OTC a high-stakes risk

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Novartis consumer Health was in an enviable position for a pharmaceutical giant.

The company's Lamisil oral prescription product for nail fungus was a leader in its segment. Novartis executives knew that spray and ointment versions of the product would be powerful remedies for such problems as athlete's foot, jock itch and ringworm, and likely would sell well in the over-the-counter market.

"We had the best way to treat athlete's foot, but it was in the wrong area. Most people are buying [athlete's foot medications] on their own. We said, `Why don't we put it where they can get it in the over-the-counter market?' " says Barry Cohen, VP-marketing for the cough, cold and dermatological brands division at Novartis.

But there was a hitch.

While the Rx Lamisil had strong awareness among physicians, the new OTC version would have limited consumer recognition in a segment where 85% of the purchases are self-diagnosed, Mr. Cohen admits.

FASTER RELIEF

Novartis proceeded to use the Lamisil name for the OTC product, appending the suffix "AT"-a Food & Drug Administration requirement to help differentiate OTC from prescription versions-and relied on a new product benefit of faster relief to promote Lamisil AT to consumers. Novartis introduced a cream in 1999 and a year later added a spray form. Grey Global Group, New York, handled the introduction, with National Basketball Association star Grant Hill as the celebrity spokesman. The products quickly found success in the OTC marketplace, Mr. Cohen says.

Moving products from prescription-dispensed and direct-to-consumer advertising to the OTC market presents a variety of challenges and opportunities to healthcare marketers, says Susan Lavine Coleman, president of NCI Consulting, which helps pharmaceutical companies bring prescription products to OTC.

Executives have to weigh the competition from rival name brands, the loss of sales-usually upward of 80%-when a product loses its patent and generics arrive on the market, profitability of new-product launches and cannibalization by a less profitable OTC product from a higher-margin prescription product, she says.

With footcare-as with other consumer-driven categories such as stomach ailment relief, hair loss prevention, smoking cessation and the upcoming non-drowsy antihistamine market with products such as Schering-Plough Corp.'s Claritin, Aventis' Allegra and Pfizer's Zyrtec-doctors often are not part of the purchasing decision. That means consumer marketing is central to any product's success.

"It is not a foregone conclusion that the OTC brand in the end is going to be a significant money maker," Ms. Lavine Coleman says. "The high marketing expense in certain categories can be daunting."

She says a marketer can strengthen the OTC launch by being the first to market with a unique benefit and strong leveraging of the prescription product.

ANTACID RACE

For example, Merck & Co.'s Pepcid scooped its rivals by being first to market, even though rival product Tagamet from GlaxoSmithKline was stronger in the prescription market, Ms. Lavine Coleman says. As part of its effort, Merck submitted to the FDA a study that claimed Pepcid could prevent heartburn, she says.

Transferring a prescription product's existing strengths, including name and consumer and physician awareness, are essential to any successful DTC to OTC switch, says Mark Ravera, an analyst with Mehta Partners. Then, marketing executives must convince management to invest heavily in consumer marketing to boost the brand and drive sales, he says. The result can be continued strong sales for both the prescription and OTC products.

The prescription product is "a high-margin item so it's a good way to keep a brand going," he says.

Even if a product switches to a consumer driven category, such as analgesics, cough and cold remedies or heartburn medication, keep the physician community in the loop, says Michael Guarini, managing director of WPP Group's Ogilvy & Mather Healthcare, New York. Physician sales and trade marketing efforts should differentiate the two products to doctors, who will then either recommend or prescribe the right product, he says.

"Don't burn your bridges," Mr. Guarini says. "The doctor is a very big stakeholder in the success of their Rx product. Some products abandon the doctor, which is a mistake. If you abandon the doctor, they won't endorse or recommend you."

Out of the gate, Lamisil AT was pitched on two benefits that neither its Rx cousin nor OTC rivals could tout, Mr. Cohen says. Relief occurs within a week, compared with up to a month for rival products, the ads stated. Novartis targeted its audience and understood that consumers were likely to pick a product off the store shelf without a physician recommendation.

Ads ran in Men's Health, Runner's World and Sports Illustrated. The company also formed a marketing partnership with Bally Total Fitness health clubs and the National Basketball Association.

"It's really just a matter of getting the word out to your consumer where they are," Mr. Cohen says.

SIMPLE MESSAGE

That insight was gleaned from Grey's experience with the OTC introduction of Pharmacia & Upjohn's Rogaine hair restorer, says Les Strauss, senior VP-account management at the agency. Product marketers knew the audience, and despite the fact that Rogaine had been marketed DTC by the name of its active ingredient, minoxidil, it still enjoyed high consumer awareness, he says. The message was kept simple and targeted using the right media.

"Even though it's drug advertising, you keep the message simple and straightforward," he says.

What's interesting about the Lamisil example is that the product wasn't scheduled to come off patent until 2006, Mr. Cohen says.

Most companies wait until their products lose patent protection-thus opening generic and rival competition-before introducing OTC products. Today, both Lamisil products remain "top priorities" for Novartis, with neither cannibalizing off the other, Mr. Cohen claims.

"What it's giving us is a global Rx-OTC franchise," he says. "We have two extremely healthy businesses here."

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