The largest OTC company, Johnson & Johnson’s McNeil Consumer Healthcare, has been plagued by a series of product recalls recently and this has widespread repercussions to the OTC industry. The problems have ranged from moldy odors and contaminated shipping palettes, to concerns about levels of active ingredients in products, and concerns about product safety and manufacturing quality controls at the firm’s Fort Washington, PA site. The recalls have prompted Congressional hearings and have affected several major brands across multiple categories including both adult and children’s medications in the Tylenol, Motrin, Benadryl, and Zyrtec lines.
The recalls and the related media coverage have understandably shaken consumer confidence in OTC products and in the coming months could end up being a boon to private-label or store brand OTCs. In the case of the pediatric OTC recall by Johnson & Johnson for Children’s Tylenol, Children’s Motrin, Children’s Benadryl, and Children’s Zyrtec, many confused parents were instructed by their pediatricians to throw away these branded OTCs and rather than substitute with other branded OTCs to use store brands instead. This endorsement by physicians for private-label OTCs coupled with private-label’s lower price point and retailers’ aggressive promotions will drive many consumers away from national brands and towards store brands. Novartis has tried to take advantage of the market absence of Children’s Tylenol products by launching children’s acetaminophen liquids under its Triaminic brand name recently.
Since the Johnson & Johnson recalls the major drug chain Walgreen’s is running advertisements noting that all of Walgreen’s store brand OTCs are FDA approved and made with strict quality standards that consumers can trust. This marks a large role reversal as private-labels are typically not advertised at all and Johnson & Johnson has spent millions of dollars over the years building Tylenol’s image as the “Brand you can trust.”