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Private-label OTC Drugs Post Solid Gains in 2008, According to Kline
Date:4/8/2009

LITTLE FALLS, N.J., April 8 /PRNewswire/ -- Manufacturers' sales of OTC drugs grew by 2.4% from $17.8 million in 2007 to $18.3 million in 2008, according to the latest research in Nonprescription Drugs USA 2008: Market Analysis and Opportunities from worldwide consulting and research firm Kline & Company.

Private-label OTC medicines were up 8.2% over the same time period, within which antacids and allergy medicines posted the highest growth last year, driven primarily by increases in sales of private-label omeprazole (Procter & Gamble's Prilosec OTC) and cetirizine (Johnson & Johnson's Zyrtec).

The following two areas distinctively posted very high growth mainly as a result of Rx-to-OTC switches: allergy, asthma, and sinus medications were up 17.3% as a result of strong sales from Johnson & Johnson's Zyrtec brand, as well as its equivalent private-label cetirizine; feminine products was the other area that grew 7.3% in 2008 as a result of strong sales growth of personal lubricants, as well as the Rx-to-OTC switch brand Plan B by Barr Laboratories.

"By contrasting the overall growth rates for OTCs with the growth rates for private-label products we can easily make the case that more Americans were seeking value and using private-label in 2008," says Laura Mahecha, industry manager at Kline's Healthcare practice. However, not all categories suffer from higher private-label growth as some are able to maintain growth for branded products. "During tough economic times, consumers are willing to spend more for some brands they are loyal to and that offer good efficacy," says Mahecha. However, if consumers view brands as being a commodity or not offering special advantages they may be able to make the trade-off to private-label. Mahecha goes on to say, "As the recession continues into 2009, we expect to see increased 'value messages' as part of branded advertising to combat the impacts of private-label erosion. Branded OTCs may use advertising messages to stress the brand's value, efficacy, safety, and possibly longer-lasting doses, which translates into fewer doses and therefore, costs less."

According to preliminary research for Kline's upcoming report Impact of Recessions on the U.S. OTC Market, past declines during recessions have not been particularly steep for the industry. OTC sales declined two years in a row; from 1999 to 2000 overall manufacturers' sales were down 0.6%, and then it declined again from 2000 to 2001 by 0.5%. Declines for the market were kept at bay possibly as a result of Rx-to-OTC switches, continued innovation, and to some extent sustained private-label sales, albeit at lower price points. There may also have been some spill over from Rx patients who chose OTCs as less expensive alternative in some cases to Rx medications and MD visits. Further research for this study will analyze the shifts in ad spending by marketers, shifts in private-label share, and the impacts innovations have had on industry performance during past recessions in order to forecast impacts of the current recession.

Kline's Nonprescription Drugs 2008: U.S. Market Analysis and Opportunities contains sales data on hundreds of OTC brands and companies, new product and ad spending analysis, retail distribution, five years historical sales and five year sales forecasts for 36 major product categories, detailed profiles of 15 leading marketers and 50 minor companies, and an analysis of media spending.

Kline's Impact of Recessions on the U.S. OTC Market is a comprehensive assessment that will provide subscribers with a historical perspective on industry performance during recessions over the past three decades and forecasts impacts of the current economic recession on OTC sales performance.

About Kline

Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for 50 years. For more information, visit www.KlineGroup.com.

    For more information, contact:
    Vera Sandarova
    Marketing Communications
    +420-222-316-282
    Vera.Sandarova@klinegroup.com


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SOURCE Kline & Company
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