LamisilAT slowdown reflects skin care problems

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LamisilAT slowdown reflects skin care problems Powered By Docstoc
					           April 2002                                                   ISSUE 139


           LamisilAT slowdown
           reflects skin care
           problems
89                   USA:                               OTC athlete’s foot/jock itch shares 2002
                                                 Lotrimin 21%

Market Report
                                                 Schering-Plough
                                                 LamisilAT 19%
                                                                                       •
                                                 Novartis
                                                                               •

Skin care (part one)                             Tinactin 18%
                                                 Schering-Plough
                                                 Desenex 9%
                                                                               •

LamisilAT growth slows as market stays flat      Novartis                          •
                                                                                           •
                                                 Private labels 10%                    •
Topical wound care provides relief in Canada     Others 23%




              Contents
        83 Company Monitor: GlaxoSmithKline
               Despite the upheaval of its mega-merger at the close of 2000, GSK began life
               confidently and finished its first full year by reporting strong results

      101 Regional Review: Asia
               Last year, China joined the WTO, signalling a new era of consumer healthcare.
               Meanwhile, in South Korea the market began to realign after SPD

      107 Market Minutes: S-P moves for OTC Claritin
               Prilosec switch this year?; Roche plans divestiture; LecTec courts suitors;
               Altus Food is dissolved; Bayer plans sell off; Chattem scoops Selsun; AER news;
               Melagesic withdrawal; Maalox goes soft; New Bumps ’n Bruises; Cold-Eeze
               extension; Diachrome launched; plus Canadian news and top appointments
                                                                  Company Monitor
                                                                     Company Monitor




GlaxoSmithKline:
one year on, GSK is fitter,
happier and more productive
    2001 was a year of momentous upheaval,
                                                       Key Facts
change and integration for GlaxoSmithKline,
and yet the group performed well in its first full     GlaxoSmithKline
year of trading. Net sales improved by 11% in
2001, excluding merger items, while trading profit
                                                        Address: 980 Great West Road,
stood at $8.7bn. Pharmaceuticals accounted for
                                                        Brentford, Middlesex, TW8 9GS, UK
more than 80% of corporate sales in 2001. The
consumer healthcare division took the greatest          Major business activities: prescription
                                                        pharmaceuticals, OTC drugs, personal
proportion of the remainder, with food products
                                                        care products
– including the sports energy drink, Lucozade, and
Horlicks malt drink – contributing 3% of net sales.     Employees: 107,500
                                                        Global net sales 2001*: $29.5bn
The merger of SmithKline Beecham and Glaxo              Global consumer health sales 2001**:
Wellcome was finally confirmed on 27 December           $4.7bn
2000 following a year of discussion. In order to
                                                        North American OTC sales 2001†:
satisfy anti-competitive concerns and complete          $928mn
the merger, SB and Glaxo were ordered by the
                                                        Global OTC ranking 2001†: 3
US Federal Trade Commission (FTC) to make
divestitures in six key product markets. In terms of    North American OTC ranking 2001†: 4
OTC, the North American trademark rights for the        Major OTC categories: analgesics,
H2 antagonist, Zantac 75, were relinquished to the      cough & cold remedies, GIs, VMS,
                                                        skin care
brand’s marketer, Pfizer Inc. GSK has retained the
Rx rights to the Zantac name. Also divested were        Related consumer activities: nutritional
the Rx antiviral drugs, Denavir and Famvir, and         drinks, oral care
the antiemetic, Kytril.                                 Leading North American OTC brands§:
                                                        Tums, Tagamet HB, Gaviscon, Phazyme,
                                                        Beano, Contac, BC powders, Goody’s,
Perhaps surprisingly, however, the FTC decided to
                                                        Nytol, Alluna, Sominex, Os-Cal, Oxy
allow the merger to proceed without breaking up         Balance, Nicorette, NicoDerm CQ
GSK’s smoking cessation portfolio. SB brought the
                                                        Other US consumer health brands§:
dominant OTC smoking cessation aids, Nicorette          Aquafresh, Sensodyne, Targon, Polident,
and NicoDerm CQ, to the table and Glaxo the             Poli-Grip, Balmex
leading prescription brand, Zyban.                      * GSK pro forma results, 12 months to year end
                                                        ** GSK pro forma consumer healthcare results,
In an unrelated move, GSK gave away a majority          12 months to year end
                                                        †
                                                          According to calculations by OTC UPDATE and
stake in its drug discovery arm, Affymax, in July       provisional data from DB6 2002, 12 months to year end
2001. Glaxo Holdings had acquired the Californian       §
                                                          Including Block Drug acquisitions
company for $533mn in 1995. Although GSK could




 Simplifyle 11                                                                                  April 2002 83
 GlaxoSmithKline




have raised an estimated $400mn from the sale of            Product Development
the shares, Affymax – which continued to provide
services to rival pharma companies – was deemed                The company has sought to deflect shortcomings
a non-core asset. GSK will continue to use                     in its own portfolio by undertaking in-licensing
                                                               agreements. 10 new products were delivered
Affymax technology, however.
                                                               into clinical development via in-licensing in 2001.
                                                               GSK has indicated that further such agreements
Another merger?                                                can be expected in future
Within four months of its formation, GSK was                   Although the FDA continues to oppose the
linked with a move for American Home Products                  Rx-to-OTC switch of antivirals, GSK could, in
                                                               the long term, attempt a direct-to-OTC launch
– now renamed Wyeth – and later for Bayer’s
                                                               of Zovirax (found OTC elsewhere in the world)
healthcare unit. GSK’s CEO, Jean-Pierre Garnier,
has always been forthright in his conviction that              Glaxo had touted the Rx influenza drug,
                                                               Relenza, as a potential switch candidate.
the pharmaceutical industry would continue
                                                               However, long-running safety concerns may
to consolidate. The move for AHP was not                       limit such a possibility
unprecedented: SB had entered unsuccessful
merger talks with AHP in 1997, while GSK’s                     Beconase allergy treatment and the
                                                               migraine drug, Imitrex, have long term
links with Bayer are also close – it was the                   OTC switch potential
distributor of Baycol in the US, prior to the Rx
cholesterol drug’s withdrawal. Therefore, although             The nicotine lozenge, available in the UK, could
                                                               provide a welcome boost to GSK’s OTC NRT
GSK remained quiet as to its plans, the rumours                line-up. The Rx smoking cessation drug, Zyban,
were not a surprise to analysts.                               is unlikely to switch in the short term

Any merger or acquisition would, however, have
likely proved too much too soon for GSK, which            GSK reports that Advair – which is known globally
is still reorganising following its formation.            as Seretide, and was launched in the US in mid-
                                                          2001 (see Market Minutes, June 2001, p179) –
Deflecting pipeline criticisms                            had recorded sales of approaching $500mn by
GSK is a world leader in the key Rx therapeutic           the end of 2001. The FDA has recently approved
areas of central nervous system, respiratory,             Advair for the treatment of chronic obstructive
metabolic & gastrointestinal and anti-infective           pulmonary disease (COPD), and GSK plans to roll
medicines. The early success of the Rx treatment          out Advair for COPD in the second quarter of 2002.
for asthma, Advair Diskus inhaler (fluticasone
propionate + salmeterol inhalation powder), has           Despite this, GSK’s product pipeline was
further strengthened the company’s portfolio.             shortened significantly in 2001 after the company
                                                          dropped a number of drugs in the late stages of
                                                          development. Investor fears were heightened
  GlaxoSmithKline:
  OTC sales by region 2001 (MSP)                          following the withdrawal of Lotronex, GSK’s drug
                                                          for the treatment of irritable bowel syndrome (IBS).
  North America 45%                        •              Touted as a potential blockbuster at its launch,
                                                          Lotronex was voluntarily withdrawn at the close of
  Western Europe 22%              •                       2000 after the FDA publicised concerns over rising
                                                          incidences of side-effects. GSK has responded to
  Asia 10%                    •
                                                          the setback and pipeline criticisms by pursuing
  Rest of World 23%                   ••                  in-licensing agreements, the most recent of which
                                                          heralded the acquisition of pre-clinical PPAR-
 Source: OTC UPDATE and provisional data from DB6 2002,
 Nicholas Hall & Company’s global OTC database
                                                          gamma modulators from Bayer’s osteoporosis
                                                          research programme.



84 April 2002                                                                                    Simplifyle 11
                                                                                 Company Monitor




Consumer healthcare                                       GlaxoSmithKline:
SB’s $1.24bn acquisition of Block Drug, the               Leading US OTC brands 2001 (MSP)
consumer products company – announced before                                                           Sales
the completion of its own merger with Glaxo – was         Brand            Category                     $mn
finalised in January 2001. Estimates suggest that         Nicorette        Smoking cessation             218
Block Drug has added around $900mn to global              Tums             Antacids                      172
consumer health revenue, pushing the corporate            Aquafresh        Toothpastes                   166
total to $4.7bn in 2001.                                  NicoDerm CQ      Smoking cessation             111
                                                          Sensodyne        Toothpastes                    58
GSK is now the third-ranking OTC player globally,         Citrucel         Laxatives                      51
                                                          Ecotrin          Systemic analgesics            39
standing behind Johnson & Johnson and Wyeth,
                                                          Source: OTC UPDATE and provisional data from DB6
and ahead of Pfizer Inc and Bayer. In the US,
                                                          2002 (DB6 excludes toothpastes)
GSK vies with Pfizer Inc to claim third place in
the OTC standings, beneath J&J and Wyeth.
                                                        Cold, flu & sinus remedies
However, in contrast to its closest competitors, GSK    GSK’s sole presence in the $1.5bn OTC cold,
realises less than half of its global OTC turnover in   flu & sinus remedies market is Contac. The recall
North America. Western Europe and Asia Pacific          of PPA-based Contac 12-hour Cold Capsules,
are key markets for GSK, each accounting for            following the FDA-requested withdrawal of
around one-fifth of corporate OTC turnover,             phenylpropanolamine (PPA) in November 2000,
according to provisional data from DB6 2002,            has sent the previously steady performer into
Nicholas Hall & Company’s global OTC database.          decline. Sales are estimated to have fallen
GSK also maintains a good presence in Latin             by 14% to $27mn in 2001. The availability
America and Central & Eastern Europe.                   of alternative pseudoephedrine presentations
                                                        staved off heavier declines for the brand.
Such a broad geographical spread gives GSK
a significant advantage over many other leading         Gastrointestinals
OTC marketers, making it the least likely to            Gastrointestinals are an area of strength for GSK,
succumb to regional industry recession.                 accounting for greater than one-third of the turnover
                                                        generated by its consumer healthcare business.
Analgesics                                              Tums is the leader of the company’s US GIs
Block Drug has provided GSK with a small,               portfolio taking sales of over $170mn in 2001.
but significant, presence in the $2.6bn US OTC          Although turnover was eroded in 2001 by both
systemic analgesics category. GSK is the leading        branded and private label H2 antagonists, Tums
provider of powdered analgesics, fielding the           (calcium carbonate) has clung on to its leadership
former Block Drug brands, BC and Goody’s.               of the antacids/antigas category. The brand will
BC registered growth of 7% in 2001, pushing             face a new rival this year, following the launch
brand sales up to $23mn, while Goody’s                  of Novartis’ Maalox Soft Chews (see Market
provided a further $20mn.                               Minutes, pp109-110). However, heavy losses
                                                        for the brand’s nearest competitor, J&J•Merck’s
Meanwhile, Ecotrin is claimed to be the aspirin         famotidine-based Pepcid AC – which lost market
brand most recommended by cardiologists.                exclusivity in the second quarter of 2001 – are
Despite such recommendations, turnover                  forecast for 2002. This, coupled with Tums’ own
dipped to $39mn in 2001. Panadol, though                broad distribution outside the mass market and a
a significant player globally, is a minor entry         new line extension, Tums Cool Relief, should enable
in the US.                                              the GSK brand to retain the number one spot.




