OTC Nexium 24HR Rides Blockbuster History Into Full Field Of Competitors
This article was originally published in The Tan Sheet
Executive Summary
Pfizer launches Nexium 24HR, the OTC progeny of AstraZeneca PLC’s prescription drug marketed in the U.S. as “the purple pill,” into the nonprescription PPI market, where other well-known brands and private label versions of some products already compete for share.
Pfizer Inc.’s May 27 launch of 20 mg esomeprazole Nexium 24HR adds another brand to the crowded OTC proton-pump inhibitor space, and pits the switch product against the blockbuster Rx Nexium still available in multiple doses.
Nexium 24HR, the OTC progeny of AstraZeneca PLC’s prescription drug marketed in the U.S. as “the purple pill,” enters the nonprescription PPI market with other well-known brands and private label versions of most of those products competing for share.
Pfizer makes Nexium 24HR available in this 14-count container, and in 28- and 42-count packages.
Marketing experts note that with Rx Nexium’s history as a top-selling drug, a large number of consumers will be interested in the OTC version, which is a delayed-release capsule, and will either follow the product from pharmacies to store shelves, or change from buying other branded or generic OTCs.
Despite the competition, Pharma marketing consultant Steven Francesco notes the OTC PPI pie is not static and should expand with another branded entrant. The market should become big enough to allow space for Nexium 24HR to gain share without substantial losses by other brands or private label products.
Francesco, president of Francesco International Inc. in Manhattan, pointed out that the market for some other switch OTC categories grew when additional brands entered the fray. “Each launch … ended up expanding the market,” he said.
Like other switch categories, “the differences are not great” between different PPI brands, he added.
Since earlier branded entrants and generics in some categories have not lost substantial market share to the new brand on the block, “the volume had to come from the prescription side,” Francesco said.
Some of those consumers likely were pushed by their health insurance providers.
Francesco noted when different versions of a drug are available OTC or Rx, insurance plans will want to cut their costs by steering clients to the OTC. If consumers do not make the change on their own, payers could give them a nudge by raising the copay they charge for the Rx product above the switched product’s price.
“This will have a reaction from the insurance companies,” he said.
Albert Bourla, Pfizer Group President-Vaccines, Oncology and Consumer Healthcare, said during the firm’s May 5 earnings call that Nexium 24HR would launch May 27. Pfizer in 2012 acquired global OTC rights for Nexium from AstraZeneca for an upfront payment of $250 million and milestone and royalty payments based on product launches and sales (Also see "Nexium OTC Switch Would Face Crowded Field, Potential Questions" - Pink Sheet, 20 Aug, 2012.).
Rx Nexium remains available in the U.S. in 2.5-, 5-, 10-, 20- and 40-mg doses. Generic equivalents in some doses are available.
The consumer PPI market already includes the OTC version of AstraZeneca’s Prilosec, marketed by Procter & Gamble Co.; Prevacid 24 HR (15 mg lansoprazole) by Novartis AG; Zegerid OTC (20 mg omeprazole with sodium bicarbonate) by a Merck & Co. Inc. business; and private-label versions of Prilosec OTC (20 mg omeprazole) and Prevacid 24HR.
Consumers Do The Math On Value
Nexium 24HR’s launch price, according to online sales sites linked on the product’s website, for a 42-count counter starts at $23.88 due to temporary discounts, and goes up to $27.99. A 28-count package is priced at $20.99 and a 14-count at $11.99.
Those prices, with the exception of the discounted 42-count packages, are similar to other branded PPI prices, but run higher than private label or store brand prices for the other PPIs, which generally are $9.99 for the small package, $17.99 mid-size and $24.99 large.
Those differences, says Robert Passikoff, founder and president of consultancy Brand Keys Inc., could be enough to make some consumers, even those who have used prescription Nexium, stick with generics of other OTC brands.
“Consumers get smarter and smarter every year,” Passikoff said from his office in New York.
“The issue regarding the store brand vs. the branded OTC is purely a sense of value for the dollar,” he added.
Consumers generally are more informed today due to living in a digital world, particularly from being engaged with social media. Consumers more than 25 years ago for the most part did not have easy access to any information about a product other than a firm’s advertising, but today the amount of information out of an advertiser’s control that consumers can access exceeds what the firm disseminates.
“It’s a more difficult problem for [Rx] drug manufacturers going to OTC to convince consumers that this is in fact going to be better than” other brands or private labels in the same category, Passikoff said.
One thing Nexium 24HR could have going for it, he added, is that heartburn, like arthritis, is a condition that bothers or discomfits consumers more than many other maladies treatable with nonprescription drugs.
“People are always looking for the new best thing” in OTC heartburn treatment, Passikoff said.