OTC Drugs: U.S. Competitor Cost Structures

Competitive Structure of the U.S. OTC Market Evolving

Recently, the U.S. OTC market has been evolving, boosted by more prescription medications moving along the Rx-to-OTC continuum, as well as a number of changes in the market. Laura Mahecha, Industry Manager of Kline’s Healthcare Practice, reveals more about these changes in a recent interview about the trends and challenges affecting the U.S. OTC market.

Q: What are the most significant trends affecting sales of OTCs?

A: A major development is the successful return to market of major brands from Johnson & Johnson, including Tylenol pain relievers and cold medications, after years of being off shelves and having unpredictable stock. After the company’s manufacturing plants were closed for years, they have been reopened, and these brands have made their way back to retail shelves. Novartis also experienced a plant shutdown, but has been able to bring stock of its Excedrin and other brands back to market using third-party manufacturing.

Recent Rx-to-OTC switches of intranasal steroid allergy brands, Nasacort Allergy 24HR by Sanofi and Flonase Allergy Relief by GlaxoSmithKline, and proton pump inhibitor Nexium 24HR by Pfizer have also driven the OTC market’s sales growth from 2014 through 2015.

Q:  Have there been any changes in the competitive landscape in the OTC market recently?

A: Yes, there have been some major shifts in the competitive landscape over the past few years, including Bayer’s acquisition of Merck’s consumer unit in 2014 and the joint venture between the consumer units of GlaxoSmithKline and Novartis in 2015. There have also been several brand ownership changes as marketers either divest or acquire brands for strategic reasons. Some of these companies include Carlyle Group, Church & Dwight, GlaxoSmithKline, Johnson & Johnson, Prestige Brands, and Reckitt Benckiser.

Q: How are these changes expected to impact the OTC market?

A: Given all the recent changes in the industry, marketers find themselves competing against new or restructured competitors. Some companies are larger, and others have a more streamlined portfolio of brands. To help marketers make more informed decisions, Kline has decided to launch a new edition of its long-running report series entitled OTC Drugs: U.S. Competitor Cost Structures.

Q: What can you tell us about this report?

A: Last published in 2013, this unique report helps marketers understand the profitability of their key competitors, as well as benchmark their own cost structure against their competitors. The report focuses on key trends, developments, and business opportunities and reveals profit and loss line items for 11 leading OTC players and their largest OTC product classes. This study also gives marketers critical insights in order to succeed in the face of intensifying cost pressures and provides an appraisal of expected future performance. To learn more about this report, please contact us.

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