 Simplifyle 11                                                                                   April 2002 85
 GlaxoSmithKline




The future is not so bright, however, for stablemate   Zyban (bupropion), and SB’s OTC nicotine
Tagamet HB. Turnover has fallen dramatically in        replacement therapies, Nicorette and NicoDerm
the past four years; the brand has been reduced        CQ. Although this combination attracted the
to a minor competitor since the loss of cimetidine     attention of regulators, the FTC decided not
patent exclusivity in 1998. With generic equivalents   to require the divestiture of any of the brands,
to Pepcid AC and Zantac 75 winning a greater           handing newly-formed GSK a virtual monopoly
share of category dollars, Tagamet HB’s decline        in both markets. However, private label
seems set to continue. Gaviscon antacid also fared     competition made a deep cut into turnover
poorly in 2001, while sales of Phazyme (another        registered by its OTC portfolio in 2001.
Block Drug brand) fell below $21mn.
                                                       Nicorette was line-extended with a new orange
GSK’s bulk-forming laxative, Citrucel, narrowed        flavour presentation in November 2000. However,
Metamucil’s lead of the laxatives category with        this was not enough to halt an 18% fall in sales
growth of 11% in 2001. Although it registered          in 2001. The brand’s 46% share of the $476mn
turnover of a little above $50mn, Citrucel remains     OTC category was substantial, but markedly lower
some distance behind P&G’s category leader.            than that claimed in previous years.
GSK also fields Nature’s Remedy in this category.
                                                       Despite remaining the best-selling patch brand,
Sales of the minor natural bulk former dropped
                                                       NicoDerm CQ nonetheless registered a heavy
to less than $3mn in 2001.
                                                       fall in turnover in 2001. GSK sliced the A+P
                                                       support given to the brand and sales dropped
Beano completes the company’s GIs line-up.
                                                       to $111mn in the past year. Recent indications
The natural food enzyme heads other products
                                                       suggest that both Nicorette and NicoDerm CQ
positioned to ease the digestion of beans and
                                                       failed to arrest declines in the latter half of
cruciferous foodstuffs.
                                                       the year.
For more information on the OTC gastrointestinals
                                                       The successful launch in late 2001 of a nicotine
market, please see last month’s Market Report
                                                       lozenge line extension to NicoDerm CQ in the UK
(pp61-69).
                                                       (where the brand is known as NiQuitin CQ) could
                                                       herald a similar introduction in the US. Results of a
Skin care                                              large clinical trial suggested that the lozenge could
Launched direct-to-OTC in October 2000, Abreva         triple a smoker’s chance of quitting, and is more
is the first antiviral cold sore treatment approved    effective than any other current delivery form.
for OTC usage in the US. The brand made                Watson has a nicotine lozenge under development
an impressive entry into the lip care market,          in the US.
registering sales of $5mn after just three months
and before full distribution had been reached.         Oral care
Abreva’s first full year on the market will be         Although line-extended with gum and lozenge
assessed in detail in the second part of our Skin      presentations in 2000, third-ranking toothpaste
Care Market Report, which will be published in         brand, Aquafresh, failed to keep pace with the
next month’s issue. The performances of GSK’s          powerful Colgate franchise (Colgate-Palmolive)
acne brand, Oxy, and Tegrin medicated shampoo          in 2001. Innovative toothpaste line extensions
will also be reviewed next month.                      have been the telling factor in Colgate’s continued
                                                       dominance of the $1.7bn category. The recent
Smoking cessation                                      announcement of a new combination product from
The formation of GSK brought together Glaxo’s          Procter & Gamble’s second-ranking Crest – Crest
leading prescription smoking cessation aid,            Whitening Plus Scope toothpaste (see Market



86 April 2002                                                                              Simplifyle 11
                                                                                Company Monitor




                                                       multivitamin brand for seniors, continued to record
 Canada: OTC Review
                                                       steep declines in 2001. GSK also fields the cod
                                                       liver oil brand, Scott’s Emulsion, as well as the
   GSK: Leading Canadian OTC
   brands 2001 (MSP)                                   second-placed iron supplement, Feosol.

                                            Sales      GSK entered the burgeoning market for
   Brand          Category                 US$mn
                                                       women’s health supplements in March 2001
   Sensodyne      Toothpastes                 9.3
                                                       with Remifemin Menopause. Developed and
   Aquafresh      Toothpastes                 8.6
   Tums           Antacids                    7.7      marketed internationally by Schaper & Brümmer
   Gaviscon       Antacids                    6.3      of Germany, Remifemin contains an exclusive
   Oxy            Acne remedies               4.6      extract of black cohosh that boasts a strong 40-year
   Source: OTC UPDATE                                  safety record in Germany. The new launch raised
                                                       the stakes in a previously low profile category
     Sensodyne has benefited from increased            and total US sales of the herb leapt up by 51%
     A+P under GSK. Together, Sensodyne and
                                                       to $24mn in 2001. In order to capitalise on the
     Aquafresh took a 21% share of the $92mn
     toothpastes category in 2001                      increasing popularity of targeted herbals, GSK
     GSK dominates the $56mn antacids/antigas
                                                       has promised to widen the distribution of
     category, fielding the two leading brands         Remifemin in 2002.
     Second-ranking acne remedy, Oxy, was joined
     by Spectro-Gel after the Block Drug acquisition   GSK’s herbals foray had begun in March 2000 with
                                                       the launch of Alluna Sleep. Worth $7mn in the 12
     The withdrawal of three presentations forced
     sales of Contac cold & flu remedy down to $4mn    months to August 2001, Alluna’s high profile has
                                                       brought a new competitive edge to the $90mn
                                                       sleep aids category. However, sales of stablemates
Minutes, March 2002, p82) – seems to emphasise         Sominex and Nytol – under the Block Drug label –
the necessity for an innovative toothpaste launch      waned in the face of stronger competition. Vivarin
from Aquafresh. The GSK brand accounted for            accounted for a leading 44% share of the $29mn
a reduced 10% share of category dollars in the         stimulants category in the same period.
12 months to end 2001.
                                                       In June 2001, GSK entered a licensing
Under GSK, the former Block Drug brand,                agreement with PacificHealth Labs for Satietrol,
Sensodyne, has enjoyed a revival of fortunes.          the natural appetite suppressant. Under the terms
Increased A+P support pushed sales up by 8%            of the deal, GSK assumed responsibility for the
to above $65mn in the 12 months to June 2001.          manufacturing, marketing and sales of the product.
The acquisition of Block Drug also added the niche     Satietrol is claimed to be the first OTC meal
Targon Smoker’s Mouthwash and the powerful             replacement to activate cholecystokinin (CCK),
Polident and Poli-Grip denture cleansing and           a protein that gives a feeling of satiety after eating.
adhesive ranges to GSK’s oral care portfolio.
                                                       GSK’s Debrox ranks second in the $30mn ear
Other categories                                       drops/treatment category, capturing a 20% share
After posting good rates of growth in 2000, Os-Cal     of turnover in the 12 months to April 2001.
registered a disappointing performance in 2001,
reflecting a downturn in the $360mn calcium
                                                       Future prospects
supplements category. Tums is positioned as a          Further in-licensing agreements are likely in
dual antacid/calcium supplement and, with the          the near future as GSK looks to plug holes in
Tums Calcium for Life line extension, bolsters         its pipeline. In the medium term, a major merger
GSK’s presence in the category. Geritol, the           or acquisition would not be surprising, particularly




 Simplifyle 11                                                                                April 2002 87
 GlaxoSmithKline




given JP Garnier’s stance on industry consolidation.    Directional Analysis
In addition, the divestiture of its non-core foods
business would allow GSK to focus solely on             GlaxoSmithKline
healthcare and pharmaceuticals like its competitors.     Past
As reported in last month’s Market Minutes (p81),
Novartis has recently announced its intention             Glaxo Wellcome was ethically oriented
to divest its health & functional foods business          while SB maintained focus on OTC
                                                          throughout the 1990s
within the next 12 months, while Bristol-Myers
Squibb is also rationalising its corporate interests.     After a failed merger in 1998, SB and
                                                          Glaxo finally get together in 2000
In terms of OTC, opportunities remain to expand           The addition of Block Drug reinforces
some strong Block Drug brands further; Sensodyne          OTC commitment
has already shown the early benefits of GSK’s
                                                         Present
greater marketing power. The herbals sector
may provide scope for further targeted launches,          The newly-formed company performs
although GSK will be mindful of a series of high          strongly in first year with net sales up
profile failures in this market, notably Novartis’        Pipeline disappointments prompt a
Resource Wellness and Pfizer’s Quanterra.                 new strategy of in-licensing

The weakening of the company’s OTC smoking               Prospects
cessation business, and a recent challenge by             A major merger or acquisition would not
Andrx to Zyban’s patent exclusivity, will also be         be surprising. A revived drug pipeline
of concern, even if GSK has the means to mount            widens the scope for Rx-to-OTC switch
a powerful defence.
                                                                             Market Report
                                                                                Market Report




Skin care:
wound care to rescue as other
categories stumble again
Market Review                                              USA
USA                                                          In the first of our two Skin Care Market Reports,
                                                          OTC UPDATE examines VYI treatments, athlete’s
  Athlete’s foot/jock itch turnover drops, while          foot/jock itch products, anti-itch remedies, topical
  LamisilAT cannibalises sales from rivals                wound care and haemorrhoid preparations.
  VYI category remains in decline, as private             Overall, turnover was relatively flat in the 12
  labels again eat into brands                            months to end January 2002. Sales of anti-itch
                                                          remedies failed to improve on those registered last
  Topical wound care and haemorrhoid
                                                          year, while antifungal treatments registered dollar
  preparations bring some relief as sales rise,
                                                          declines. However, these disappointing returns
  though those of anti-itch products are flat
                                                          masked positive showings from the topical wound
 Canada                                                   care and haemorrhoid preparations categories.

  A strong mass market presence helps fuel
                                                          Some data in this report has been restated to take
  growth of topical wound care products
                                                          account of revised estimates of brand sales in
  Anti-itch, antifungal and haemorrhoid                   some categories.
  preparations register steady performances

  USA and Canada:                                         VYI treatments
  Skin care categories 2000-2002 (MSP)
                                                          This category’s decline continued in the 12 months
  US$mn                        2000      2001      2002   to end January 2002 with dollar turnover dropping
  USA                                                     by 4%. Smaller branded players have become
  VYI treatments              206.2 199.8 192.4
                                                          increasingly marginalised, while private labels
  AF/JI treatments            253.8 254.4 252.5
  Anti-itch remedies          246.6 254.8 255.8           have again increased share. In March 2001,
  Topical wound care          297.8 302.1 317.5           the FDA warned that vaginally administered
  Haemorrhoid preps           133.8 133.9 136.5           miconazole, the active ingredient in Monistat,
  TOTAL                     1,138.2 1,145.0 1,154.7
                                                          could cause bleeding or bruising if used in
  Canada
                                                          conjunction with warfarin, the Rx blood-thinning
  VYI treatments               12.2       12.6     12.6
  AF/JI treatments              4.7        4.8      4.9   drug. The OTC industry responded promptly with
  Anti-itch remedies            4.2        4.4      4.5   labelling amendments. Sales of miconazole-based
  Topical wound care           12.1       13.5     14.0   VYI treatments do not seem to have been unduly
  Haemorrhoid preps             6.7        6.8      6.8
  TOTAL                        39.9       42.1     42.8   affected by the publication of the warning.
  Source: OTC UPDATE estimates, based on sales
  through all retail outlets, 12 months to end January    The protracted decline of seven-day treatments
                                                          showed no sign of abating in 2001. Three-day




Simplifyle 5                                                                                  April 2002 89
 Skin Care




