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OTC Market Is Not Largely Impacted by Recession; However, Prominent Growth Remains Only in Some Categories, According to Kline

Saturday, September 19, 2009 General News J E 4
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LITTLE FALLS, N.J., July 15 The overall OTC market grew 3.2% during non-recession years and only 1.2% during recessions according to the latest research Impact of Recessions on the U.S. OTC Market from worldwide consulting and research firm Kline & Company.

The impact of recessions on the OTC market mainly comes from erosion of branded OTC sales by private-label products and is reflected in slower growth rates. The level of erosion varies by product classes and categories. However, Rx-to-OTC switches, major innovations, and new product launches with related promotion that occur during recessions help cancel the effect of private-label erosion.

While overall the U.S. OTC market grows at slower rates than during non-recession periods, private-label OTC medicines outgrow 2007 rates by 5.7% over the same time period.

Sales of Rx-to-OTC switch brands are either not impacted or are less impacted than regular OTC brands by recession. For instance, the Rx-to-OTC switch of Claritin in 2003 only lost 18% of sales to its sales to private-label competitors in the non-recession period, while private-label equivalents of Zyrtec launched in early 2008 seized one-forth of brand sales during 2009, a recession year.

"There is clear evidence that private-label OTCs grow at significant rates during a recession. Consumers did trade down to private label, and branded products lost considerable shared private label, but at the same time, several switch products still did really well as consumers are still willing to pay extra for a product they feel is more innovative and offers more relief," says Laura Mahecha, healthcare industry manager at Kline.

In previous recessionary periods, overall OTC sales declined two years in a row; from 1999 to 2000 overall manufacturers' sales were down 0.6%, and then declined again from 2000 to 2001 by 0.5%. Declines for the market were not very steep and this may be a result of sustained private-label sales.

Impact of Recessions on the U.S. OTC Market provides subscribers with a historical perspective on industry performance during recessions over the past three decades in order to estimate impacts of the current economic recession on OTC sales performance. The report offers detailed forecasts through 2011 in terms of sales for the existing OTC market and expected future Rx-to-OTC switches. Three scenario forecasts are offered including the most likely-case, best-case, and worst-case sales performance with all assumptions clearly defined.

About Kline

Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for 50 years. For more information, visit www.KlineGroup.com.

For more information, contact:

Vera Sandarova Marketing Communications +420-222-316-282 Vera.Sandarova@klinegroup.com

SOURCE Kline & Company
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