Industry consolidation, major new brand launches, and a series of mergers and acquisitions in the U.S. OTC market have caused OTC cost structures to shift both in the near- and long-term. The costs associated with marketing, sales, and promotions of OTC brands tend to have wider swings from year to year, offset by administrative and R&D costs that tend to be more stable over time.Continue reading
Driven by the market return of popular OTC brands from Johnson & Johnson and GlaxoSmithKline, as well as the success of several Rx-to-OTC switch brands, the U.S. OTC market increases by a solid 4% in 2015, reveals our recently published Nonprescription Drugs USA report.
In October 2015, Johnson & Johnson announced that the FDA approved the reopening of the Fort Washington, PA, plant that had been shuttered since May 2010. Johnson & Johnson’s key brands, including Tylenol Arthritis Pain and Tylenol 8 Hour, are re-launched in 2015, supporting overall sales growth of the OTC drugs market. Steady distribution of Zyrtec and other key brands from the market leader, Johnson & Johnson, help propel sales in the OTC market.Continue reading
While the U.S. OTC market is not highly dynamic in terms of growth, its competitive landscape has changed significantly over the past five years, with the top 10 rankings shifting in 2015.
Market leaders Johnson & Johnson and Bayer have remained the #1 and #2 OTC marketers, respectively, for many years. Bayer’s bolt-on acquisition of Merck’s Consumer Health business in 2014 helped solidify its spot as the second-largest OTC marketer. However, the OTC companies ranked 3-10 have been affected by consolidation, mergers, and acquisitions. In 2015, GlaxoSmithKline rises to the third largest position after forming a joint venture with Novartis Consumer Health. Back in 2010, when these businesses were separate, Novartis ranked fifth and GlaxoSmithKline was the sixth largest competitor. Despite the acquisition of Emergen-C immune boosting supplement and the successful launch of Rx-to-OTC switch Nexium 24HR, Pfizer was pushed down to the fourth ranked position from third as a result of the GSK/Novartis joint venture.Continue reading
The most recent merger impacting the OTC market was announced yesterday and involves Sanofi acquiring the consumer health unit of Boehringer-Ingelheim Pharmaceuticals in exchange for Sanofi’s Merial Animal Health business. This swap is still in negotiations; however, the addition of Boehringer-Ingelheim’s consumer health business will serve to broaden Sanofi’s global OTC portfolio in cough/cold, digestives, analgesics, and vitamins, as well as expand the company’s reach in key markets, such as Germany, Japan, and China. In 2014, Sanofi and Boehringer-Ingelheim had combined OTC sales of $942 million in the United States, ranking sixth in the market.
This deal follows several that have taken place over the past 14 months where major competitors in the OTC industry have merged or created joint-venture companies in an effort to expand their global reach, widen brand portfolios, achieve higher revenue growth, and seek cost synergies. Beyond strategic bolt-on acquisitions, such as Reckitt Benckiser’s acquisition of the Schiff vitamin and supplement business in October 2012, these recent mergers have made large competitors into global giants with portfolios that span nearly every consumer health category.Continue reading