SWEET TIME EXPECTED WITH OTC PEPCID AC

JOEL ELSON

Supermarkets expect to reap strong profits when the prescription stomach remedy Pepcid goes over-the-counter next month.

The drug, which has been used to treat ulcers and other gastrointestinal illnesses, became available as a prescription item in 1986.

Last month the Food and Drug Administration gave Johnson & Johnson/Merck Consumer Pharmaceuticals, Fort Washington, Pa., the go ahead to produce and market a low dosage over-the-counter version of the medication under the Pepcid AC Acid Controller name. The OTC decision is viewed as a significant advance in the treatment of heartburn. Pepcid AC, which contains famotidine, is said to relieve symptoms of occasional heartburn, acid indigestion and sour stomach in people aged 16 and older. Pepcid AC will be the first product to emerge from the joint venture Johnson & Johnson and Merck formed five years ago. "There is no question that Pepcid in nonprescription form will be a major event for supermarkets," said Terry Cater, director of pharmacy at Save Mart Supermarkets, Modesto, Calif. "This is a great addition to the antacid category as well as the whole health and beauty care section," added Jan Winn, director of health and beauty care and general merchandise, Big Y Foods, Springfield, Mass. The pharmaceutical company will market the drug in 10-mg tablets of famotidine in six-, 12-and 18-count sizes. The prescription form is available in 20-mg and 40-mg tablets of famotidine.

"We're planning a substantial print and broadcast advertising

campaign," said Gary Lachow, a spokesman for Merck. He said the company has not yet decided how much money it will spend on advertising.

Retailers polled by SN are eagerly awaiting the June arrival of Pepcid AC, saying it will help build traffic in supermarket HBC departments. Cater said Save Mart will likely carry Pepcid AC in both the antacid section of its HBC department as well as in the pharmacy area. "It will attract patients from other pharmacies who could pick it up while food shopping instead of traveling to a discount or chain drug store," he added.

Big Y will add Pepcid AC to its HBC shelves as soon as the product becomes available. "Most OTC products do a great deal to bring a lot of store traffic, and as long as we advertise it and get it to shelf early with a lot of support, it should do well," Winn said. Supervalu's Southeast division, Anniston, Ala., plans to advertise Pepcid AC's arrival with full-page ads, floor shippers and signs. The product will be available in its 250 stores, including 13 Cub Foods units that it supplies, said Randy Coleman, division marketing manager for general merchandise-HBC. "There is certainly a demand, and it will be big for us," said Coleman. "We'll really play it up. Our ads will show that supermarkets, which don't always get a lot of credit for having new HBC items quickly, do indeed have it." Still waiting for the prescription-to-OTC change are Zantac, marketed by Glaxo Wellcome, London, and Tagamet, marketed by SmithKline Beecham, Pittsburgh.

An FDA advisory committee recently recommended OTC status for Tagamet, a prescription ulcer drug that is planned to be marketed in low-dosage form for treatment of heartburn. If approved by the FDA, it could be available at supermarkets as early as August.

If Zantac and Tagamet also receive OTC status, it could translate into a heavy marketing competition, said Cater of Save Mart.

"A marketing war could also be unleashed as Tagamet and Pepcid battle for market share," said Cater. Such battles were hotly fought in the analgesics category last year when Procter & Gamble introduced Aleve.

"How this will relate to price remains to be seen. There would be different price points and different consumer spins, which would be no different than when Advil, Nuprin and other OTC switches came out to win customers." The rollout of Pepcid AC will affect the large antacid market. For the year ended March 31, 1995, antacids generated $409 million at food chains, up 3% over the previous year, according to figures reported by Towne-Oller & Associates, New York, a division of Information Resources Inc., Chicago.

"We expect to capture some of the antacid market," said Lachow of Merck.

The demand for Pepcid AC is evident in the fact that in over 50% of U.S. households, there is at least one person who suffers from heartburn and acid indigestion, said Curt Selquist, president of Johnson & Johnson/ Merck Consumer Pharmaceuticals.

Unlike antacids, which neutralize stomach acids, one Pepcid AC tablet works to control the production of stomach acid, according to Johnson & Johnson/ Merck. Raley's, West Sacramento, Calif., "is gearing up for the OTC switches of Pepcid and Tagamet since there are a lot of people without insurance to cover drug costs. Those people will self-medicate and use these new drugs," said Jody Stewart, codirector of pharmacy. Stewart said a Pepcid OTC switch "will stir up a lot of interest in those shoppers using antacid tablets and liquids, especially when the manufacturer begins to advertise."

Grant MacLean, HBC director at Rosauers Supermarkets, Spokane, Wash., said Pepcid AC will not only have a great effect on category sales, but predicted a pricing war as other drugs go OTC.

"The first one that reaches the market will be the [leading] brand. As Tagamet and then Zantac go to OTC, this can only increase overall price competition between these brands in antacids," he said. Though the OTC switches are expected to increase the entire category, MacLean fears it may take sales from the traditional heartburn and antacid products. But Cater of Save Mart doesn't expect a great sales erosion of traditional antacid products, since they frequently have been used as an adjunct to prescription drugs.