                                                    applicators and a tube of topical cream. The
 USA:
 VYI treatment shares 2002 (MSP)
                                                    FDA approved the line extension on the condition
                                                    that the product’s labelling contained a warning
 Monistat 3 31%                                     about the miconazole/warfarin interaction; similar
 Personal Products/J&J
 Monistat 7 16%
                                                    warnings have since been added to other
                                       •   •
 Personal Products/J&J                              presentations in the range. Monistat 3 now
 Monistat 1 14%
 Personal Products/J&J
                               •                    features five presentations, including an
 Vagistat-1 9%                                      established combination pack that contains
 Bristol-Myers Squibb              •
                                                    suppositories rather than cream applicators.
 Gyne-Lotrimin 3 6%
                                       •   •
 Schering-Plough
 Others, inc PL 24%                                 In common with other seven-day treatments,
 Source: OTC UPDATE estimates, based on sales       Monistat 7 remained in decline in the 12 months
 through all outlets in the 12 months to January
                                                    to end January 2002. Dollar turnover dropped by
                                                    10% to below $30mn. Monistat 1 was revitalised in
treatments remain the most popular option           2001, reversing declines registered in 2000 to take
by some distance; single-dose presentations         $27mn. The brand was boosted by the Rx-to-OTC
improved their share of dollars in the              switch of Monistat Dual Pack, a combination pack
reporting period.                                   incorporating a miconazole nitrate 1,200mg softgel
                                                    vaginal insert – not previously available OTC –
Distribution trends                                 and miconazole 2% cream. Original Monistat 1
Drugstores account for the greatest proportion      is formulated with tioconazole 6.5%.
of category dollars. Such outlets registered a
                                                    Vagistat-1 shares Monistat 1’s active ingredient
relatively flat performance to hold a 43% stake.
                                                    – Bristol-Myers Squibb having licensed tioconazole
Mass merchandise outlets continued to expand
                                                    to J&J in 1998 – but did not match its positive
and captured an improved 31% share of turnover.
                                                    performance in the past year. Sales of the BMS
Foodstores posted a disappointing performance
                                                    brand fell by 5% in the reporting period. Perrigo’s
and lost ground on drug and mass merchandise
                                                    announcement in December 2001 that it intends
outlets. Less than 3% of sales are made via
                                                    to launch a generic equivalent to Vagistat-1 could
other channels.
                                                    prompt further declines in the coming year.
The competitive environment
                                                    Schering-Plough’s Gyne-Lotrimin also fared
Johnson & Johnson’s Personal Products division      poorly in the past year. Despite being the first VYI
holds a formidable lead over other corporate        treatment to switch to OTC, Gyne-Lotrimin has
players. The company’s Monistat franchise           been reduced to a relatively minor competitor.
accounts for more than 60% of category turnover.    The brand’s leading three-day presentation took
Monistat’s single dose, three-day and seven-day     less than a 6% category share after registering
lines occupy the top three spots in the category.   a 14% decline.
J&J supports the franchise with category-leading
adspend to maintain an advantage over brands        Bayer encourages consumers to compare its VYI
from Bristol-Myers Squibb, Schering-Plough          treatment, Mycelex-3, to category-leading Monistat
and Bayer.                                          3. However, despite its competitive price point,
                                                    Mycelex-3 has been undermined by the
The launch of a new Monistat 3 combination          proliferation of cheaper private label three-day
pack in the second quarter of 2001 cemented         options. Turnover slumped by 35% in the reporting
the brand’s position at the head of the category.   period, falling to $8mn. The brand’s seven-day
The combination pack consists of three cream        presentation also lost ground on its competitors




90 April 2002                                                                             Simplifyle 5
                                                                                             Market Report




                                                           2002. Athlete’s foot treatments account for the
 USA:
 Athlete’s foot/jock itch distribution 2002 (MSP)          greater proportion of turnover.

          40                                               Distribution trends
          30
    %                                                      Mass merchandise outlets again increased share
  share
          20                                               as drug and foodstores both failed to improve
          10
                                                           on sales registered in 2000/01. Sales made via
                                                           drugstores were flat to account for a 37% share
          0
               F           D         M           O         of category turnover. Foodstores bore the brunt
  Source: OTC UPDATE estimates; F=food; D=drug; M=mass     of category losses, falling by 3% to take a reduced
  merchandise; O=other outlets, 12 months to end January
                                                           23% stake. Mass merchandise outlets captured
                                                           a little under one-third of dollars. Other outlets
and took just $2mn. Bayer discontinued Femstat 3           are stronger in this category than in any other
in January 2001. Though the first three-day                reviewed here and took a 10% slice of sales in
treatment available OTC, Femstat 3 has suffered            the 12 months to end January 2002.
from limited consumer support in the face of
stronger rivals.                                           The competitive environment
                                                           Novartis’ LamisilAT has further eroded Lotrimin’s
Private labels again increased their share at
                                                           lead of the athlete’s foot/jock itch category in the
the expense of branded options. Turnover
                                                           past year. Sales of the Schering-Plough brand
improved by 5% in the reporting period. The
                                                           dipped slightly, but remained above $53mn.
introduction of a generic equivalent of Vagistat-1
                                                           Lotrimin’s lead over LamisilAT now stands at
should bring further advances in the coming
                                                           just $5mn.
12 months.

                                                           Sales of Lotrimin’s sister brand, Tinactin, held
Category prospects
                                                           steady at $44mn, ensuring that Schering-Plough
The launch of two new combination packs is likely          maintained a healthy advantage over other
to enhance Monistat’s position as the leading OTC          corporate players. A+P for Lotrimin and Tinactin
VYI treatment franchise. Private labels can be             stresses points of difference between the two
expected to erode further the share of smaller             brands and LamisilAT. In contrast to LamisilAT,
entries and hold back overall dollar growth. New           Lotrimin is claimed to work on the whole foot,
innovations from branded players in such a mature          rather than just the toes; Tinactin, which is
market are unlikely, but may prove necessary to
restrict private label expansion.                           USA:
                                                            Athlete’s foot/jock itch shares 2002 (MSP)
The Rx-to-OTC switch of Pfizer Inc’s systemic
antifungal, Diflucan, remains a possibility and would       Lotrimin 21%
                                                            Schering-Plough                              •
provide a welcome boost to the OTC category.
                                                            Lamisil AT 19%                      •
                                                            Novartis

Athlete’s foot/jock itch                                    Tinactin 18%
                                                            Schering-Plough
                                                                                               •
                                                            Desenex 9%
The athlete’s foot/jock itch category failed to             Novartis                                 •
                                                                                                              •
grow in the past year. While LamisilAT, which               Private labels 10%                           •
                                                            Others 23%
switched to OTC in 1999, continued to cannibalise
                                                             Source: OTC UPDATE estimates, based on sales
sales from other options, its dollar growth slowed           through all outlets in the 12 months to end January
considerably in the 12 months to end January




 Simplifyle 5                                                                                            April 2002 91
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                                                           Novartis relaunched Desenex in 1999 in an
 IRI:
 US OTC skin care facts 2002 (RSP)                         attempt to counter any adverse impact from
                                                           LamisilAT’s Rx-to-OTC switch in the same year.
                                    Sales      % change    This was followed by the introduction in 2000
 Category                           $mn         2001/02
                                                           of a line extension, Desenex Max (based on
 Foot care/athlete’s foot                                  the same terbinafine formulation as LamisilAT),
 medication                         236.6             -2   and subsequent repositioning of Desenex as
 Anti-itch treatments               283.1             +0   a brand complementary to LamisilAT. However,
 First aid ointments/
 antiseptics                        342.4             +5   these measures have failed to prevent a steady
 Haemorrhoidal cream/                                      loss of sales. This trend continued as turnover
 ointment/spray                      71.1          -6      dropped by 8% to $21mn in the 12 months to end
 Haemorrhoidal remedies              71.2         +19      January 2002.
 Source: Information Resources Inc, based on retail
 sales in food, drug and mass merchandise outlets          Micatin has been increasingly marginalised since
 (excluding Wal-Mart), 52 weeks to 27 January              it was acquired by Pharmacia from J&J in 1997.
                                                           The loss of sales to LamisilAT has compounded the
tagged “Tough Actin’ Tinactin”, is said to                 brand’s woes. Turnover fell by 20% in the reporting
provide more immediate relief than the Novartis            period to account for less than a 3% share of
brand. Yet, according to Competitive Media                 category dollars. Micatin also maintains a limited
Reporting, LamisilAT boasts an adspend some                presence in the jock itch segment.
$8mn higher than that given to Lotrimin and
Tinactin, raising the prospect that Schering-              Sales of Alva-Amco’s Fungi Cure improved to
Plough’s message is not reaching consumers.                almost $5mn. Promoted as “The finger and toe
                                                           fungi specialist”, Fungi Cure features a core liquid
However, the recent announcement of FDA                    presentation as well as dual action gel and liquid
approval for OTC Lotrimin Ultra could lend the core        options. The brand also includes a nail mycosis
brand fresh impetus and encourage a greater                product, Fungi Clear.
commitment to A+P. The launch of Lotrimin Ultra,
which contains butenafine hydrochloride 1%, is             Gold Bond Medicated Foot Powder mainly targets
expected shortly. The new antifungal cream is              those who have foot dermatitis. Some estimates
permitted to carry indications for athlete’s foot,         suggest that up to 68% of people who think they
jock itch and ringworm (see Market Minutes,                have athlete’s foot, and attempt to treat it with an
February 2002, pp52-53).
                                                            USA:
LamisilAT continued to outpace the category,                Anti-itch remedy shares 2002 (MSP)
cannibalising sales from competitors. Novartis
                                                            Cortizone•10 19%
supports LamisilAT with an extensive media                  Pfizer
campaign, and has maintained the brand’s high               Benadryl 10%
                                                                                                      •
                                                            Pfizer                                        •
profile association with the National Basketball
                                                            Cortaid 9%                            •
Association (NBA). In addition, the company                 Pharmacia
feels that the brand name is strong enough to               Vagisil 8%                       •
begin to build it into a broader footcare range,
                                                            Combe                             •
                                                            Aveeno 7%                                         •
featuring deodorants, deodorisers and insoles.              Johnson & Johnson                         •
However, brand growth of 7%, though impressive              Private labels 18%
                                                            Others 29%
in an otherwise stagnant category, constituted
                                                            Source: OTC UPDATE estimates, based on sales
a considerable slowdown from past rates                     through all outlets in the 12 months to end January
of growth.




92 April 2002                                                                                             Simplifyle 5
                                                                                      Market Report




antifungal product, actually have dermatitis.
                                                        USA:
Gold Bond Medicated Foot Powder is therefore            Anti-itch remedy distribution 2002 (MSP)
indicated to stop common foot itch, absorb
moisture and control odour. Turnover rose by                    50

10% to reach $5mn in the 12 months to end                       40
January 2002.
                                                                30
                                                          %
                                                        share
WF Young fields athlete’s foot presentations under              20

its Absorbine Jr brand. The tolnaftate-based                    10
treatment also contains the herbs calendula,
                                                                0
echinacea and wormwood to provide cooling relief.                      F          D         M           O
The brand is a minor competitor in this category.        Source: OTC UPDATE estimates; F=food; D=drug; M=mass
                                                         merchandise; O=other outlets, 12 months to end January

Novartis’ Cruex is the foremost brand positioned
solely for the treatment of jock itch. Cruex had       Distribution trends
come under pressure from LamisilAT jock itch
                                                       Drugstores remain the most popular choice of
presentations, prompting sales to fall in recent
                                                       outlet for consumers of anti-itch products.
years. However, turnover stabilised before rising
                                                       However, a flat performance in the past year let
slightly to $5mn.
                                                       category share slip down to 41%. Foodstores put
                                                       in a marginally more positive performance to claim
The growth of LamisilAT has restricted private label
                                                       a 23% slice of turnover. Mass merchandise outlets
dollar gains, but turnover improved by 3% in the
                                                       outperformed both and accounted for more than
reporting period.
                                                       30% of sales. Other outlets took a 5% share.

