Why Does Merck Switch Pepcid To OTC Status?
Pepcid Case Analysis
1. Why does Merck want to switch Pepcid to OTC status when the patent is good for another six years? How attractive is this opportunity?
Over-the-counter market growth is attractive to pharmaceutical companies like P&G who successfully changed Aleve from prescription strength to OTC. Once the patent for Pepcid expires in six years there will inevitably be fierce competition. Since the FDA usually takes so long to process an approval for a prescription-to-OTC switch, JJM can go through the process while they still have patent protection for Pepcid and get a stronghold on the market. Also, Pepcid is a treatment for a common chronic problem that is relatively easy to self-diagnose and treat. An OTC Pepcid would …show more content…
The FDA considers education as a means to prevention rather than medication. From the perspective of medication, over-medication in pursuit of prevention might mask serious medical problems. JJM is likely to approval much easier and faster if they only claim “treatment.” If JJM wants to enter the market early, dropping the “prevention” claim can reduce the risk of the FDA’s disapproval and speed up Pepcid’s OTC introduction. According to the BASES I test results, consumers are more attracted to Pepcid AC by its long-lasting relief than by prevention of digestive symptoms anyway. OTC users want the treatment benefits and unique qualities of Pepcid AC and are less interested in the prevention benefits. Only prescription users expressed higher interest in prevention than treatment (64% compared to 49%), and the prescription market is smaller than the OTC market. JJM should consider the advantages of appealing to a larger market sooner rather than later to benefit from the higher profits waiting for them. The sales promotion on the treatment concept could yield the best return on investment. Also, the attribute of prevention is difficult to communicate to ordinary antacid
1. Why does Merck want to switch Pepcid to OTC status when the patent is good for another six years? How attractive is this opportunity?
Over-the-counter market growth is attractive to pharmaceutical companies like P&G who successfully changed Aleve from prescription strength to OTC. Once the patent for Pepcid expires in six years there will inevitably be fierce competition. Since the FDA usually takes so long to process an approval for a prescription-to-OTC switch, JJM can go through the process while they still have patent protection for Pepcid and get a stronghold on the market. Also, Pepcid is a treatment for a common chronic problem that is relatively easy to self-diagnose and treat. An OTC Pepcid would …show more content…
The FDA considers education as a means to prevention rather than medication. From the perspective of medication, over-medication in pursuit of prevention might mask serious medical problems. JJM is likely to approval much easier and faster if they only claim “treatment.” If JJM wants to enter the market early, dropping the “prevention” claim can reduce the risk of the FDA’s disapproval and speed up Pepcid’s OTC introduction. According to the BASES I test results, consumers are more attracted to Pepcid AC by its long-lasting relief than by prevention of digestive symptoms anyway. OTC users want the treatment benefits and unique qualities of Pepcid AC and are less interested in the prevention benefits. Only prescription users expressed higher interest in prevention than treatment (64% compared to 49%), and the prescription market is smaller than the OTC market. JJM should consider the advantages of appealing to a larger market sooner rather than later to benefit from the higher profits waiting for them. The sales promotion on the treatment concept could yield the best return on investment. Also, the attribute of prevention is difficult to communicate to ordinary antacid