Retailers benefit greatly from store brand sales

7/14/2008

BOSTON A declining economy that’s driving the consumer toward more value-minded purchases may be good for drug retail, especially as pharmacy operators are picking up more and more of the fill-in purchases toward the end of the month.

As much as 70 percent of a retailer’s profitability is derived from store branded analgesic offerings, noted Joe Papa, Perrigo chief executive officer, during a presentation before analysts at the Oppenheimer Consumer Growth Conference held here last week.

“Of the analgesic sales, approximately 25 percent of the sales dollars come from store brand, approximately 35 percent of the units are attributed to store brand, but almost 70 percent of the retailer’s profitability in the category of analgesics is driven by store brand,” Papa said. “It really shows you the importance of store brand to the retailer.”

The margin contribution is even more pronounced in nicotine replacement therapy, Papa said, where store brand offerings represent approximately 50 percent of dollar sales; 60 percent of unit sales; and more than 80 percent of margin contribution.

Store brand offerings are also quickly gaining market share against McNeil Consumer Healthcare’s allergy remedy Zyrtec, launched in January. “Store brand today already accounts for between 35 [percent] and 40 percent of the [Zyrtec] volume share,” Papa said. “So the product is getting off to a great start both from the branded side but also from the store brand side.”

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