Category prospects                                     The competitive environment
The rates of growth registered by LamisilAT are
                                                       Pfizer Consumer Healthcare markets the leading
slowing as the brand matures. However, LamisilAT
                                                       anti-itch brand, Cortizone•10. After registering
is still expected to cannibalise sales from its
                                                       healthy growth in 2000, brand turnover stalled and
competitors, rather than bringing new users to
                                                       was flat at $50mn in the 12 months to end January
the market.
                                                       2002. The brand receives high-profile A+P
                                                       backing, while packaging stresses the product’s
Encouraged by the success of LamisilAT, other
                                                       rapid onset. In addition to the core cream
companies may employ Rx-to-OTC switch in this
                                                       presentation, Cortizone•10 also offers spray
category. Potential switch candidates include
                                                       and anal itch relief variants.
Janssen’s econazole-based antifungal,
Spectazole, and Ortho’s Sporanox, a nail
                                                       Pfizer also fields second-ranked Benadryl allergy
mycosis treatment.
                                                       relief. The brand reversed declines registered in
                                      •                2000/01 as sales increased by 3% in the reporting
Anti-itch remedies                                     period. Caladryl calamine brand generates a
                                                       further $5mn for Pfizer’s anti-itch portfolio.
This category registered a flat performance in the
reporting period as new, more innovative products      Cortaid (Pharmacia) retained third place in the
cannibalised the sales of existing options. OTC        category despite a 4% fall in sales. The brand is
UPDATE includes topical hydrocortisones,               reported to receive a high level of recommendation
calamines, topical antihistamines and vaginal          from dermatologists and this is a feature of
itch treatments in its category definition.            advertising support. However, Cortaid has




 Simplifyle 5                                                                                  April 2002 93
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                                                        strength of hydrocortisone available OTC with
 USA:                                                     ACNielsen:
 Topical wound care shares 2002 (MSP)                     Canadian home test aloe (RSP)
                                                        natural colloidal oatmeal,factsand vitamin E,
                                                        the new presentation’s unique formula will likely
 Neosporin Plus 16%                                     provide a boost to turnover in 2002. Aveeno is
 Pfizer
                                                        supported by professional detailing while FSIs
 Neosporin 11%
 Pfizer                             • •
                                                        will run in national newspapers in 2002.
 Solarcaine 4%
 Schering-Plough                •
 Betadine 3%                    •
                                •                       J&J’s powerful Band-Aid wound care franchise
 Purdue Pharma
 Becton Dickinson 3%                               •    has been successfully extended into the anti-itch
 Becton Dickinson
 Private labels 32%                       •             category. The brand consists of one gel and two
 Others 31%
                                                        spray presentations, one of which is formulated
  Source: OTC UPDATE estimates, based on sales
  through all outlets in the 12 months to end January
                                                        with calamine and the second with the
                                                        antihistamine, diphenhydramine. The anti-itch
                                                        line-up benefits from association with its parent
struggled to compete with cheaper private               brand as well as from dedicated A+P support,
labels and better supported competitors, such           under the tagline, “The relief that you’ve been
as Cortizone•10.                                        itching for”. Sales leapt up by 30% in the past
                                                        year to pass $6mn.
Line-extended with three cleansing foam
presentations, Combe’s Vagisil is the leading           Private labels outgrew the category to claim
female anti-itch treatment. The first product of its    an improved 18% share of dollars.
kind in the feminine hygiene segment, Vagisil
Cleansing Foam was launched in April 2001 with          Category prospects
regular fresh, clean scent and hypoallergenic
                                                        Little progress is expected from the anti-itch
formulas. Vagisil registered growth of 7% in the
                                                        category in the coming year. Band-Aid and Vagisil
12 months to end January 2002.
                                                        have led the way in the past year, benefiting from
                                                        innovative line extensions. Others could benefit
The publication of a study in 2002 which
                                                        from following this blueprint for success.
highlighted the effectiveness of Vagisil and
some other vaginal lubricants and preparations
                                                        As people age, the level of blood circulating to the
in fighting HIV could provide a boost to long-term
                                                        skin decreases, increasing the need for anti-itch
prospects. However, no clinical trials have yet
                                                        products. This, coupled with an ageing population,
been undertaken. Stablemate Gynecort
                                                        should bring incremental growth in the long term.
is an increasingly minor concern.

                                                         USA:
Another dip in sales for Combe’s general                 Topical wound care distribution 2002 (MSP)
anti-itch brand, Lanacane, pushed brand
turnover below $11mn. Advertising promotes                        50

the brand’s unique germ-killing benefits, as                      40
well as anti-itch properties.
                                                                  30
                                                            %
                                                          share
Anti-itch presentations in the Aveeno skin care                   20

range disappointed in the past year with sales                    10
dipping to $17mn. However, J&J’s Personal
                                                                  0
Products division has just line-extended the brand,                     F          D          M          O
launching Aveeno 1% Hydrocortisone Anti-Itch              Source: OTC UPDATE estimates; F=food; D=drug; M=mass
                                                          merchandise; O=other outlets, 12 months to end January
Cream in March 2002. Combining the highest




94 April 2002                                                                                    Simplifyle 5
                                                                                 Market Report




Topical wound care                                   Bayer’s Bactine and Campho-Phenique compete
                                                     at the same level, ahead of entries from Quaker,
A positive performance from the topical wound        Playtex, Fruit of the Earth and Beiersdorf.
care category was largely a result of a strong
showing from the top-ranking brand, Pfizer’s         Band-Aid Hurt-Free Antiseptic Wash, launched
Neosporin Plus. OTC UPDATE includes topical          in March 2001, is reported to have expanded J&J’s
antiseptics, antibacterials and antibiotics in its   presence in this category significantly . The brand
category definition, but does not include plasters   is available in a squeezable bottle, removing the
or bandages.                                         need to touch wounds with a cleaning material,
                                                     such as a cotton swab. Band-Aid Hurt-Free
Distribution trends                                  Antiseptic Wash is targeted at parents with
                                                     young children.
Sales via all outlets improved in the 12 months to
end January 2002. Drugstores retained a leading      Other minor competitors include Humco,
42% share of category turnover. Foodstores           Dermoplast (Medtech), Mederma (Merz) and
registered growth of above 6% to capture a 27%       an entry from Chattem under the Gold Bond
stake. Mass merchandise outlets accounted for        name. Private labels accounted for a little over
23% of sales. Other outlets took the remainder.      30% of category turnover in the reporting period,
                                                     but failed to match category growth.
The competitive environment
Pfizer Consumer Healthcare is the dominant           Category prospects
marketer of topical wound care products. The         New innovations that reduce the need to touch
company accounted for approaching 30% of             wounds, such as Band-Aid Hurt-Free Antiseptic
category turnover in the past year. The Neosporin    Wash, or reduce the sting, provide an interesting
range heads Pfizer’s portfolio and the rest of the   niche in this category. Such products could
category. Core Neosporin ranks second with           drive further growth in coming years and
sales of $36mn, while Neosporin Plus (which          should appeal to the category’s principal
also contains the topical anaesthetic, lidocaine)    target of families.
tops the standings with $49mn. Pfizer also fields
the mature topical antibiotic, Polysporin.           Haemorrhoid preparations
The second tier is closely contested by a            For the fourth year in succession, the mature
number of brands, although some are primarily        haemorrhoid preparations category has posted
distributed to hospitals. Schering-Plough leads      a low rate of growth. Pads, wipes and gels have
the chasing pack with Solarcaine and A&D.            brought some branded growth, although private
Sales of Solarcaine dipped by 2% to $11mn            labels continue to generate a sizeable proportion
in the 12 months to end January 2002.                of category dollars.

Purdue Pharma’s Betadine realises a large            Distribution trends
proportion of its turnover in hospitals and,
without dedicated support, OTC sales of the          Drugstores account for the lion’s share of sales
brand fell below $8mn.                               of haemorrhoid preparations. Foodstores again
                                                     outperformed the category to take a 24% share
Becton Dickinson’s antiseptic brand also             of turnover. Mass merchandise outlets also
generates the majority of its sales in hospitals;    registered healthy rates of growth and captured
OTC turnover was flat in the reporting period        28% of category dollars. Sales made via other
to account for a 3% share of the category.           outlets stood for a 4% share.




 Simplifyle 5                                                                            April 2002 95
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                                                       Sales of Novartis’ Nupercainal grew by 5% in
 USA:
 Haemorrhoid preparation shares 2002 (MSP)
                                                       the 12 months to end January 2002, reversing
                                                       declines registered in the previous year.
 Preparation H 52%                                     Turnover stood at $3mn.
 Wyeth
                                           •
 Tucks 11%                             •               Tronolane (Ross/Abbott), which features a local
 Pfizer                            •                   anaesthetic to help relieve pain, continued its slow
 Anusol 10%
 Pfizer
                                                       decline in the past year. Brand sales dropped
                                    • •                by 7% to account for just $1.6mn. Private labels
 Private labels 20%
                                                       posted a flat performance, largely as a result
 Others 7%
                                                       of the improved showing from Preparation H.
 Source: OTC UPDATE estimates, based on sales
 through all outlets in the 12 months to end January   Category prospects
                                                       Preparation H has strengthened its lead at the
The competitive environment                            head of the category with innovative and well
                                                       supported line extensions. However, private labels
Another strong performance consolidated
Preparation H’s position as the leading
haemorrhoid treatment. The brand’s most recent           A+P Review
line extensions, Preparation H Cooling Gel and
Preparation H Medicated Wipes, have proved                USA:
                                                          Leading OTC skin care adspends 2001
particularly successful. Medicated Wipes were
added to the range in October 2000, while Cooling
                                                          Brand            Company                    $mn
Gel launched in 1999. Cooling Gel is to be
supported by a new TV campaign fronted by                 LamisilAT        Novartis                   18.2
Don Zimmer, baseball coach with the New York              Vagisil          Combe                      14.5
Yankees. The ads will coincide with the start             Monistat         Personal Products/J&J      10.5
of the new baseball season. Overall, brand                Preparation H    Wyeth                      10.0
                                                          Lotrimin AF      Schering-Plough             7.3
turnover improved by 9% in the past year to
                                                          Tinactin         Schering-Plough             2.8
rise above $70mn.
                                                          Gold Bond        Chattem                     2.3

Pfizer Consumer Healthcare fields several                 Source: Competitive Media Reporting, 12 months
                                                          to November
brands in this category. Chief among them
is Tucks, which registered a relatively flat
performance in the 12 months to end January              Key consumer
2002. However, the brand pushed further ahead            campaigns of the year
of stablemate, Anusol. Both the core Anusol brand
                                                             Novartis again supported LamisilAT
and hydrocortisone-based Anusol HC-1 posted                  with a market leading share of voice.
poor performances in the reporting period.                   However, adspend was pared back by
Combined sales fell to $13mn.                                16% as the brand showed signs of
                                                             reaching maturity

Pfizer also markets Hemorid. An increasingly                 Monistat retained a leading adspend in
minor concern, Hemorid sales dropped by over a               the VYI category
quarter to less than $2mn. The brand is likely to
                                                             Combe supported Vagisil with a significantly
continue to dwindle in the shadow of its more                improved adspend. The launch of Vagisil
illustrious counterparts and could be a candidate            Cleansing Foam was also widely promoted
for divestiture or discontinuation.




