P&G's Hold on Prilosec OTC Extended to 2008

Court Decision Postpones Private-Label Distribution of $800 Million Antacid Drug

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CINCINNATI (AdAge.com) -- Procter & Gamble Co. will likely get until mid- to late 2008 to exclusively market its blockbuster Prilosec OTC antacid -- two years beyond the period initially set by the Food and Drug Administration -- following a court-ordered stay preventing private-label manufacturer Perrigo from rolling out store brands.
Spending likely to stay steady.
Spending likely to stay steady.

The reprieve could also mean media dollars will continue to flow for Prilosec OTC, one of the bigger spenders in the category, supported with more than $100 million in last year. Publicis Groupe's Publicis Worldwide, New York, is the creative agency, while Starcom MediaVest Group, New York, handles media.

Three years of exclusivity
Prilosec OTC has U.S. retail sales of more than $800 million in all outlets, according to an executive close to P&G, quickly grabbing leadership in U.S. over-the-counter antacids following its 2003 launch despite rationing caused by P&G's inability to get enough supply from manufacturer AstraZeneca.

Because of the research P&G had to do to win approval for the OTC switch, the FDA gave it 36 months of marketing exclusivity for the brand, which expired June 20.

But AstraZeneca litigation to defend patents on the drug could give P&G much longer to fend off private-label competition. Though prescription Prilosec has been around since 1989, its first patents don't expire until April. A third patent AstraZeneca also is trying to enforce -- filed well after Prilosec hit the market -- could last until 2018.

AstraZeneca filed a patent-infringement suit in late May in U.S. District Court in Delaware and Eastern Virginia against Perrigo's partner, Dexcel Pharma Technologies, an Israeli company that has developed a generic version of Prilosec OTC.

'At risk'
The court in June issued a 30-month stay preventing Dexcel or Perrigo from marketing a private-label Prilosec OTC. The companies could market the drug "at risk" of having to pay for patent infringement after that, said an AstraZeneca spokesman.

A representative of Perrigo said at the recent National Association of Chain Drug Stores trade show that the company expects to begin shipping a private-label version of the drug no sooner than 2008.

Unless the court finds in favor of Dexcel prior to 2008, that means P&G will continue to have exclusive rights to Prilosec OTC, the only major OTC antacid brand not to face private-label competition.

'Partner of choice'
Prilosec OTC has been one of the biggest OTC switches ever and a cornerstone of P&G's efforts to become "partner of choice" with drug marketers in such switches.

Though P&G last year entered a marketing deal to handle prescription and possible OTC marketing of incontinence drug Enablex, other opportunities with bigger brands haven't come along yet.
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