The analgesics explosion.
In the beginning, early Greek, Romand and Egyptian civilizations chewed bark to alleviate pain and reduce fever. During the 15th century, scientists discovered the active ingredient in bark--salicin--and in 1853 researchers concocted the synthetic compound, acetysalicylic acid, or aspirin.
Initially a powder, aspirin was introduced to the United States in 1900. At that time, no safety or effectiveness tests were required; manufacturers simply made it available to pharmacists and informed doctors of its utility. A workable aspirin tablet was formed in 1915, and has been available over-the-counter ever since.
The next major development in the analgesic market was the over-the-counter approval of acetaminophen in 1955 as a children's elixir. It wasn't until 1960 that acetaminophen was approved for general use at an adult strength--at that time 300 milligrams. From 1960 until the mid-70's acetaminophen was marketed primarily to physicians as an aspirin alternative. Around 1975 manufacturers aimed their marketing sights directly at consumers. Acetaminophen now accounts for more than a third of all OTC analgesic sales, with aspirin making up most of the difference.
The approval of ibuprofen for OTC sales on May 18, 1984, promises to permanently alter patterns of OTC analgesic use. Sold as a prescription drug since 1974, ibuprofen came onto the OTC market with an established customer base: approximately 7 million prescription patients. It is yet to be determined what the extent of ibuprofen's impact on the market will be. But it is certain that ibuprofen represents an alternative form of pain relief that is proven both safe and effective.
The Market for OTC Analgesics
Supermarkets have a big stake in the estimated $1.4 billion analgesic business: About half of all OTC pain relievers sold come from food stores' shelves. While dollar volume has risen steadily (about 10% annually), unit sales are more sluggish (less than 2% over the last two years). The introduction of ibuprofen and the consequent marketing wars promise to heat up the category. Drug marketers are relying on new users to expand the segment without pirating sales from established brands. They support this hope with massive marketing expenditures.
HBA Buyers React
Some comments on ibuprofen from HBA buyers around the country:
* "Hasn't taken off as well as I thought, but I'm still optimistic."
* "Will carve out a nice share--probably 15% tops."
* "Still to early to tell. Don't think it's going to make much difference."
One HBA buyer suggested that consumers are not aware of ibuprofen as a new drug. He felt that they see it and are buying it as a new brand rather than a new form of analgesic, but said that as such, it's selling very well.
To find shelf space for the new brands containing ibuprofen, most retailers are cutting line extensions slightly rather than drop any brands altogether. Average linear feet of shelf space devoted to headache remedies is 21 feet.
Windfall for Retailers
As a result of heavy consumer couponing and an advertising blitz, overall sales of OTC analgesics are up. Whether this growth can be maintained and what effect deals and couponing will have on profits remains to be seen. But as manufacturers scramble for increased share, trade promotions are both generous and abundant.
Ibuprofen is not providing the only activity in the market. There's a battle brewing between the established brand extensions. Extra-strength formulas have taken off--30% of the best-selling analgesic products in terms of both dollar volume and unit sales are extra-strength. Capsules are an increasingly popular alternative to tablets. In fact, they now command 54% of the market. And caplets (coated oval tablets), which provide many of the advantages of both, were introduced recently.
But the real winner in this war is the supermarket. Not only do food outlets benefit from the deals and allowances being offered, but they're grabbing a larger share of the pie each year. Between 1982 and 1983, food stores' share of OTC analgesic sales jumped about 4.5%. Overall, the category is expected to grow about 9% annually through the late 1980's in all outlets. And grocery outlets are expected to increase their share of OTC drug sales even further in the future.
There are at least two reasons behind supermarkets' increasing share. First, the growing tendency of consumers to self-medicate; and second, the convenience factor. Consumers shop at food outlets twice weekly on average, compared with three times monthly at drug outlets, making food outlets the most convenient by far. Food retailers also find that OTC's attract customers and provide high profit margins.
