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Alternate Distribution Channels Claim Opportunities for OTC Drug Sales in the United States, Finds Kline
Date:7/30/2012

PARSIPPANY, N.J., July 30, 2012 /PRNewswire/ -- Manufacturers' sales of over-the-counter (OTC) medicine through alternate retail channels have grown by a compound annual growth rate (CAGR) of 9.4% from 2006 through 2011, far exceeding the 2.4% overall growth rate through all retail outlets. Online sales saw the highest increase with a CAGR of 16.1%, according to the recently published OTC Retailing: U.S. Alternate Channel Analyses and Opportunities report by global consulting and research firm Kline & Company. Expanding sales through alternate retail channels is viewed as an opportunity for OTC drug manufacturers to increase their revenues.

The U.S. retail industry remains highly consolidated with a fairly small number of large retail chains that continue to dominate OTC distribution. The three main retail outlets consisting of drug stores, mass merchandisers, and food stores combined account for about 84% of OTC sales; however, other outlets such as the Internet, convenience stores, dollar stores, and warehouse clubs are offering noteworthy competition across several categories and account for nearly 15% of the OTC retail market.

The Internet is increasingly becoming a popular distribution outlet driven by convenience, as online shopping through websites allows consumers to quickly compare prices of products and offers direct and discreet shipping to the consumer's home. As a reflection of the Internet's ever growing importance and to expand its online reach, Walgreens acquires Drugstore.com in 2011.

Online sales of OTC drugs are growing at a rapid pace, but not equally for all OTC categories. For example, vitamins, minerals, herbal products, and OTCs such as pain relievers—products that consumers like to stock in their medicine cabinets—have a high rate of online purchase. However, OTC products for an immediate need, such as a
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SOURCE Kline & Company
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