Digestives

Drug Store News, May 20, 1996

No OTC category saw more activity during the past year than the gastrointestinal department. Retailers who had been adjusting planograms and bracing for the arrival of Rx-to-OTC switch histamine 2 blockers got their wish in 1995. Pepcid AC from Johnson & Johnson/Merck hit store shelves in June and was followed two months later by Tagamet HB from Smith-Kline Beecham.

Strong sales of those two brands pushed antacid sales to new heights. The category in all outlets increased to slightly more than $100 million. Chain drug stores accounted for about 40 percent of that volume. Sales in chain drug stores increased 14.1 percent, according to Information Resources.

Pepcid AC benefited by being the first of four H2 blocker products expected to come to market and from its rhymy advertising slogan, "Be heartburn free with Pepcid AC." First year sales of the product were $200 million, surpassing Aleve's first year sales of $90 million, to become the largest Rx-to-OTC launch to date. The makers of Pepcid AC also emphasized the product's ability to prevent as well as treat heartburn.

Sales of Tagamet HB have also been strong at roughly $100 million, though not near the level of Pepcid AC. De spite having strong name recognition and a much longer prescription heritage, Tagamet's early success may have been hindered because SmithKline was not initially given FDA marketing clearance regarding the product's ability to prevent heartburn. The company subsequently received clearance to make that claim and since then has been emphasizing the product's ability to work faster than Pepcid AC in preventing heartburn.

The most recent entry to the category is Zantac 75 from Warner Wellcome. Its first year sales are projected to exceed those of Pepcid AC. The product was launched on April 22 after receiving-FDA marketing clearance in late December 1995. The launch would have taken place sooner, but the manufacturer pushed back elate February date after retail demand exceeded expectations.

Whether Zantac 75 can live up to its billing remains to be seen. Some retailers have begun to question the size of the heartburn market and wonder about the extent to which Zantac 75's sales will be incremental, as opposed to cannibalizing sales of other antacids and H2s.

Another question mark for Zantac 75 is the inability of Warner Wellcome to make advertising claims about its ability to prevent heartburn. The prevention claim appears to be a valuable one for the other two Rx-to-OTC switch brands.

Warner Wellcome's vice president of gastrointestinal marketing, Robert Casale, contends the company's research shows most consumers purchase products to treat heartburn and the familiar Zantac name will carry a lot of weight among consumers.

"As the world's most-prescribed medicine of its kind for the last five years, Zantac 75 will enter the consumer marketplace from an enviable position of leadership," Casale said.

The fact that Zantac 75 enters the U.S. market after Pepcid AC and Tagamet HB doesn't mean the product won't eventually become the category leader. According to Casale, the brand faced similar circumstances in the United Kingdom where it was also third to market, but after only five months surpassed sales of the other two H2 brands.

Regardless of when the product launches, optimism about the product's success is well-founded. The brand has enormous name recognition as there were close to 28 million prescriptions written for Zantac during 1995, according to data from IMS America. The combined total of prescriptions for Tagamet, Pepcid and Axid was about 26 million.

Axid is a fourth H2 blocker from Whitehall Robins expected to join the other three switches. However, at press time, the product had still not received final FDA marketing clearance, even though an FDA advisory committee issued a favorable recommendation more than six months ago. Axid was also the last H2 to enter the prescription market; there were six million prescriptions written during 1995.

The arrival of two more switches in 1996 will further threaten sales of traditional antacids. Those products suffered during 1995, but not as much as was perhaps originally thought. Products such as Mylanta, Maalox, Pepto-Bismol, Tums, Rolaids and Di-Gel all declined, with some experiencing double-digit declines. However, the reason those brands didn't slip further is because of what has emerged as a market for dual usage. Some consumers rely on H2 blockers for their long duration of action and to help control heartburn symptoms through the night. Because they work systemically, H2 blockers have a slower onset of action than antacids. Antacids can offer heartburn relief almost as soon as they are taken because the products absorb excess stomach acid as opposed to inhibiting its production.

From an overall store profitability standpoint there are several bright spots. The arrival of switches and all the branded advertising and promotion they have brought to the category haven't hurt private label sales. Store brand antacids increased modestly from $40.6 million in L994 to $43.7 million in 1995, according to IRI.