96 April 2002                                                                                   Simplifyle 5
                                                                                      Market Report




are still showing above category growth in terms of    Canada:
units and may erode branded sales in the coming        VYI treatment shares 2002 (MSP)
year. In the longer term, the ageing of the
population should foster category gains.               Monistat 54%
                                                       McNeil/J&J
                                                                                                       •
 Canada                                                Canesten 36%
                                                       Bayer
                                                                                            •

                                                       GyneCure 8%                              •
The Canadian OTC categories reviewed in the first      Pfizer
part of our Skin Care Market Report registered                                                  •
                                                       Others, inc PL 2%
only marginal growth of 2% in the 12 months to
end January 2002. Dollar increases were driven         Source: OTC UPDATE, based on sales via all retail
                                                       outlets in the 12 months to end January
by the topical wound care category, supported by
solid performances from anti-itch treatments and
athlete’s foot/jock itch products.                    of presentations. As discussed earlier (p89),
                                                      miconazole has recently been the subject of a US
VYI treatments                                        FDA investigation following reports of a possible
                                                      interaction between the antifungal drug and
Sales of OTC VYI treatments were flat in the 12       prescription anticoagulants. Health Canada has
months to end January 2002. The category posted       asked manufacturers of miconazole to add a
modest yearly increases following the introduction    new warning to the product monograph and
of single-dose Monistat by McNeil in 1999, but        label, asking women who use anticoagulant
now appears to have reached maturity.                 drugs to seek guidance from a doctor before
                                                      use (see Market Minutes, October 2001, p300).
Sales made via drugstores increased modestly
in the past year to take a dominant 81%               Bayer’s Canesten came under pressure from
share. Retail sales through grocery and mass          Monistat in the past year and as a result the
merchandise outlets remained steady to capture        clotrimazole-based brand recorded a 6% decrease
13% and 6% shares, respectively.                      in sales. Canesten’s category share fell to 36%.
                                                      Bayer supports the brand with national TV ads.
The competitive environment
                                                      Third-ranked GyneCure (tioconazole), fielded
The category is dominated by the top two brands
                                                      by Pfizer Consumer Healthcare, the only other
that together account for around 90% of turnover.
                                                      notable brand, has steadily lost ground to the top
Single-dose and three-day treatments remained
                                                      two brands in recent years. Sales dipped by 8%
popular in the reporting period, while six- and
                                                      to stand at just $1mn in the reporting period.
seven-day options have continued to decline.
Private label treatments realise only a tiny share
of turnover in this category.
                                                      Category prospects
                                                      The trend toward more convenient single-dose
McNeil’s Monistat range posted a 5% increase in       treatments is likely to continue. The long-awaited
dollar sales in 2001 and has cemented its position    Rx-to-OTC switch of Pfizer’s systemic treatment,
as category leader. Brand turnover approached         Diflucan, would revitalise the VYI category and
$7mn in the 12 months to end January 2002. The        drive innovation.
miconazole-based brand has registered healthy
yearly increases since the successful launch of       Meanwhile, in such a highly consolidated category,
Monistat 1. The range now covers one-, three-         growth is likely to be generated by new launches
and seven-day treatment options in a variety          and line extensions from the existing marketers.




 Simplifyle 5                                                                                       April 2002 97
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Athlete’s foot/jock itch                                  dipped slightly in the 12 months to end January
                                                          2002 to account for 28% of turnover. The
Sales of topical antifungals positioned for the           tolnaftate-based brand is available in cream,
treatment of athlete’s foot and jock itch registered      powder, liquid and aerosol presentations.
a slight upturn during the past year. Category
growth has been driven by sales of athlete’s              S-P also fields a range of athlete’s foot treatments
foot treatments, which comprise the bulk of               under the Dr Scholl’s brand. Dr Scholl’s consists
the category. The jock itch segment failed to             of tolnaftate presentations alongside a popular
capitalise on recent strong performances and              butenafine 1% cream. Dr Scholl’s retained fourth
turnover remained flat in the 12 months to end            place following a year of static sales.
January 2002.
                                                          Bayer’s Canesten retained second place and
                                                          eroded Tinactin’s lead. The brand registered a 3%
In the athlete’s foot segment, drugstore turnover
                                                          increase in dollar sales to account for 24% of
increased marginally to account for 74% of
                                                          category turnover.
turnover. Grocery stores experienced the largest
increase capturing over a 17% share. Mass                 McNeil’s Micatin was the category’s strongest
merchandisers and other outlets accounted for the         performer in the past year, posting healthy dollar
remainder. Meanwhile, sales of jock itch remedies         increases of 7%. The miconazole-based brand
remained concentrated in drugstores, which                has continued to challenge the category leaders
posted modest gains in the reporting period to            through strong consumer advertising and
take a 78% share of the segment.                          promotional campaigns. The brand targets
                                                          active young users.
The competitive environment
The brand rankings remained unchanged as                  Novartis fields Desenex, which retained fifth
category growth slowed. There has been little             place ahead of Pfizer’s Trosyd following an
movement among the leading brands since the               unremarkable year.
radical realignment caused by the Rx-to-OTC
switch of major brands such as Canesten and               Category prospects
Micatin in the mid-90s.                                   The expected Rx-to-OTC switch of Novartis’
                                                          Lamisil (terbinafine) has yet to materialise
Schering-Plough’s veteran brand, Tinactin,                in Canada. Should it launch OTC, Lamisil
maintained category leadership. However, sales            would re-invigorate the category and might
                                                          benefit existing brands through increased
 Canada:                                                  category awareness.
 Athlete’s foot/jock itch shares 2002 (MSP)

 Tinactin 28%
                                                          Anti-itch remedies
 Schering-Plough
                                              •
 Canesten 24%                       •                     The Canadian anti-itch category is confined by
 Bayer
 Micatin 19%                                              regulatory controls on hydrocortisone treatments,
 McNeil/J&J                         •                     which are restricted to 0.5% strength formulations
 Dr Scholl’s 12%
 Schering-Plough
                                          •           •   and behind-the-counter (BTC) sale. The category
 Desenex 10%                                      •       again only managed to register incremental growth
 Novartis
 Others, inc PL 7%
                                                          of 3% in the 12 months to end January 2002.
                                                          Drugstores captured around three-quarters of
 Source: OTC UPDATE, based on sales via all retail        category turnover. However, marketers report that
 outlets in the 12 months to end January
                                                          such outlets are rapidly losing ground to mass




98 April 2002                                                                                   Simplifyle 5
                                                                                        Market Report




merchandisers, which are estimated to have              ACNielsen:
registered double-digit growth in the past year.        Canadian skin care facts 2001 (RSP)

                                                                                          Sales      % change
The competitive environment                             Category                          C$mn        2000/01
Combe’s Lanacane has consolidated its category
                                                        Vaginal antifungals                 27.0         -1
lead with a strong performance in the 12 months         Athlete’s foot                       4.7         +7
to end January 2002. The benzocaine-based brand         Men’s antifungals                    5.6         -2
posted a 5% increase in dollar sales to capture a       Topical wound care                  49.9         +4
                                                        Haemorrhoid preps                   15.2         -1
leading 28% category share. Lanacane has been
repackaged recently and is consistently supported       Source: ACNielsen, based on retail sales in drug and
                                                        grocery stores, 12 months to 29 December
by extensive, seasonal TV and print advertising.
This success seems likely to continue, as in
February 2002 Combe launched new Extra-                Category prospects
Strength Lanacane, containing benzocaine               Marketers do not expect the current restrictive
20% compared to the normal strength of 5%.             regulatory situation to change in the near future.
                                                       Despite this, companies such as Combe and
Combe has also suggested the possibility of            Chattem have driven sales through product
relaunching Lanacort, the hydrocortisone-based         innovation and consistent, seasonal consumer
brand that was withdrawn in 1998 owing to poor         advertising, targeting a wide age range of
sales. However, the potential for growth in the        consumers.
hydrocortisone segment is inhibited by current
BTC classification, a factor which would likely        Private labels have traditionally formed only
restrict the impact of any relaunch.                   a negligible section of the anti-itch category.
                                                       However, following the continued expansion
Turnover registered by Chattem’s Gold Bond range       of Wal-Mart in Canada, store brands such as
of anti-itch products increased by 2% in 2001.         Wal-Mart’s Equate may provide increased
The brand retained second place and captured           competition in future.
a 13% category share. The range – which
includes regular and extra-strength body powders,      Topical wound care
medicated creams and lotions – was line-extended
by the introduction of a medicated foot powder in      This category includes topical antibacterials,
April 2001. The new launch was supported by            antibiotics and antiseptics and has grown steadily
dedicated TV and radio ads that targeted a young       during the past two years. Dollar sales increased
and athletic male audience, using the familiar         by 3% in the 12 months to end January 2002.
tagline: “It’s more than a powder. It’s medicated.”
                                                       Drugstore sales remained flat to account for over
The leading hydrocortisone anti-itch treatment,        70% of turnover. Grocery stores showed a modest
Cortate (Schering-Plough), achieved only a slight      increase. The mass merchandise channel
increase in sales to raise its share of the category   registered impressive double-digit growth, driven
to 12%. Cortate dominates its small segment and        by the expansion of Wal-Mart to take over 12%
competes against minor brands, such as McNeil’s        of category turnover.
Cortef and Taro’s Cortoderm.
                                                       The competitive environment
Pfizer Consumer Healthcare fields the two minor        Pfizer’s topical antibiotic, Polysporin, continued to
brands containing diphenhydramine, Benadryl            build on its formidable category lead and posted a
and Caladryl. Both are restricted to BTC sale.         10% increase in sales during 2001, taking its




 Simplifyle 5                                                                                      April 2002 99
 Skin Care




  Canada: Haemorrhoid preparation                        The competitive environment
  shares 2002 (MSP)                                      Preparation H (Wyeth Consumer Health, previously
                                                         known as Whitehall-Robins) remains the clear
 Preparation H 57%
 Wyeth                                       •           category leader, taking approaching 60% of sales.
                                                         Its wide range of suppositories, ointments, creams
 Anusol 30%                          •
 Pfizer                                                  and gels, coupled with the fact that the brand is the
 Tucks 10%                                           •   only haemorrhoid preparation to be supported with
                                    •
 Pfizer                                                  year-round nationwide consumer advertising, has
                                    •                    ensured its dominance of the category.
 Others, inc PL 3%

 Source: OTC UPDATE, based on sales via all retail       The only competition of note is provided by Anusol
 outlets in the 12 months to end January
                                                         and Tucks, both marketed by Pfizer Consumer
                                                         Healthcare. Anusol’s category share dipped
category share above 50%. The brand’s                    slightly to 30% in 2001. Sales of Tucks, the leading
stablemate, Lidosporin, was discontinued                 brand in the pads segment, remained flat and took
in autumn 2001.                                          almost 10% of category turnover.

Bayer fields two minor entries, Bactine antiseptic
                                                         Category prospects
and Ozonol antibiotic. Each posted small                 This category is expected to grow incrementally,
increases for category shares of 11% and 9%,             owing to the ageing population. Marketers have
respectively. Mentholatum’s Mecca ointment               noted, however, that improved diet and exercise
takes a small proportion of sales. The company’s         regimes may reduce the incidence of haemorrhoids.
anaesthetic, Medi-Quick, was discontinued in
2000. The remainder of the category is contested           Market Forecast
by a host of small brands and private labels.
                                                           USA
Category prospects                                             Monistat’s position at the head of the VYI
Although the rates of growth registered in this                category is likely to be enhanced, although
category slowed in the past year, continued                    private labels will erode overall dollar sales
investment in product development can be                       Driven by new product innovations, the
expected. Moreover, the expanding presence of                  topical wound care category looks good
this category in grocery and mass merchandise                  for further gains
outlets should fuel future gains. This also raises
                                                               LamisilAT’s expansion is likely to slow
the possibility of significant private label growth.
                                                               in the coming year, but will continue
                                                               to outpace other brands
Haemorrhoid preparations
Category turnover was flat in the 12 months to             Canada
end January 2002 with little movement in any                  The Rx-to-OTC switch of Diflucan would
of the distribution channels.                                 boost VYI treatments. However, major new
                                                              topical entries are not expected
Drugstores remained the clear favourite with
consumers, capturing 77% of turnover, while food              Topical wound care growth likely
sales dipped slightly to account for just under a             The aggressive expansion of Wal-Mart
19% share. Mass merchandisers and other outlets               could increase store brand share
captured the remainder.




