Here are the two options JJM had as far as introducing Pepcid AC as an OTC medicine is concerned: Option 01: Argue with FDA on the case for the treatment and prevention claims and there by preserve the opportunity to be the first entrant. Pros:
Competitive Advantage: If approved by FDA the prevention claim for Pepcid AC would be a critical distinguishing factor compared to other similar medicines available in the market. This could very well give JJM and Pepcid AC a competitive advantage differentiating it from its competitors in the market. Two First Mover Advantages: If successful, JJM would position Pepcid AC, so it could enjoy two first mover advantages in the OTC market. It will be the first H2 drug to obtain OTC approval from the FDA and the first to obtain approval for the prevention of heartburn, not just symptomatic relief. This dual first mover advantages could very well contribute to the success of Pepcid AC in OTC market. Cons:
Substantial investment to prove prevention claims: The cost to support prevention claim, including clinical studies to prepare for the submission to FDA may represent a substantial investment from JJM. Risking first mover advantages: If Pepcid AC won’t get FDA approval for its prevention claim, it could delay the product introduction into OTC market. This could result in Pepcid AC loosing the first mover advantage to its competition. Switching Costs: In the scenario in which Pepcid AC loose its first mover advantage, it may be hard (expensive) to attract customers as once they experience benefits from use of a particular OTC medication, they may be reluctant to experiment (risk aversion) with alternative OTC products. It requires significant investment and effort (mostly in the form of aggressive marketing, differentiating products from the incumbent) to overcome the first mover advantage into the OTC market.
Option 02: Drop the prevention claim...