Kline & Co.'s Mahecha projects growth of U.S. OTC market

LITTLE FALLS, N.J. There may be good tidings in store for purveyors of over-the-counter medicines in the coming year, suggested Laura Mahecha, healthcare industry manager for Kline & Co., in a December 2009 Web posting. There are signs of economic recovery, she suggested, which will help ease the number of cost-conscious consumers, and even could halt the growth of some private-label OTCs as some consumers return to their favorite brands. Continued concerns around seasonal and H1N1 flu outbreaks can be expected to drive strong sales of OTC allergy and cough-and-cold products, and healthcare-reform legislation currently under consideration may be a driver of OTC sales.

Overall, all of these factors will combine to expand the U.S. OTC market by as much as 5% per year to reach over $23 billion by 2014, Mahecha projected.

Corresponding with those signs of economic recovery, many major marketers have begun to increase previously scaled-back advertising budgets for OTC brands, Mahecha added, which should serve to increase sales of major brands. Another factor that may contribute to OTC market growth is the number of Rx-to-OTC switches expected to enter the market over the next few years as a result of several Rx patents expiring, among other factors.

Part of that growth-by-switch is taking place now, Mahecha said. “This month, Novartis Consumer Health launches Prevacid24HR, which is an Rx-to-OTC switch that was approved in May 2009,” she said. “Takeda’s Rx Prevacid franchise is very large, and the OTC version is expected to add considerable sales to the OTC market, perhaps as much as $200 million to $250 million by the end of 2010.”

The recently-approved Zegerid OTC may also prove to be a sales booster in the coming year, Mahecha noted.

Other categories that could deliver lucrative Rx-to-OTC switches include allergy relief, cholesterol lowering medicines, urinary incontinence, benign prostatic hyperplasia, migraine pain relievers and sleeping aids, according to Kline’s Rx-to-OTC Switch Forecasts USA 2010 study. Still, other categories like oral care products, fungicidal preparations, feminine yeast infection medicines and drugs to treat the flu could yield additional Rx-to-OTC switches over the next five years.