market.”

More growth is likely for nasal sprays, strips and inhalers, which generate 15.5 percent of category sales, according to Mintel. “Schering-Plough is introducing an Afrin pure salt water nasal spray, and Novartis Consumer Health is introducing Triaminic Pure Remedies natural saline mist,” Lentz said.