You are now leaving this site and you'll be redirected to the Interbrand Global website.
An improved regulatory system runs at the heart of a changing healthcare market, which includes stratified patient populations, larger clinical trials, the growing role of biologics, and the diminishing value of the blockbuster drug model for the majority of companies. With the cost of developing most drugs reaching approximately $1bn from bench to bedside, more companies are looking for ways to extend the life of their drugs beyond their impending patent cliffs.
A separate panel at the NYBIO conference delved into the intricacies of shifting from prescription (Rx) status to over-the-counter (OTC) to capitalize on the brand equity built by the corporate manufacturer over years of marketing. With a potential loss of 85 percent or greater market share, drug manufacturers of select therapies will likely be able to successfully convert their Rx products into OTC products, but doing so comes with its own set of challenges. Each manufacturer is required to conduct a series of marketing assessments to ensure that the product adheres to existing guidelines on safety.
Due to the nature of the Rx to OTC switching process, the majority of the drugs that have successfully made the jump include drugs in categories such as migraine, high cholesterol, oral contraception, erectile dysfunction, antivirals, etc. The top 10 products in the OTC category currently generate more than $300m per year per drug, which offers a significant “cash cow” alternative for those products setting up to battle stiff generic competition. Even with a steady cash flow from OTC sales, companies are often forced to drop their prices to remain competitive and relevant within this new market dynamic. However, in light of the Affordable Care Act, industry specialists expect more and more patients to self-treat with OTC treatments before seeking the costlier option of seeing a medical professional.
So, should a branded drug asset compete on par with other products in the OTC market given these stakes? Can an Rx branded product cut through the “noise” and effectively capitalize on its brand equity to generate momentum in sales with a direct-to-consumer distribution channel? Pharma companies need to carefully consider these challenges and investigate if the R&D investment is worth the payoff.