Chapter 2: Why Switch? Evaluating the Value of Switch Candidates
24
visibly lost. Nexium, which was sold via prescrip-
tion as a capsule, switched in 2014 and gained
approval for tablets in 2015 and Clearminis in
2016. Flonase, which switched more recently in
2015, gained approval for children’s packaging
(same dosage) in 2016 and switched the pre-
scription product Veramyst as Flonase Sensimist.
Retail trade partners, in fact, will expect a
stream of innovations and “new news” every year,
which can insulate the brand from private label
competition (and thus preserve premium pricing).
A robust future innovation pipeline also may
help general managers outside of the US commit
to the launch and support of the new OTC
product.
NDAs are not the only mechanism to
extend Rx-to-OTC switch brands. Within the
Mucinex product range, just over 50% of sales are
from monograph (not extended-release NDA)
formulations.
Other brands have turned to ancillary
products. When Differin switched to OTC, it
launched simultaneously with a cleanser and
a moisturizer, both of which are governed by
cosmetics regulations. Even further on this
spectrum, Claritin licensed its name and equity
to hypoallergenic bedding.
Assessing Rx-to-OTC Switch Value—
Ability to Execute at Retail
A key difference between launching a prescription
product and launching an Rx-to-OTC product
is the ability to successfully execute at retail.
Manufacturer and retailer partnership planning
begins 24 months prior to launch to coordinate
tactics such as appropriate shelf placement,
prelaunch activity to drive awareness and excite-
ment with consumers, rapid distribution at launch
and retail launch ads, consumer education/activity
at shelf, pharmacy education, and secondary store
placement and retailer customization.
Unlike prescription products, in many OTC
categories, retailers only reset their shelves once
a year. Failure to hit this timing can significantly
delay a launch and erode any period of exclusivity.
Shelf placement can be key to a product’s
success. Oxytrol was placed adjacent to products
like pregnancy tests that were no longer relevant
to the target consumer. The patch dosage form,
coupled with a juxtaposition next to devices, may
not have connoted “real medicine.”
The package also needs to stand out at shelf,
and the brand’s colors and branding equities may
need to be revised to provide shelf presence.
Recent launches have invested heavily to
generate pre-launch awareness and excitement
at shelf. Shelf blockers announcing, “Coming
Soon!” are useful if the annual shelf reset pre-
cedes the Rx-to-OTC launch. Mock packages in
the shelf blocker can be used to specify where to
find the product when it does become available
and can facilitate rapid distribution. Retailers
find this tactic to be expensive, however, as no
sales are generated from the space occupied by
the “blockers.”
Other tactics used to generate pre-launch
excitement include store signage and pre-launch
announcements, in-store, in circulars, and online.
Prior to its launch, Voltaren announced a part-
nership with the American Arthritis Foundation
and donated 100% of pre-order profits to the
foundation’s scientific research.42
Once the Rx-to-OTC switch is launched,
however, speed to market is critical, especially
if the product does not have protection from
private label competition. For OTC products,
distribution is retailer driven—retailers decide
whether or not to stock the product. For a major
Rx-to-OTC switch, it is not unrealistic to stock
100,000 retail outlets on the initial ship date.
Given the need for speed, manufacturers must
employ tactics that make it as easy as possible for
stores to stock the shelves, both for open stock of
the product and for potential displays.
OTC product volumes can exceed pre-
scription product volumes. With different
manufacturing configurations, including the need
for inner packs and the potential need to “bright
stock” prior to launch, expensive investments
may be required for the manufacturing process,
packaging equipment, or for other aspects of the
supply chain.
Additional display opportunities, custom-
ized in multiple configurations to fit the needs
of top retailers, can include endcaps, sidekicks,
and displays at the point-of-purchase. The top
eight to 10 retailers will expect customization
24
visibly lost. Nexium, which was sold via prescrip-
tion as a capsule, switched in 2014 and gained
approval for tablets in 2015 and Clearminis in
2016. Flonase, which switched more recently in
2015, gained approval for children’s packaging
(same dosage) in 2016 and switched the pre-
scription product Veramyst as Flonase Sensimist.
Retail trade partners, in fact, will expect a
stream of innovations and “new news” every year,
which can insulate the brand from private label
competition (and thus preserve premium pricing).
A robust future innovation pipeline also may
help general managers outside of the US commit
to the launch and support of the new OTC
product.
NDAs are not the only mechanism to
extend Rx-to-OTC switch brands. Within the
Mucinex product range, just over 50% of sales are
from monograph (not extended-release NDA)
formulations.
Other brands have turned to ancillary
products. When Differin switched to OTC, it
launched simultaneously with a cleanser and
a moisturizer, both of which are governed by
cosmetics regulations. Even further on this
spectrum, Claritin licensed its name and equity
to hypoallergenic bedding.
Assessing Rx-to-OTC Switch Value—
Ability to Execute at Retail
A key difference between launching a prescription
product and launching an Rx-to-OTC product
is the ability to successfully execute at retail.
Manufacturer and retailer partnership planning
begins 24 months prior to launch to coordinate
tactics such as appropriate shelf placement,
prelaunch activity to drive awareness and excite-
ment with consumers, rapid distribution at launch
and retail launch ads, consumer education/activity
at shelf, pharmacy education, and secondary store
placement and retailer customization.
Unlike prescription products, in many OTC
categories, retailers only reset their shelves once
a year. Failure to hit this timing can significantly
delay a launch and erode any period of exclusivity.
Shelf placement can be key to a product’s
success. Oxytrol was placed adjacent to products
like pregnancy tests that were no longer relevant
to the target consumer. The patch dosage form,
coupled with a juxtaposition next to devices, may
not have connoted “real medicine.”
The package also needs to stand out at shelf,
and the brand’s colors and branding equities may
need to be revised to provide shelf presence.
Recent launches have invested heavily to
generate pre-launch awareness and excitement
at shelf. Shelf blockers announcing, “Coming
Soon!” are useful if the annual shelf reset pre-
cedes the Rx-to-OTC launch. Mock packages in
the shelf blocker can be used to specify where to
find the product when it does become available
and can facilitate rapid distribution. Retailers
find this tactic to be expensive, however, as no
sales are generated from the space occupied by
the “blockers.”
Other tactics used to generate pre-launch
excitement include store signage and pre-launch
announcements, in-store, in circulars, and online.
Prior to its launch, Voltaren announced a part-
nership with the American Arthritis Foundation
and donated 100% of pre-order profits to the
foundation’s scientific research.42
Once the Rx-to-OTC switch is launched,
however, speed to market is critical, especially
if the product does not have protection from
private label competition. For OTC products,
distribution is retailer driven—retailers decide
whether or not to stock the product. For a major
Rx-to-OTC switch, it is not unrealistic to stock
100,000 retail outlets on the initial ship date.
Given the need for speed, manufacturers must
employ tactics that make it as easy as possible for
stores to stock the shelves, both for open stock of
the product and for potential displays.
OTC product volumes can exceed pre-
scription product volumes. With different
manufacturing configurations, including the need
for inner packs and the potential need to “bright
stock” prior to launch, expensive investments
may be required for the manufacturing process,
packaging equipment, or for other aspects of the
supply chain.
Additional display opportunities, custom-
ized in multiple configurations to fit the needs
of top retailers, can include endcaps, sidekicks,
and displays at the point-of-purchase. The top
eight to 10 retailers will expect customization