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Nonprescription sales grow as cos. ‘switch’ things up

BY Michael Johnsen

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.

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NACDS puts a new spin on Meet the Market

BY Michael Johnsen

SAN DIEGO This year the National Association of Chain Drug Stores introduced two new features to its Meet the Market format. First, NACDS hosted a Meet the Market Presentation Template webinar twice prior to Meet the Market, in which NACDS introduced a meeting template that succinctly captured all of the information retailers typically use to evaluate a new product or company.

Also new to Meet the Market were the booths of 10 service companies — trade media and professional education, merchandising consultants and marketing/media information companies — which afforded an opportunity for new and smaller suppliers to meet with these organizations.

“New companies have a need not only to meet with retailers, obviously, they have a need for their business,” noted Jim Whitman, NACDS SVP meetings and conferences. Another ongoing improvement is the productivity within each meeting, Whitman added. “We keep refining the match, the appointments,” he said.

This year, the Meet the Market format — in which smaller and new suppliers have 10-minute meetings with their category buyers — represented more than 8,000 face-to-face pre-arranged appointments.

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Retail clinic growth slowing down? Not a chance

BY Antoinette Alexander

WHAT IT MEANS AND WHY IT’S IMPORTANT The news that Target is looking to expand its retail-based clinic business this year is yet one more indicator that reports of the demise of retail clinic growth have been greatly exaggerated.

(THE NEWS: Target to expand its retail clinic presence. For the full story, click here)

As the article states, Target, which opened its first clinic in 2006, is looking to open up eight new locations this September. It already operates 28 locations in Minnesota and Maryland.

It wasn’t so long ago — April to be exact — that CVS Caremark’s MinuteClinic indicated that it could double its current number of clinics in five years.

Why the growth? Well, aside from the aging population and a shortage of primary care physicians, a major catalyst is healthcare reform, which will mean that 32 million people who currently are uninsured will have healthcare coverage. With emergency rooms already overflowing, and primary care physicians already over-extended, having a retail clinic nearby where patients can receive convenient, quality and affordable health care will only become increasingly important.

Meanwhile, RediClinic, which has 22 clinics in H-E-B stores in Houston and Austin, Texas, is cranking up its marketing efforts and has tapped former Duane Reade executive Jeff Thompson as VP marketing. Thompson will be responsible for RediClinic’s consumer and partner marketing activities, including developing and implementing strategic customer acquisition/retention programs, new product delivery and brand strategy.

Thompson most recently served as VP marketing for Duane Reade.

Clearly, there continues to be significant growth opportunities for clinics — both in terms of the number of clinic locations and the scope of services offered within the clinics. As mentioned earlier, there are 32 million reasons why the growth will be quite dramatic.

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