Stomach remedies are the hottest category in HBC.
The factors combining to grow the over-the-counter stomach remedies category include Americans' growing expectation for more and better OTC medicines, slicker marketing programs, rises in prescription co-pays, some recent help from Congress, and of course the popularity of Procter & Gamble's Prilosec OTC.
The "Antacid Tablets" category has lately showed some of the strongest growth numbers in all health and beauty care, according to numbers from Information Resources Inc., Chicago. For the 52 weeks ended March 20 in supermarkets, the overall category grew 8.9% to $364 million.
"Stomach remedies are interesting," commented Don Clark, director of pharmacy operations for K-VA-T Food Stores, Abingdon, Va. "With a lot of the H2 antagonists -- things like Tagamet, Prilosec and Zantac going over the counter -- you're seeing a lot of the purchasing shift away from prescription. It seems like more and more people are just going to the over-the-counter section to purchase this stuff instead of getting prescriptions filled."
Liquid antacids sales have been flat, while solid forms have trended up. according to Jeff Lowrance, spokesman, Food Lion, Salisbury, N.C. "Prilosec is shipping, but supplies are still limited." His chain has started some in-store promotions, but sales "have not had a chance yet to return to the initial launch levels. We've seen no significant changes in vendor promotion programs, except for Prilosec, which is now back to promoting and advertising."
One of the biggest HBC success stories in the last two years has been the introduction of Prilosec OTC by Procter & Gamble, Cincinnati, said Jim Wisner, president of Wisner Retail Marketing, Libertyville, Ill. "It has probably been among the most successful Rx-to-OTC switches ever." IRI numbers showed the dollar sales of Prilosec OTC reached $82 million during its first full year on the market. It was launched Sept. 15, 2003.
Prilosec OTC proved too popular to keep on store shelves. Demand significantly exceeded initial expectation, resulting in a national shortage across all retail channels. "Retailers are ecstatic because product is just flying off store shelves." Joe Arcuri, general manager of P&G's North America Personal Health Care business, Cincinnati, told SN shortly after the product's debut. In addition, P&G was receiving over 1,000 requests per day for samples, via the brand's Web site www.prilosecotc.com.
Prilosec (omeprazole magnesium delayed-release tablets), which debuted behind a $100 million marketing campaign, works by shutting down active acid pumps at the source of stomach acid production.
During the Prilosec shortage, said Food Lion's Lowrance, Pepcid, Zantac and private-label product were popular alternatives. "Consumers also turned to their physicians for prescription brands."
"They had what I would consider a severe shortage for quite awhile," said Clark. It lasted until "probably right around the end of the year. It seems like when we went into the new year in January and February, we had ample supply." During that period, he added, "there were some people who were going back and getting prescription items. Other people were switching to other nonprescription stomach remedies like Zantac or Pepcid AC."
To P&G's credit, Clark said, "They put a lot of thought into how they were going about it. I think from a packaging and display standpoint, they did a superior job, and we heard that in focus groups, interestingly enough. People told us, 'Well, the packaging really looks good.' I've seen the displays and they really marshaled their forces to see to it that they got excellent support all the way through with all of their retail accounts."
On the other hand, he added, "It's also an excellent product. No surprise there. Before it converted, it had been one of the top five pharmaceuticals."
Not only P&G is benefiting from Prilosec OTC's popularity. "What you have going on is kind of interesting," Wisner said. "Normally, when new Rx-to-OTC products come to market, there is kind of a misperception that a lot of people are going to switch to that. There is some truth to that, but you're not totally going from one pocket to another."
Instead, what happens is that the entire category benefits, he added. "In the case of Claritin coming to market, allergy products spiked amazingly. For the first full year it was on the market, the non-Claritin items saw 14% to 15% growth."
A big part of the reason is the advertising, publicity and ultimately "buzz" that such conversations spark. "It actually brings more people back to the market to seek relief who otherwise may not be accessing it on a regular basis," Wisner noted. "They may go to the shelf and start to look at all of them and start to figure out what the difference is between this one and that one. That's kind of exciting. When these switches happen, they're really good for the whole OTC category."
Kevin Mukai, Procter & Gamble's sales director, said that sales in the overall category have risen 5% over the nine months ending March 26, 2005. "Results have been driven by Prilosec OTC, which is up 41%" for the same period.
Prilosec OTC's supply has been 50% greater than estimated demand since December 2004, and will be three times the estimated demand in July of this year, Mukai said.
K-VA-T's Clark said he believes the category will continue to grow through 2005 and beyond. "If they're able to keep a product like Prilosec in supply, then I think you're going to start to see that start to take a lot of the category over, simply because it's the newest one out there and it's the one people seem to be seeking. I think that's what caused the shortage in the supply problem to begin with."
"We expect the stomach remedies category to continue to grow as baby boomers get older," Lowrance agreed. "We could see growth over the next several years."
Paying for OTC
Some consumers complained when prescription drugs converted to OTC because they were no longer available for low co-pay prices.
"That was going on when we had the lavish prescription plans, which are quickly going away," said Jim Wisner, president Wisner Marketing Group, Libertyville. Ill. "The co-pay might have been $5 for what may be a $40 drug instead of spending $9 on an OTC product. The other thing is that the prescription drugs, from a tax standpoint, might be deductible over a certain limit whereas OTC was not."
What has changed in the last year, Wisner pointed out, is that "Congress finally got it together and said, 'Gee, drugs are drugs, and people are caring for themselves or not caring for themselves. Rather than make the health care system less efficient, maybe we ought to make it more efficient.'"
Congress finally authorized reimbursement of OTC products for people with medical spending accounts, that allow consumers to put money aside that they can later draw from to pay their bills, Wisner said. "That actually is pretty huge for OTC. Quite frankly, in a lot of cases you can get equivalent kinds of therapeutic value right off the shelf. It's really a much more intelligent way to go."
