NEW YORK —Switch always has been the most significant driver of revenues within the non-prescription aisles, with Rx-to-OTC products sometimes having $200 million run rates over the first few years in the marketplace. And the next five years will be no exception.
Future switches are expected to add as much as $1.5 billion collectively in absolute dollars (without inflation) through 2014, according to Kline Group’s latest report, “Rx-to-OTC Switch Forecasts USA 2010,” which was published in April. That alone represents projected growth across the OTC category of approximately 4%, according to the report.
The switch nearest on the horizon is likely Sanofi-Aventis’ Allegra for allergies, which will be handled by one of Sanofi’s latest acquisitions—Chattem. Indeed, according to many in the industry, switching Allegra OTC and bringing the allergy remedy to market themselves was one of the key reasons behind the Chattem acquisition.
Chattem isn’t the only OTC supplier recently picked up by a traditional pharma company—last year Merck merged with Schering-Plough, and Pfizer, after having jettisoned its consumer healthcare division to Johnson & Johnson in 2006, acquired Wyeth and Wyeth’s consumer healthcare division.
Certainly, having an inhouse consumer division is a valuable commodity today, and switch is one of the primary reasons. “At least the OTC business, even though it’s not a high-gross market, can help provide stability and a predictable revenue stream,” said Laura Mahecha, Kline Group industry manager of healthcare practice. “In Pfizer’s case, and Merck as well, there are some additional switches coming,” she added.
In addition to Allegra, other near-term potential switches include Protonix (Pfizer Consumer) and Aciphex (Eisai).
Beyond allergy and protonpump inhibitors, other switches may require more complicated educational pieces and distribution agreements going forward, such as statins, Mahecha said. “A lot of the [future switches] will be driven by the economics,” she said, a factor that may drive the creation of a de facto behind-the-counter status a la the emergency contraceptive Plan B, which is sold only in pharmacies and behind the pharmacy counter by agreement of Duramed Pharmaceuticals, which distributes the product.
“Health plans are in favor of [a de facto BTC status], because they can reduce coverage or eliminate coverage altogether if [a medicine] is sold without a prescription; pharmacists are in favor of it from what we’ve heard—in general more interaction between the pharmacist and the patient, the pharmacists are all for that; and manufacturers, of course, would like to see more of these products switched OTC or BTC,” Mahecha added.
That may open the door for other, new classes of OTCs: erectile dysfunction, Pfizer is rumored to have an OTC version of Viagra in development for the European market; benign prostatic hypertrophy; or even incontinence. “Many of these medications [with] expiring patents are definitely more complicated,” Mahecha said.
For example, consumers might know they’re incontinent, but do they know why they’re incontinent? Is it stress incontinence, is it just from old age or is there an underlying or more serious condition? That may create a need for an initial diagnosis by a physician, Mahecha suggested, after which any follow-up medication therapy management would be left to the pharmacist.