100 April 2002                                                                                  Simplifyle 5
                                                                      Regional Review
                                                                           Regional Review




Asia Pacific:
region outperforms the West
as Korea and China modernise
    OTC UPDATE’s sister publication, Far East           sales of OTC-registered brands. This growth has
Focus, recently held its 4th conference in Bangkok      been stimulated by the implementation of drug
on 7-8 February 2002. Here, with their help, we         classification regulations introduced in January
review the trends and developments in Asia Pacific      2000, which have led to the expansion of the retail
during the past year.                                   pharmacy channel. Having joined the World Trade
                                                        Organisation (WTO) last year, China can expect to
Several markets within the region posted excellent      experience difficult regulation-driven change to its
sales growth in 2001, building on the recovery          healthcare markets over the next few years, but
from the major economic setbacks caused by the          these are changes which should be of benefit in
Asian currency crisis of 1997-8. Overall, the Asia      the long term and will facilitate greater international
Pacific OTC market – including Japan and                participation in the emerging OTC market.
Australasia – registered growth of 4.5% in the
2001, according to Far East Focus and provisional       South Korea began to realign its OTC market
data from DB6 2002, the latest edition of Nicholas      after fundamental regulatory change in 2000,
Hall & Company’s global OTC database. By                and turnover reached $1bn following growth of 6%.
comparison the North American markets remained          India’s OTC market closed in on $1bn after growth
essentially static. Within this Asia Pacific regional   of 7%, consistent with last year’s performance.
figure, individual markets experienced widely           Indonesia recorded the region’s most notable
varying results.                                        performance, surging ahead with growth of 18%.
                                                        Australia, another developed market, managed to
Market overview                                         post respectable growth of 6%, despite a downturn

Japan accounted for close to half of total OTC
                                                          Asia Pacific:
turnover – in dollar terms – in Asia Pacific in 2001,
                                                          Major OTC markets 2001 (MSP)
but this proportion is diminishing year after year as
the Japanese market remains static while other                                Sales    % growth      Per capita
countries continue to develop apace. Japan also           Country             ($mn)    2000/01*      spend ($)
reflected a lower share of regional OTC sales after       Japan               6,382         +1         50.25
substantial devaluation of the Japanese yen (¥)           China               2,214        +11          1.74
                                                          South Korea         1,004         +6         21.36
against the US dollar last year. The startling growth     India                 953         +7          0.94
of Taisho’s RiUP minoxidil hair loss treatment,           Australia             657         +6         34.58
following its OTC debut at the start of July 1999,        Indonesia             389        +18          1.83
                                                          Taiwan                366         +0         16.64
stalled quickly. However, Pharmacia’s Nicorette           Philippines           256         +4          3.37
nicotine replacement patch debuted direct-to-OTC          Thailand              254         +5          4.03
in 2001 and has generated rapid sales growth.             Malaysia              167         +8          7.59
                                                          *Growth calculated in local currency
Meanwhile, China posted OTC market growth of              Source: Far East Focus and provisional data from DB6
                                                          2002; includes Rx+OTC sales of semi-ethical brands
11% to pass $2.2bn in 2001 – including hospital



 Simplifyle 12                                                                                   April 2002 101
   Asia Pacific




                                                           hoped, by the cost-conscious government and
  Asia Pacific:
  Economic growth trends 1998-2002                         marketers alike, that SPD will begin to stimulate
                                                           long-term OTC growth after the reverse switch of
                               % GDP change
                                                           products such as non-sedating antihistamines and
  Country           1998    1999    2000 2001* 2002†       H2 antagonists had shrunk the market in 2000.
  Australia         +4.5 +4.4       +4.2     +3.1   +3.5   However, this growth process cannot truly begin
  China             +7.8 +7.1       +7.9     +7.4   +7.2   until the Korean FDA finally publishes its definitive
  India             +6.8 +6.5       +5.8     +5.6   +6.2   new Rx/OTC drug classifications list – which was
  Indonesia        -13.1 +0.8       +4.8     +3.4   +3.8
  Japan             -2.5 +0.2       +1.5     -0.1   +0.1
                                                           originally due for publication early last year. In the
  Malaysia          -7.4  -5.4      +8.5     +0.8   +3.5   current, post-SPD environment, OTCs may only
  Philippines       -0.6 +3.3       +3.9     +3.4   +4.2   be sold legally in pharmacies in South Korea,
  South Korea       -6.7 +10.9      +8.8     +2.7   +4.1
                                                           with hospitals and clinics no longer licensed to
  Taiwan            +5.4 +6.0       +5.9     -0.3   +2.6
  Thailand         -10.8 +4.2       +4.3     +1.2   +2.1   dispense medicines to consumers or outpatients.
                                                           The mass market is as yet non-existent, except for
  *Expected, †forecast
  Source: World Bank and government statistics             certain low dose vitamin, mineral and herbal
                                                           products registered as health aids.
in sales in the dietary supplements market.
                                                           Once consumers learn to self-medicate, rather
The country continues to be fairly liberal in
                                                           than relying on their doctor, it is believed that
deregulating products with a good safety profile,
                                                           the OTC market will post good rates of growth.
and drugs that benefited from reclassification
                                                           Deregulation of certain products, most notably
in Australia’s multi-layered regulatory system in
                                                           tonic drinks – a major moneyspinner in Asia – and
2001 included ranitidine H2 antagonists and
                                                           simple analgesics, may also create a mass market
loperamide antidiarrhoeals.
                                                           within the next couple of years.
Among other Asian countries, Malaysia enjoyed an
                                                           Meanwhile, the cash-strapped national health
8% increase, better than growth in 2000. Thailand
                                                           insurance scheme in Taiwan has led the
posted 5% OTC sales growth, almost matching
                                                           Government to begin dereimbursing OTC-
the previous year and taking sales back to levels
                                                           registered drugs, which should gradually lead to
similar to those prior to the currency crisis. Growth
                                                           greater self-medication. The Thai government has
in the Philippines slowed to just 4%, as consumers
                                                           followed almost the opposite course in its efforts to
reacted to an anticipated recession. Taiwan’s
                                                           provide wider and cheaper healthcare coverage for
OTC market was static, hampered by economic
                                                           its citizens. The primary driver of this has been the
instability and reimbursement of Rx sales of
                                                           so-called 30 Baht policy, which has so far rolled
OTC-registered medicines.
                                                           out as a trial in several Thai provinces, whereby
                                                           all citizens are entitled to visit a doctor and get
Regulatory developments                                    any necessary prescription for a flat fee of 30 Baht
South Korea’s separation of prescribing and                (around 67¢). Since this is less than the cost of
dispensing (SPD) duties in August 2000 radically           many OTC medicines, it has seriously dented
realigned the market and has caused considerable           the OTC market in areas where the policy is
turmoil throughout the past 18 months as doctors           currently in operation.
were prevented from dispensing medicines to
outpatients in an effort to curb profiteering through      China’s entry to the WTO has led to a raft of new
over-prescribing. SPD has led to strikes and               measures – these include the requirement that
demonstrations by various stakeholders, including          manufacturers abide by international GMP
doctors, pharmacists and wholesalers. However,             guidelines by 2004 – and the Government is
the market now seems to be settling down and it is         relaxing restrictions on foreign firms operating in



102 April 2002                                                                                  Simplifyle 12
                                                                                  Regional Review




the country. Intellectual property rights will gain
                                                        Asia Pacific:
greater protection as China modernises its              OTC sales by category 2001 (MSP)
regulations, and import tariffs on pharmaceuticals
are set to be reduced. Also, the State Drug
                                                        VMS* 35%
Administration recently published guidance on Rx-
to-OTC switch, stating that only Rx drugs that had      Cough, cold & allergy 20%                 •           •
already completed marketing and manufacturing           Gastrointestinals 13%           •
approval, and were available OTC in other major         Analgesics 12%                        •
markets, would be considered for switch.
                                                        Dermatologicals 9%                            •       •
In Australia, there were few major changes,             Others 10%
                                                                                                          •
although several ingredients or pack sizes were
                                                       *Includes OTC-registered and quasi-drug tonic drinks
derestricted to allow wider OTC sale. A task force
                                                       Source: DB6, Nicholas Hall & Company’s global OTC
is in ongoing discussions with officials from New      database, 12 months to June
Zealand over trans-Tasman harmonisation of
pharmaceutical regulations. In India, a failure to
                                                      GSK’s Fenbid is the leading brand, ahead of
move ahead with TRIPS intellectual property
                                                      Bufferin, while in Indonesia two local brands
legislation has led firms such as GSK to announce
                                                      dominate, Paramax (Konimex) and Bodrex (Bode/
that they will no longer launch new products there.
                                                      Tempo). Unilab holds the leading portfolio in the
Analgesics                                            Philippines, spearheaded by Alaxan and Biogesic.

Across Asia, GSK’s Panadol is a leading presence
                                                      Topical analgesics are a popular choice in Asia,
in the systemic analgesics category, worth around
                                                      where such therapies have a long tradition of use.
$70mn in mid-2001. However, Panadol suffered a
                                                      Indeed, in countries such as India, Japan, Taiwan,
major setback in Australia in 2000 when product
                                                      South Korea and Malaysia, topical presentations
tampering and extortion led to the brand’s
                                                      actually substantially outsell systemic treatments.
temporary withdrawal and subsequent move to
                                                      Hisamitsu’s Salonpas is the leading topical brand
behind-the-counter (BTC) sale. As a result, the
                                                      in Asia, primarily from its base in Japan, but the
brand lost ground to ibuprofen-based Nurofen
                                                      brand is also the category leader in Taiwan and is
(Boots) and its main rival, Herron Paracetamol
                                                      available in Malaysia. Tiger Balm (Haw Par), which
(Herron), which has benefited from advertising
                                                      has rolled out in the US over the past couple of
highlighting the company’s Australian background
                                                      years, has its origins in traditional Chinese
and that the product is identical to Panadol. In
                                                      medicine (TCM) and enjoys a wide geographic
India, GSK fields its local acquisition, Crocin,
                                                      spread across Asia. However, sales growth has
rather than investing heavily to establish Panadol.
                                                      been held back in the past few years as newer
Meanwhile, Bufferin (Bristol-Myers Squibb) has
                                                      active ingredients, such as diclofenac and
generated growth and is now in a position to
                                                      ketoprofen, have switched in several countries.
challenge Panadol’s claim to be the region’s
                                                      Indeed, sales of Novartis’ Voltaren Emulgel
powerhouse brand – it achieved leading sales
                                                      – which remains Rx in the US – have tripled in the
of $54mn in Japan alone in 2001.
                                                      past five years as the brand has rolled out OTC
                                                      across Asia. Other notable regional players include
McNeil’s Tylenol has a mid-tier presence across
                                                      Rohto’s Mentholatum and Ketotop (Merck CHC).
the region and debuted in Japan in 2000. Thus far,
the brand has struggled to achieve strong sales in
a market where brand loyalty is particularly strong
                                                      Cough, cold & allergy
and combination therapies are popular. In South       While S-P is only just now seeking to switch
Korea, Sam Jin’s Geworin leads Tylenol. In China,     Claritin in the US (see Market Minutes, p107), the



 Simplifyle 12                                                                                    April 2002 103
   Asia Pacific




                                                              International) compete in the sore throat segment.
  Asia Pacific:
  Top five OTC brands 2000* (MSP)                             In many countries, these brands are sold in small,
                                                              low-priced SKUs that are affordable to most
  Rank Brand               Category            Marketer       low-income consumers.
    1     Bacchus-F        Tonic drinks        Dong-A
                                                              The US FDA’s ban on phenylpropanolamine (PPA)
    2     Panadol          Analgesics          GSK
                                                              led to a number of other regulatory agencies
    3     Contac           Cold & flu          GSK
                                                              worldwide banning the ingredient. This had a
    4     Vicks            Cough & cold        P&G
                                                              marked impact in China, where Contac (GSK)
    5     999              Analgesics          Nanfang
                                                              was among the brands forced to be withdrawn
 *Excluding sales made in Japan and tonic drinks where they   for reformulation, as well as in Thailand, the
 are registered as foods
                                                              Philippines and Indonesia. In Taiwan and South
 Source: DB6
                                                              Korea, PPA was not a common ingredient and so
                                                              the impact was limited, while Australia and Japan
non-sedating antihistamine has been available                 rode out the scandal because PPA was already
OTC for some years in several Asian Pacific                   restricted to very low doses in both countries.
markets. Known as Claratyne in Australia, the
brand has expanded sales rapidly since its                    Gastrointestinals
deregulation to self-select status from BTC sale in           Traditional remedies – such as TCM in China,
September 1999. The brand is also a big success               ayurveda in India, jamu in Indonesia and kanpo in
in China, where it ranks second behind Xian-                  Japan – are a major presence in the Asian OTC
Janssen/J&J’s Hismanal. However, Claritin and                 GIs market. The use of these products continues
all other non-sedating antihistamines, except                 to hold back the growth of clinically-proven
cetirizine products such as Zyrtec (marketed by               medicines, but there is increasing demand for
UCB Korea), were reverse switched to Rx in South              Western drugs. The exchange of medicinal
Korea following SPD. This has allowed Zyrtec to               knowledge goes both ways, however, as Western
strengthen its position as the top OTC brand there.           markets – such as the US – begin to experiment
                                                              with Asian remedies. For example, probiotic
The Vicks range (P&G) has a broad presence                    antidiarrhoeals like Boehringer Ingelheim’s
across Asia, but particularly so in India where it            Probiata are now gaining ground fast in the US,
ranks easily as the leading Western-style cough &             positioned to compete against McNeil’s Imodium
cold brand. Vicks and other Western brands in this            and loperamide generics. But probiotics have been
category face heavy competition from traditional              popular in Japan for years.
medicines, and in several places Vicks VapoRub
has been repositioned as a traditional style cure-all         H2 antagonists are widely available OTC in Asia,
to take advantage of this factor. In India, ayurvedic         but several such products were reclassified as Rx
traditional remedies are increasingly being                   in South Korea following SPD. Prior to that, proton
packaged to compete alongside allopathic Western              pump inhibitors, such as Losec (AstraZeneca)
brands, with Kopran’s Smyle range being a prime               – currently applying for OTC switch in the US,
example. The Vicks range has even penetrated the              where it is known as Prilosec – were also
Japanese market, occupying a second-tier position             available off-prescription. TCM liquid digestive aids
behind domestic franchises such as Pabron                     like Gas Whalmyungsu-Q (Dong Wha) and plain
(Taisho) and Lulu (Sankyo). Vicks lozenges and                antacids like Gelfos (Bo Ryung) have profited from
Halls (Pfizer Consumer Healthcare) vie for regional           the reverse switches.
leadership of the medicated confectionery
category, while brands such as Fisherman’s                    Meanwhile, H2s finally seem to be gaining success
Friend (Lofthouse) and Strepsils (Boots Healthcare            in Japan. When these products first launched in



