DUBLIN — As more consumers continue to capitalize on the value of a national brand equivalent through the appeal of the kind of own brand mindset many retailers have today, private label has never looked so promising. Not only is there continued growth in core categories due to the migration of consumers from national brand to store brand, but also the potential for new OTC product classes to emerge as the administration struggles to make healthcare more affordable.
"Store brand growth continues to outpace national brand growth in almost every major category," John Hendrickson, CEO Perrigo, told analysts Thursday. "This is really driven by continued consumer acceptance of store brand products and the launch of store brand products in categories where national brands previously held exclusive share," he said. "Over the past three months the growth of store brand is particularly prominent in the cough, cold, allergy, and sinus category, which is driven by store brand Fluticasone among other products. In addition, new products are continuing to drive growth in the smoking cessation categories."
"[Store brand growth] is really driven by continued consumer acceptance of store brand products and the launch of store brand products in categories where national brands previously held exclusive share.”According to Perrigo, citing IRI data for the latest 13 weeks ended July 9 covering products sold through U.S. multi-outlets, total OTC store brand growth outpaced both national brand growth and overall category growth. That was particularly pronounced across cough/cold/allergy, where sales of store brand solutions were up 6% in the period as compared to 4.4% category growth and 3.7% national brand growth. There is a similar story across gastrointestinal, where store brand growth totaled 2.4% v. 1.2% overall category growth and 0.5% national brand growth.
Within gastrointestinals, there is still one blockbuster brand, Pfizer's Nexium 24HR, that does not yet have private label competition. Hendrickson suggested the initial private label opporunity represented 20% of national brand sales.
In this case, sales of Nexium totaled almost $300 million for the 52 weeks ended June 11 across total U.S. multi-outlets, according to IRI data provided to Drug Store News. That would represent a $60 million total market store brand opportunity.
Moving forward, the bigger opportunty is within those categories that are not sold OTC yet. "You think about the talk that's going on in government about, boy, we're paying too much here, all of those things, it's created this stir on the Rx side," Hendrickson said. "It also creates an impetus to say, how do we manage that cost? You bring products over the counter. And so, it really gets the FDA starting to think not just about getting products approved for an Rx market, but also which categories make sense to switch?"
Some of the low-hanging fruit may include skin care products and migraine. "[The] derm category, many of those are natural products to switch," Hendrickson said. "They're not billion dollar categories, but they're natural products that are safe, effective, could be self-prescribed, could be over the counter. ... Migraine, another one. We have certain migraine products over the counter now, but certainly switching some of those are also kind of key ones."
Erectile dysfunction remains on the horizon, especially given the fact that Sanofi bought the OTC rights for Cialis. That may give rise to a more inclusive role for pharmacists in dispensing these medicines, Hendrickson suggested. "Will [an ED OTC class] come over by themselves?" Hendrickson asked "[Or] will there have to be a pharmacist saying, hey, do you have a heart condition? Okay. You can take this. Who knows what intervention there will be?"
And if pharmacists are tasked with patient intervention on appropriate self-selection for ED medications, that re-opens the door for statins. "[Statins] belong over the counter," Hendrickson said. "Some kind of pharmacy intervention could make them out over the counter, almost like a third class," he said. "That certainly has been tried; not quite there, yet."