J&J/MERCK'S PEPCID RACES TO OTC MARKET

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Johnson & Johnson/Merck's new over-the-counter antacid, Pepcid AC, has the competition feeling queasy.

And with good reason. The estimated $1 billion stomach remedies market, already dominated by J&J/Merck's Mylanta, grew just 4.1% for the 52 weeks ended Feb. 26, according to Information Resources Inc.

Pepcid represents a new class of antacid that some industry watchers believe could double the category's sales. But the spoils are likely to go to J&J/Merck Consumer Pharmaceuticals Co., a joint venture.

Pepcid is the first antacid of its kind to win OTC approval from the Food & Drug Administration, leaving rival SmithKline Beecham's Tagamet at the gate.

Both products stop stomach acid production instead of merely neutralizing it like current OTC products. The antacids, classified as H2 blockers, can relieve heartburn, and Pepcid may be the only one to claim it can also prevent it.

An FDA spokeswoman said Tagamet hasn't submitted a request to claim heartburn prevention. A company spokesman said research showed only 3% of consumers took medication to prevent heartburn because they didn't know when they would get it, therefore the company didn't seek prevention claim approval.

Both Pepcid and Tagamet are now prescription drugs, and though Tagamet has been recommended for OTC status by FDA advisory panels, it hasn't yet received an official OK.

Rivals are waiting in line, including Glaxo Wellcome's Zantac and American Home Products Corp./Eli Lilly & Co.'s Axid, but their approval isn't imminent.

Because time is of the essence to build the brand, J&J/Merck is wasting none getting Pepcid to store shelves next month.

"It's fairly remarkable, really, if you compare the timing to [Procter & Gamble Co.'s] Aleve launch, which took six months-this is six weeks," said Paul Kelly, president of Silvermine Consulting, Westport, Conn.

J&J is expected to put $100 million in marketing support behind Pepcid; Compton Partners, New York, handles. A teaser campaign began May 21.

With U.S. prescription sales of $431 million in 1994, according to Dun & Bradstreet Corp.'s IMS America, Pepcid is the second-ranked H2 blocker in prescription sales, trailing Zantac.

But Tagamet, introduced in 1976 and the oldest H2 blocker, claims to be the most prescribed with a total of 237.4 million prescriptions worldwide during its product lifetime through December 1994. The prescription numbers are considered important because they're expected to represent new consumers on the OTC side and Tagamet is considered by many as a better known name.

"It's a bigger brand Rx and very formidable," Mr. Kelly said.

Tagamet's prescriptions began falling off last year, however, dropping from 2.7 million in the first quarter to 757,000 in the fourth quarter after losing its patent.

SmithKline Beecham wouldn't comment on marketing plans or name an agency for Tagamet, but it's expected to match Pepcid's spending.

Pepcid will compete with sibling Mylanta, which tops the stomach remedies list and was up 6.1% to $182.4 million in sales, for a 16.4% share, according to IRI. It will also battle SmithKline Beecham's second-place Tums, up 7.2% to $161.2 million for 14.5% share.

More vulnerable, consultants say, are Ciba-Geigy Corp.'s Maalox, down 5.3% to $102 million and now in sixth place, and Warner-Lambert Co.'s seventh-place Rolaids, down 6.8% to $76.3 million as it battles supply problems as well.

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