104 April 2002                                                                                    Simplifyle 12
                                                                               Regional Review




1996, poor communication of their benefits
                                                         Japan:
hampered the segment, but H2 antagonists led by          Top five OTC brands 2000 (MSP)
Yamanouchi’s Gaster 10 (famotidine) generated
14% sales growth in 2001. Nevertheless, H2s form        Rank     Brand         Category          Marketer
only 8% of the Japanese OTC antacids market.              1      Lipovitan     Tonic drinks      Taisho
                                                          2      Alinamin      VMS               Takeda
Antidiarrhoeals are an emerging category in               3      Pabron        CCA               Taisho
many countries, where motility inhibitors such as         4      Yunker        VMS               Sato
                                                          5      Tiovita       VMS               Otsuka
Imodium (Janssen/J&J) and Lomotil (Pharmacia)
are widely available alongside carbon-based             Source: DB6

brands like Ultracarbon (Merck CHC). Several
governments in the region have also promoted the       itself as a growing force in the region. In Japan,
benefits of electrolyte oral rehydration therapies,    where the dietary supplements market remains
which has slowed sales of true antidiarrhoeal          dominated by domestic players, such as Kowa and
drugs. The laxatives market remains quite              Takeda, calcium supplements in particular face
undeveloped in most Asian countries. Changing          heavy pressure from fortified foods and drink.
dietary patterns, influenced by the Westernisation
of many cultures, is expected to spur growth of        In Australia, where the market is highly developed
the GIs market.                                        and very similar to those of Europe or North
                                                       America, most VMS categories have taken a
VMS                                                    substantial downturn in the past 18 months, partly
                                                       reflecting the imposition of general sales tax (GST)
OTC-registered and quasi-drug tonic drinks
                                                       on dietary supplements, as well as the increasing
form a hugely lucrative market across Asia, with
                                                       maturity of the sector and adverse media reports
powerhouse brands such as Lipovitan (Taisho),
                                                       about several herbs, such as St John’s wort.
Yunker (Sato) and Bacchus-F (Dong-A) pulling
in hundreds of millions of dollars each year.
                                                       Dermatologicals
Generally positioned for daily consumption to
combat fatigue and provide essential nutrition,        Many categories in this therapeutic sector remain
tonic drinks form a $2bn market in Japan alone,        ethically-oriented in a number of key Asian
where the category is segmented into 50ml mini-        countries – including China, India, Taiwan and
drinks and 100ml bottled nutritive drinks (BNDs).      Thailand. Such categories include haemorrhoid
Since the introduction of a mass market quasi-drug     preparations, hair loss remedies, cold sore
classification in Japan in 1999, tonics have           treatments and topical antibiotics. Other categories
benefited hugely in terms of sales growth. In South    have restricted distribution or advertising. Even
Korea, it is widely predicted that tonic drinks will   those brands that are available OTC often realise
soon be deregulated to permit mass market sales.       a substantial proportion of turnover through
                                                       hospitals or doctors’ prescriptions. Japan and
Competing alongside a huge market for                  Australia are fairly liberal markets, with Taisho’s
unpackaged traditional medicines, a number of          RiUP minoxidil hair loss treatment massively
leading Western dietary supplement brands have         expanding its category when it debuted OTC in
established a strong presence in Asia – such as        1999. However, perhaps because of the lower
Blackmores of Australia, Centrum (Wyeth),              efficacy of the 1% formulation – compared with
Pharmaton (BI) and One-A-Day (Bayer). These            Pharmacia’s Rogaine 2% and 5% versions fielded
compete against a raft of local generics. Calcium      in the US – the category has been in decline since
supplements are particularly popular in China and      peaking in mid-2000 and has now dropped below
Korea, where diets are commonly low in this            the $100mn mark. In Australia, Regaine switched
crucial mineral. Wyeth’s Caltrate has established      in 1998 – although it leads a category worth less



 Simplifyle 12                                                                                April 2002 105
   Asia Pacific




than $2mn – while aciclovir topical antiviral cold
                                                          Asia Pacific:
sore treatments are also sold OTC.                        Top five OTC companies 2000* (MSP)

Regionally, Clearasil is the number one acne
                                                          Rank       Company                                 % share
treatment, although the brand’s formulation and
positioning as a drug or cosmetic varies from               1        GlaxoSmithKline (UK)                      5.8
market to market. Its acquisition by Boots has              2        Johnson & Johnson (US)                    2.9
helped to improve sales, and it is expected that            3        Pfizer Inc (US)                           2.4
                                                            4        Dong-A (S Korea)                          2.2
Clearasil will also be rolled out in new markets
                                                            5        Wyeth (US)                                1.4
where it had not been available previously. Reckitt
                                                          Total sales = $7.6bn
Benckiser’s Dettol is a prominent antiseptic brand
                                                          *Total includes E & SE Asia, Australasia, Indian
found throughout the region, and in many places           sub-continent but excludes Japan
it faces competition from local multi-purpose oils.       Source: DB6

With the hot and humid climate prevalent across         retail chain, Seiyu, over the next five years giving
much of Asia, there is a large market for antifungal    it access to Japan after expansion elsewhere in
and anti-itch treatments. Bayer’s Canesten and          Asia. This may provide multinationals with a route
Janssen/J&J’s Daktarin are regional leaders and,        via which to introduce OTC brands into Japan.
although they remain Rx-bound in some countries,
also achieve sales UTC. In Japan, Taisho’s              Several Japanese firms are major players in the
Dermarin and Takeda’s Scorba are the leading            regional and global OTC rankings, but achieve the
brands in the $161mn OTC antifungals category.          vast bulk of turnover in their domestic market. Of
Nizoral (Janssen/J&J) is a leading scalp treatment,     these, Taisho ranks first, but owes its position to
and also offers athlete’s foot presentations in some    huge sales of Lipovitan tonic drink. Takeda, ranked
markets. A global leader, P&G’s Head & Shoulders        number two in Japan, is currently acting as local
also ranks as a top dandruff shampoo in Asia.           marketer for McNeil/J&J’s Tylenol. SSP was taken
                                                        over by BI in a hostile bid that secured a majority
Corporate developments                                  shareholding unrivalled by other multinationals in
GlaxoSmithKline is the biggest OTC marketer in          Japan; but Roche has since acquired a dominant
Asia Pacific, excluding Japan. When they merged         stake in Chugai. A proposed mega-merger
at the close of 2000, both Glaxo Wellcome and           between Taisho and Tanabe fell through recently
SmithKline Beecham contributed major Asian              after failing to agree on a strategic direction. Still,
brands to the combined portfolio. Pfizer Inc also       the discussions showed that perhaps Japanese
holds a sizeable presence, thanks primarily to a        corporations are finally preparing to open up and
strong cough & cold portfolio led by the Halls          use their potential internationally.
franchise. J&J fields a number of strong brands,
                                                        United Laboratories (or Unilab) of the Philippines
including Nizoral and Daktarin, while Tylenol is
                                                        is a substantial player regionally, and is one of
also expanding. With the acquisition of Clearasil
                                                        the few Asian firms with a solid base outside its
and the expansion of Nurofen and Strepsils,
                                                        domestic market. In Australia, FH Faulding was
Boots Healthcare International is fast rising up the
                                                        acquired by its compatriot, Mayne, for $1.2bn in
rankings. However, Boots Retail International has
                                                        2001, while Sigma sold off its New Zealand
scaled back plans for pharmacy expansion into
                                                        operations to Zuellig, the leading distributor of
Asia and has closed its Japanese stores. The firm
                                                        drugs across Asia Pacific.
will instead target a series of store implants within
existing drugstores in the region. Meanwhile, the
US retail giant, Wal-Mart, has announced an
agreement to purchase up to 66.7% of Japanese



106 April 2002                                                                                      Simplifyle 12
                                                                           Market Minutes
                                                                              Market Minutes




S-P finally files application
to switch Claritin to OTC
Schering-Plough has filed supplemental new drug          to the company’s prospects that it regained the
applications with the FDA to switch all indications      initiative in this saga. The latest announcement
and market all formulations of Claritin (loratadine)     has come at almost the very last moment
non-sedating antihistamine to OTC status;                – the brand loses its patent protection in mid-
loratadine is indicated for the treatment of perennial   December 2002 – and S-P will want to squeeze
and seasonal allergic rhinitis. The FDA’s Non-           out the brand’s remaining Rx sales prior to generic
prescription Drugs Advisory Committee will also          competition. The company recently moved
consider whether loratadine may carry an                 to block bids by Wyeth and McNeil to market
additional indication for chronic idiopathic urticaria   direct-to-OTC generic forms of loratadine
in an OTC setting. The applications have been            (Market Minutes, March 2002, pp79-80).
assigned a standard review by the FDA, with              The rapid market acceptance of the company’s
a targeted action date of 28 November 2002.              new Rx third-generation antihistamine, Clarinex
                                                         (desloratadine), has also contributed to the
In May 2001, the FDA advisory committees                 decision to submit the switch application
recommended that the FDA force Claritin and two          for Claritin. The move should allow the company
other prescription non-sedating antihistamines,          to establish brand leadership in both the US
Allegra (Aventis) and Zyrtec (Pfizer Inc) to switch      Rx and OTC allergy remedies categories.
to OTC status (see Market Minutes, June 2001,
pp171-178). The switch of Claritin is sure to shake      The switch of Claritin could force Pfizer and
up the $355mn US OTC allergy remedies category           Aventis to follow suit with Zyrtec and Allegra.
(see Market Report, October 2001, pp279-280).            Both companies have reported a downturn
                                                         in share value since the submission of the switch
Claritin accounts for one-third of S-P’s total           application was announced by S-P; OTC Claritin
corporate turnover and it was therefore crucial          could cut sharply into sales of Rx competitors.