Not surprisingly, supermarkets with in-store pharmacies fare better with over-the counter medications than those without. Particularly with new product introductions or OTC conversions such as ibuprofen, some customers prefer to consult pharmacists prior to purchase. As they become comfortable with the medications, they are more likely to purchase directly off the shelves in the most convenient, least expensive outlet available.
Habit, too, seems to have nearly as much influence on consumer buying behavior as anything else. Non-aspirin products tend to be the product of choice for younger consumers, while older people prefer aspirin three-to-one. Sale of non-aspirin tends to be a phenomenon of the past decade, attracting a younger audience, particularly in households with small children.
America's First Defense
A recent survey by the Proprietary Association revealed that Americans handle nine out of ten everyday aches and ailments to their own satisfication without professional help. Of these complaints--which include minor pain or injury, indigestion, coughs and colds, sore throats, skin infections, acne, allergy symptoms and arthritis pain--Americans turn to over-the-counter medicines 35% of the time.
Of particular interest is the fact that Americans are using these medications responsibly. James D. Cope, P.A. president, stated, "The study provides new and important evidence that American are conservative, knowledgeable and more responsible in self-care than many have given them credit for being." Ninety-six percent read instructions before taking a non-prescription drug for the first time.
Pain respects neither class nor sex, but plagues nearly everyone equally. There are only slight differences in the numbers of most problems reported by men compared with women, by region, or by high versus low income individuals. The exceptions are those over 65 or under 12. These two groups report far fewer incidences of minor aches or pains and are most likely to see a doctor and use medication.
The pay-off of self-medication is high. Consumers who self-treat an ailment with OTC drugs pay approximately one-third the cost incurred by visiting a professional and receiving a prescription. Over-the-counter medications have proven to be less expensive than their prescriptive counterpart--in a recent case, 40% less. Only 2^ of every healthcare dollar goes for self-medication.
And the benefits multiply. As consumers demonstrate responsible self-treatment, drug companies are better able to justify to the FDA that they can write comprehensible directions for the lay customer, which is one of the primary criteria for prescription-to-OTC conversion.
Converting prescription drugs to OTC use, or de-Rxing, benefits consumers by offering a wider variety of readily available medications at reasonable costs, and benefits retailers by offering a wider variety of salable products at attractive margins.
How External Analgesics Work
Analgesics relieve a broad range of consumer complaints; primarily headache, arthritis and pain associated with coughs and colds. Surveys indicate that these complaints account for nearly all analgesic consumption. Heavy users of analgesics tend to be arthritics: while they comprise only 22% of those taking analgesics they consume almost 50% of unit sales.
The three most popular forms of analgesics combat pain in much the same way. Aspirin, acetaminophen and ibuprofen are all peripherally acting analgesics, which means that they inhibit or modify pain at the site of injury. They do so by blocking prostaglandin production, the naturally occurring human chemical which regulates pain, inflammation and fever. Prostaglandins generally create sensations of pain in the immediate area in which they are produced. While all three drugs combat pain and reduce fever, only aspirin and ibuprofen are anti-inflammatory.
By contrast, centrally acting analgesics, such as codeine, alter the perception of pain by modifying the pain signal in the central nervous system.
Manufacturers provide a lot of support for this category, and promotional activity has stepped up even further in the past six months. Manufacturer expenditures on consumer advertising have outpaced trade support by far, but off-shelf displays, co-op advertising and couponing are readily availble. Estimates place ad support at about 12% of sales.
Retailers are capitalizing on the media blitz by merchandising better than ever. The growth of the various subcategories within the analgesic market has prompted a number of marketers to advise the use of headers and subsections within the category. Extra-strength formulations (including arthritis remedies) especially deserve a header of their own if retailers are going to capitalize on the popularity of these products. As the number of older Americans grows, these subcategories are likely to grow in equal measure.
While there is no "headache season," featuring pain remedies with cough/cold products will increase sales. The effectiveness of this is borne out by a seasonal index of OTC analgesic sales.
The analgesic market is dynamic, with lots of opportunity for growth. Merchandised properly, the headache remedies section of supermarkets is one of HBA's most profitable.
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|Date:||Dec 1, 1984|
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