Market researchers see multiple factors affecting the outlook for Rx-to-OTC switches, which remain the biggest growth driver in the nonprescription arena.

Switches today have the potential to play an even greater role in a market facing health care reform, recessionary trends and private-label growth, they say. But sizable corporate reorganizations will affect specific switch priorities, the experts note.

Bruce Carlson, publisher of medical market research firm Kalorama Information, said the Obama administration's mission to reduce health care costs, and the potential shift to single-payer insurance, will mean reduced use of expensive Rx drugs wherever possible.

"There will be pressure to make anything available OTC that's possible, as much available OTC as possible," Carlson said. "That's one of the reasons why we anticipate growth in OTC."

The other side of the coin is that the Democratic-controlled Congress and White House may be leery of a quick, industry-friendly review process by FDA, he added.

The Five-Year Picture

Kalorama's May report "Rx to OTC Switches 2009" estimates switched products will tally $7 billion in revenues in 2009, a 4.7 percent increase over 2008.

The report projects the switch market to grow at a compound annual growth rate of 8 percent to $9.6 billion between 2009 and 2013 (see chart: " ¹ Segment Growth ").

The report is based on potential switch drugs that go off patent during that timeframe.

Kalorama predicts a grab-bag "other" category that will grow at a compound annual growth rate of more than 25 percent during that period, from about $540 million in 2009 to $1.5 billion in 2013.

"Other" includes contraceptives, anti-lipidemics, dental rinses and fluorides, hair growth treatments, sleep aids, weight management drugs and rectal ointments.

Kalorama includes Novartis' anti-lipidemic Lescol (fluvastatin) in its growth estimation beginning with the statin's projected switch in 2011. Carlson said the drug's loss of patent protection in October 2011 could drive Novartis to push for a switch around that time.

The firm's analysis says other statins that have failed to switch so far - including Merck's Mevacor (lovastatin) and Bristol-Myers Squibb's Pravachol (pravastatin sodium) - are not likely to switch before 2013, and have been omitted from the projections (² Also see "The JUPITER Results: Will The Planets Align For OTC Statins?" - Pink Sheet, 17 November, 2008., p. 4).

Kalorama also discusses drugs in other categories that - like statins - have not yet cracked the OTC ceiling, such as osteoporosis, overactive bladder and sexual dysfunction. Beyond Lescol, these are excluded from its projections through 2013 (see chart: " ³ Prescription Drugs With Anticipated OTC Approval ").

Merck's Fosamax (alendronate sodium) for osteoporosis and Pfizer's erectile dysfunction drug Viagra (sildenafil) and incontinence treatment Detrol (tolterodine tartrate) are among products in these categories that have been bandied as possible switch candidates (⁴ Also see "P&G Pharma Sale Could Bring $1 Billion To Feed Consumer Business" - Pink Sheet, 16 February, 2009., p. 5 and ⁵ 'The Tan Sheet,' Feb. 4, 2008, p. 5).

Gastrointestinal Fortitude

Kalorama predicts the strongest single category during the period will be gastrointestinal, led by anticipated switches of proton pump inhibitors. The report projects Novartis' PPI Prevacid (approved since the report's release) will lead gastrointestinal drugs to a 9.6 percent compound annual growth rate from 2009 through 2013 (⁶ Also see "Prevacid Initial Launch Efforts To Focus On Switching Prescription Users" - Pink Sheet, 16 May, 2009., p. 3).

Next, the allergy/cold/sinus category will grow 5.7 percent compounded annually during the period, followed by analgesics at 5.6 percent, with anti-infectives and smoking cessation around 2 percent each, the research firm says.

Carlson cited AstraZeneca's PPI Nexium (esomeprazole) as another potential switch in the GI arena.

Laura Mahecha, health care industry manager for market research firm Kline & Co., notes Wyeth's Protonix (pantoprazole) also could enter the OTC PPI segment, which may be a crowded field by the time it gets there.

Schering-Plough has already applied to switch Zegerid (omeprazole/sodium bicarbonate), while Mahecha said she has seen little to indicate that Wyeth is taking any action with Protonix.

Wyeth's pending merger with Pfizer, however, could spur a Protonix switch, she said (⁷ Also see "Pfizer’s Wyeth Buy Rebuilds OTC Switch Potential" - Pink Sheet, 2 February, 2009., p. 10).

"Pfizer's got an enormous sales force, maybe they could make it a successful product" even as the third or fourth OTC PPI to market, Mahecha added.

The combination of Merck and Schering-Plough - historically a "switch-focused company," Mahecha said - also could alter the landscape of switches, depending on what becomes of Merck's joint venture with Johnson & Johnson, which includes consumer products such as Pepcid (famotidine) (⁸ Also see "J&J Options In Face Of Merck’s Schering Bid Include OTC Deal" - Pink Sheet, 16 March, 2009., p. 4).

Kalorama projects Merck's hair-loss remedy Propecia (finasteride) could switch to OTC sale by 2011. The firm also expects nonprescription availability of Schering's allergy drug Clarinex (desloratadine) in 2013, Carlson said.

The OTC Market At Large

Mahecha shared data from Kline's upcoming "Nonprescription Drugs USA 2008" report, which says the broader OTC market grew 2.4 percent to $18.3 billion in 2008, from $17.8 in 2007, in all retail channels. Kline includes dietary supplements and home diagnostic test kits in the nonprescription drug category.

Within that market, private-label products grew 8.1 percent, to $3.9 billion from $3.6 billion, year over year. Private-label market share was up to 21.4 percent, compared to 20.2 percent in 2007.

Market research company Mintel takes its own measure of OTC sales with two reports released in April, on analgesics and pediatrics.

The firm estimates OTC internal analgesics will drop 1.1 percent in 2009, to $2.39 billion, at inflation-adjusted prices. By that measure, the segment will not see positive growth again until 2012, Mintel says.

Forecasting through 2012, Mintel expects 5 percent growth to $2.54 billion, in current dollars, but the category will remain flat at inflation-adjusted prices.

OTC analgesics "are not considered to be products at significant risk as a whole" Mintel says. "However, it is likely that many consumers previously buying branded products may be more willing to switch to private label products."

In a separate report, Mintel projects the OTC pediatric market will decline 0.8 percent in 2009, even though "children's health needs will remain a priority for consumers."

The $530 million OTC pediatric segment will see either negative or flat growth at inflation-adjusted prices through 2013, Mintel projects.

- Dan Schiff (d.schiff@elsevier.com)

Switch Projected To Continue Driving OTC Market Growth In 5-Year Picture

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