Prilosec switch this year?                               cleared with regulators in the current negotiations.
                                                         It is believed that Prilosec may switch initially only
Procter & Gamble’s CFO, Clayton Daley, has               with heartburn indications. When Prilosec finally
hinted that the FDA may approve the Rx-to-OTC            makes the switch to OTC in the US, it will join
switch of AstraZeneca’s proton pump inhibitor (PPI),     a market crowded with high-efficacy antacids and
Prilosec (omeprazole), before the end of 2002.           H2 antagonists. Prilosec’s main advantage is that
If approved, P&G will market an OTC version of           it offers 24-hour coverage. However, this will bring
Prilosec under an agreement with AstraZeneca.            it into direct competition with J&J•Merck’s fast-
Both companies have eagerly awaited Prilosec’s           growing Pepcid Complete, a dual antacid/H2 line
switch since the first application for OTC status        extension to its leading H2 brand. The $1.1bn OTC
was rejected by the FDA in October 2000 owing to         antacids/antigas category was featured in last
concerns over the use of the drug without a doctor’s     month’s Market Report (pp61-64).
supervision (see Market Minutes, Nov/Dec 2000,
p337). Daley identified labelling and dosage issues,     Meanwhile, AstraZeneca has found it increasingly
not safety concerns, as the last hurdle to be            difficult to convince US and UK authorities that, as




 Simplifyle 15                                                                                April 2002 107
 Market Minutes




an Rx drug, Prilosec – which is known globally as     of poor sales. Despite the continued success
Losec – should retain patent protection any longer.   of the TheraPatch range, the company recently
AstraZeneca has been accused of using a number        reported a 40% fall in net sales in 2001. LecTec’s
of delaying tactics to halt the entry of generic      TheraPatch was featured in our Patches & Pads
versions of the drug, which have been approved        Brand Strategies article (Nov/Dec 2001, pp323-326).
by the FDA (see Market Minutes, January 2002,
p27); the company is currently pursuing a patent      Altus Food dissolved
infringement trial against Schwarz Pharma, Andrx,
                                                      PepsiCo’s Quaker Foods division and Novartis
Genpharm and Reddy-Cheminor. The basic
                                                      have dissolved Altus Food, their functional foods
US drug substance patent on Prilosec expired
                                                      business joint-venture formed in February 2000.
in October 2001, but the trial concerns an
                                                      No decision has yet been made on the fate
infringement of two omeprazole patents that
                                                      of the two brand ranges that had been test
claim protection until 2007. The trial is expected
                                                      marketed by the company. These comprise the
to conclude at the end of March.
                                                      Take Heart brand of cholesterol-reducing products,
Roche plans divestiture                               containing the patented ingredient Reducol,
                                                      and Women’s Individual Nutrition, a line of cereals,
Roche has announced plans to divest its bulk          snack bars and smoothies fortified with calcium
vitamins & fine chemicals division in an attempt to   and other nutrients. Late last year, Forbes Medi-
refocus as a fast-growing healthcare concern. The     Tech reacquired licensing and distribution rights
company reported a 57% drop in net income             to products fortified with Reducol – developed by
in 2001, after a poor year resulting from product     Forbes – and has indicated it may actively pursue
failures, restructuring charges and a record          buyers for the Altus brands, as well as exploring
fine for its involvement in a price-fixing cartel     new contracts for Reducol (see Market Minutes,
(OTC.newsflash, 23 November 2001). Although           January 2002, p52). Novartis intends to divest its
the company’s bulk vitamins business retained its     entire functional foods division in order to focus
global leadership, divisional sales grew by only 1%   solely on its pharmaceuticals business (see last
in local currency terms in 2001. This, coupled with   month’s Market Minutes, p81).
the recent problems and general downturn in the
VMS market, has contributed to the decision to        Bayer plans divestiture
divest the operation. The divestiture could be
achieved by a spin-off to shareholders.               Bayer has announced plans to divest its household
                                                      insecticides unit, which includes Autan repellent
The proposed sale also raises questions about         and Baygon insecticide in its portfolio. Production
the future of Roche’s branded vitamins, including     facilities and sales offices will be sold alongside
Supradyn, Redoxon, Berocca and Sanatogen.             the trademark rights, although the active
Vitamins, minerals and dietary supplements            ingredients business will remain. Bayer is
accounted for close to 60% of Roche’s OTC turnover    streamlining its business in order to focus
in 2000, according to DB6 2001, Nicholas Hall &       on human and animal healthcare.
Company’s global OTC database. Roche is looking
to its new alliance with Chugai of Japan, alongside   Chattem buys Selsun Blue
the continued development of its core pharma and
diagnostic divisions, to drive future growth.         Chattem has signed a definitive agreement with
                                                      Abbott Laboratories to purchase Selsun Blue,
LecTec takeover?                                      a leading medicated dandruff shampoo, for $75mn
                                                      plus inventories. Selsun Blue is available in the
LecTec Corporation has declared itself to be          US and in over 50 other countries. The acquisition
a possible takeover candidate following a year        includes worldwide rights (except India) to



108 April 2002                                                                Simplifyle Simplifyle 15
                                                                                         ?
                                                                                      Market Minutes




manufacture, sell and market the Rx and OTC
                                                          Smoking cessation aids
formulations of the medicated shampoo, plus related
intellectual property and manufacturing equipment.         Addiction Therapies Inc (ATI) has developed a
Selsun Blue has performed consistently well in the         unique nicotine replacement therapy. The Straw
                                                           is a single-use plastic straw containing beads of
$227mn US medicated shampoos category and
                                                           nicotine and can be used with any beverage. The
held a 10% share of turnover in 2000. Selsun               oral delivery system has presented positive results
Blue’s performance in 2001 will be examined                from Phase I & II clinical trials. The Straw delivers
in next month’s Skin Care Market Report.                   the entire dose of nicotine in the first sip and may be
                                                           used every time the patient craves a cigarette, up to
                                                           10 to 12 times a day over a 12-week course.
Herbals AERs news
                                                           Meanwhile, a natural smoking cessation aid has
                                                           been introduced by Nicodrops, marketed under the
In a letter to the FDA, Michael Maves, the former
                                                           company name. The mint-flavoured lozenges
Consumer Healthcare Products Association                   contain a mixture of several herbs purported to
(CHPA) president and current American Medical              relieve withdrawal symptoms, including St John’s
Association (AMA) executive VP & CEO, has                  wort, valerian and ginseng. Nicodrops has been
                                                           launched in the US and in Canada, where the
repeated the AMA’s request to recall all products          formula also contains lobelia. The lozenges retail in
containing the maligned herb ephedra from the              the US for around $19.99 for a 60-count pack.
market. Ephedra has been the subject of a large
number of adverse event reports (AERs)                   (Omni Nutraceuticals), have both previously
(see Market Minutes, October 2001, pp298-299).           been subject to FDA warning letters concerning
Previously, the CHPA, under the leadership of            the addition of a dietary supplement to a legally
Maves, had attacked the FDA’s perceived reliance         marketed drug. BF Ascher disagrees with the ruling
on the frequency of AERs to determine the path           but has discontinued sales and production of
of regulatory restrictions placed upon certain dietary   Melagesic PM in accordance with the FDA directive.
supplements (Market Minutes, February 2002, p53).        However, the company has called for the FDA to
                                                         work alongside the industry to develop guidelines
Meanwhile, a report submitted to the FDA in              for dietary supplement/drug combination therapies.
February 2002 by Donald Waller of the University
of Illinois in Chicago has suggested that the use        Maalox goes soft
of kava kava alone may not cause hepatotoxicity.
Waller opines that when used in conjunction with         New Maalox Soft Chews are being marketed both
other drugs, dietary supplements or alcohol, kava        as an antacid and as a daily calcium supplement.
kava may cause damage to the liver. Waller has           A supplement facts panel will be included on
continued to participate in an FDA investigation         product packaging, alongside an indication for
to examine AERs involving consumption of the             the relief of occasional heartburn. Users are
herb, including cases reported in Europe.                recommended to take one softchew, three times
                                                         a day, as a calcium supplement. Maalox Soft
Melagesic PM withdrawal                                  Chews are available in 30-count bottles in cherry
                                                         and chocolate flavours, retailing at around $5.99.
The FDA has ordered BF Ascher to withdraw                The launch is the latest in a series of line extensions
Melagesic PM, its dietary supplement/drug                for the Maalox franchise, which discontinued
combination. Melagesic PM contains the systemic          its traditional tablet presentation in 1999.
analgesic, acetaminophen, and melatonin, a natural
ingredient that promotes sleep. The FDA ruled that       These new dual-indication antacid chews are
this combination has effectively created a new           placed to compete directly with Tums (GSK),
drug and is therefore subject to FDA approval.           the leading OTC antacid in North America.
Melagesic PM, alongside Inholtra Joint Pain              Tums’ previously unique dual positioning as an




 Simplifyle 15                                                                                   April 2002 109
 Market Minutes




                                                          imitation zinc lozenges. The company remains
  Canadian launches
                                                          undeterred, however, and has continued to support
  Diagnostics marketer, TheraSense, has launched          the brand with high profile media campaigns (Cough
  its FreeStyle blood glucose monitoring system
                                                          Remedies Market Report, September 2001, p248).
  in Canada. The brand enters the $105mn Canadian
  blood glucose test kits market, which was last          The new launch will be accompanied by an
  reviewed in our Home Diagnostic Tests Market            intensive six-week radio ad campaign.
  Report (June 2001, pp162-163). The company
  has also signed an agreement to expand into
  France, Italy and Belgium. This follows the recent
                                                          New Diachrome brand
  launch of FreeStyle in Japan through an agreement
  with Nipro Corporation, a leading Japanese medical      Nutrition 21, a developer of chromium-based
  devices company.                                        nutritional ingredients, has announced that its
                                                          patented Diachrome formula has been featured
  Meanwhile, Alva-Amco has introduced a home
  diagnostic test kit, Thinz MetaboStix, which            in a new line of branded supplements from NBTY.
  claims to be able to determine if diet and exercise     Diachrome, which combines Chromax chromium
  programmes are working. The urine test strips           picolinate with the vitamin biotin, has been shown
  detect the presence of acetoacetic acid, a ketone
  compound, which is produced only when the body          to be beneficial to diabetics in the control of blood
  is breaking down large quantities of fat. The company   sugar levels. The range is available through
  claims that the test will provide evidence that         NBTY’s Vitamin World retail stores and its
  the weight loss plan is working even when the
                                                          Puritan’s Pride direct mail catalogue.
  weighing scales do not. Thinz MetaboStix are
  available nationwide in boxes of 25 test strips
  and retail for around $15.99.                           LillyAnswers benefit card

                                                          Eli Lilly has become the latest pharmaceutical
antacid and calcium supplement had helped it
                                                          company to introduce a patient assistance scheme
to retain the number one spot in the $1.1bn US
                                                          for low-income individuals enrolled in Medicare.
antacids/antigas category. Maalox Soft Chews will
                                                          The LillyAnswers card allows customers, who do
increase competition and should bolster sales of
                                                          not receive any financial support for prescription
the Novartis brand.
                                                          drugs, to pay a flat rate of just $12 for a 30-day
New Bumps ’n Bruises                                      supply of any Lilly product. Eli Lilly follows Pfizer,
                                                          GSK and Novartis in the introduction of similar
Hylands Inc, has line extended its range                  schemes (see Market Minutes, January 2002, p26
of children’s analgesics with Bumps ’n Bruises            and Regulations, Nov/Dec 2001, p331).
Ointment with Arnica. The topical analgesic
is indicated to relieve bruising and inflammation           Key appointments
associated with minor injuries sustained by young
children. The new presentation joins the established      Dr Attila Molnar has been appointed president
tablet formulation and will retail at around $6.99.       of the Bayer Corporation and senior Bayer
                                                          executive for the US, suceeding Helge Wehmeier.
Cold-Eeze extension
                                                          Ulf Wiinberg has been appointed to the position of
Quigley has announced plans for a honey lemon             president of Wyeth Consumer Healthcare division.
flavour line extension to its Cold-Eeze brand
of zinc-based homoeopathic lozenges. The new              Former FDA director, Dr Lester M Crawford Jnr,
presentation will be launched in the autumn of 2002,      has been appointed to serve as the agency’s deputy
in time for the next cold season. Cold-Eeze has           commissioner. Crawford replaces Bernard A
been in decline since 1999 after adverse publicity        Schwetz, and will act as the senior official, pending
was generated by the entry of poor quality,               the instalment of a permanent full commissioner.




110 April 2002                                                                     Simplifyle Simplifyle 15
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Description: LamisilAT slowdown reflects skin care problems