Healthy Skepticism Library item: 13913

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Publication type: news

Asomura Y.
OTC 'Switch' Market Next Battleground for Drugmakers
Nikkei English News 2008 Jul 2
http://www.therapeuticsdaily.com/news/article.cfm?contentvalue=1804775&contenttype=sentryarticle&channelID=26

Full text:

TOKYO (Nikkei)—Large pharmaceutical companies are turning to “switch drugs,” or over-the-counter products made with ingredients from prescription medicines, to treat lifestyle-related diseases. The move will likely trigger a reorganization of the OTC market, where most of the players are smaller firms.

On Tuesday, Taisho Pharmaceutical Co. (4535) and Takeda Pharmaceutical Co. (4502) respectively released Ciganon CQ and Nicorette Patch, over-the-counter aids to quit smoking. Both are patches containing small amounts of nicotine to relieve withdrawal symptoms. The firms are following in the footsteps of Swiss-owned Novartis Pharma KK, which began marketing Nicotinell, the first OTC switch product of this type in the domestic market, in May.

“The market for anti-smoking aids in Japan will double to 14 billion yen a year in the near future,” said Kanako Kikuchi, head of the local OTC drug operation of Novartis.

In Japan, the first switch drugs were approved in 1983 and their number has since expanded greatly, from flu and stomach medicines to athlete’s foot creams.

In April 2007, the Japan Self-Medication Industry included prescription ingredients for hypertension and cholesterol in about 70 switch-type candidate drugs. The market related to these lifestyle-related diseases, which require continuous medication, is estimated at 1.4 trillion yen, making it larger than the entire OTC drug market of 1.1 trillion yen. If switch drugs can capture part of that market, the impact will be huge for every firm. Many switch products will likely follow the nicotine patches in 2009 and thereafter.

The main player in the OTC-switch market is expected to be Daiichi Sankyo Health Care Co., which was created through the integration of the OTC drug operations of four pharmaceutical firms in 2007. It currently ranks fourth, posting 50.3 billion yen in sales in fiscal 2007. With effective “switchable” ingredients on hand, including those of its Mevalotin cholesterol drug, which has earned over 100 billion yen in Japan alone and whose patent expired in the U.S. in April 2006, a successful switch drug “could completely rewrite the industry power map,” said an executive at a midsize pharmaceutical firm.

Three or four hundred firms produce OTC drugs in Japan, but only a few industry majors and affiliates of foreign concerns can develop switch drugs from ingredients they own. Smaller firms with limited R&D capacity will have to compete with existing products and may gradually fall behind.

Signs of an industry reorganization have already appeared. In April, 25 midsize makers of OTC treatments began a joint promotion through several drugstore chains. The campaign could be taken as a move to compete with larger companies expanding into the OTC market, like Taisho, which plans to jointly develop new switch products, including one for intestinal problems, with subsidiary Biofermin Pharmaceutical Co. (4517).

—Translated from an article written by Nikkei staff writer Yuta Asomura

(The Nikkei Business Daily Wednesday edition)