PRILOSEC OTC IN SHORT SUPPLY

DAN ALAIMO

CINCINNATI -- One of the most popular over-the-counter switch products of all time is currently in short supply.

Demand for heartburn medication Prilosec OTC, which was launched last fall with a $100 million marketing campaign, has outstripped supply. The product is now being doled out to retailers on a "managed inventory" basis, said Procter & Gamble spokesman Steve Sholtes here, confirming reports by retailers.

The shortage is national and across all retail channels. "The essence is that America's frequent heartburn is much more common than we could have ever predicted," said Kurt Weingand, associate director of the P&G Health Sciences Institute. Product is available, although not in every store, he added.

AstraZeneca Pharmaceuticals, Wilmington, Del., which supplies Prilosec OTC to P&G, is working to fix the supply chain, Weingand said.

The shortage began earlier this year, but became more severe during the last couple of months, retailers and P&G executives said. Some stores have no inventory, while others have some, and not necessarily of the sizes most in demand. The shortage will ease in the early fall, but will not be fully resolved until the end of the year, the P&G executives told SN.

"Our supplies have been significantly impacted," said Jeff Lowrance, spokesman, Food Lion, Salisbury, N.C. The shortage is affecting all stores and started in early May, he stated.

Other retailers said it started earlier -- about four months ago, according to Dan Spears, director of HBC and GM, Ingles Markets, Asheville, N.C., and since the beginning of the year, said a nonfood executive with a major Midwestern retailer, who asked not to be identified. P&G announced its "managed inventory" program to its customers on March 29, Sholtes said.

Some retailers were critical of P&G for underestimating the market demand and not resolving it more quickly. "A company as big as P&G should have been able to react to a production problem like this three or four months ago," Spears chided.

"It's very disappointing that a large manufacturer like P&G has come out with a blockbuster item and can't meet the demand," said the Midwestern retail executive. "There were some major projection misses by either AstraZeneca or P&G on this. It's very frustrating."

While the biggest impact is on sales of Prilosec itself, Spears is concerned that customers are walking out of his stores because they can't get it and are going elsewhere.

Some customers are switching to other products like Pepcid, Zantac and private-label H2 blockers, Lowrance observed.

Prilosec was one of the top five prescription drugs when the OTC version was made available, noted Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. "You get a lot of OTC products coming to market, but very few of them bring that many customers with them at the outset."

The initial marketing campaign for Prilosec OTC was very effective. Even consumers in focus groups commented on it, Wisner said. "There was a lot of good blocking and tackling in getting that product to market," he remarked.

"We apologize for any inconvenience that retailers or Prilosec OTC users may have experienced, but it's a short-term problem," Weingand explained. "We are going to be back to full speed as soon as possible."