Pepcid Race to Market
Pepcid AC: Racing to the OTC Market
Introduction and Background In the late 1980’s and early 1990’s, the pharmaceutical industry began to experience a decline in sales. Many companies began to see the potential of the over-the-counter (“OTC”) market as a proactive and defensive strategy to counteract the generic threat and to reinvigorate market share growth from their existing product line. In 1989, Johnson & Johnson and Merck (“JJM”) joined forces in an effort to bolster both company’s portfolios. The joint venture brought “Merck’s research and development expertise and product portfolio with Johnson & Johnson's knowledge of consumer marketing and retail distribution” together. The intent of the venture was to improve development, manufacturing, marketing, and distribution of certain OTC consumer products in the United States and Canada.
Problem Identification In 1994, JJM experienced a setback when the FDA advisory panel said it would not recommend Pepcid AC for either prevention or treatment of heartburn, since studies JJM conducted failed to establish without doubt the effectiveness of Pepcid AC. And although JJM had originally conceded becoming the first OTC to the market in order to provide a multi-claim OTC drug, the FDA’s similar rejection of other companies’ products for treatment only now provided an opportunity to become first to market, but with only a treatment claim. JJM was faced with the dilemma of how to proceed. JJM needed to examine the impact of becoming the first-mover into the market as an H2-receptor antagonist that only catered to treatment, versus coming to market roughly at the same time as its competition but with dual benefits of treatment and prevention. Seeking approval from the FDA for both claims would increase the chance that Pepcid AC could once again be rejected, in essence guaranteeing no chance of being first to market. However, JJM’s original viewpoint was that the prevention claim was far too
Introduction and Background In the late 1980’s and early 1990’s, the pharmaceutical industry began to experience a decline in sales. Many companies began to see the potential of the over-the-counter (“OTC”) market as a proactive and defensive strategy to counteract the generic threat and to reinvigorate market share growth from their existing product line. In 1989, Johnson & Johnson and Merck (“JJM”) joined forces in an effort to bolster both company’s portfolios. The joint venture brought “Merck’s research and development expertise and product portfolio with Johnson & Johnson's knowledge of consumer marketing and retail distribution” together. The intent of the venture was to improve development, manufacturing, marketing, and distribution of certain OTC consumer products in the United States and Canada.
Problem Identification In 1994, JJM experienced a setback when the FDA advisory panel said it would not recommend Pepcid AC for either prevention or treatment of heartburn, since studies JJM conducted failed to establish without doubt the effectiveness of Pepcid AC. And although JJM had originally conceded becoming the first OTC to the market in order to provide a multi-claim OTC drug, the FDA’s similar rejection of other companies’ products for treatment only now provided an opportunity to become first to market, but with only a treatment claim. JJM was faced with the dilemma of how to proceed. JJM needed to examine the impact of becoming the first-mover into the market as an H2-receptor antagonist that only catered to treatment, versus coming to market roughly at the same time as its competition but with dual benefits of treatment and prevention. Seeking approval from the FDA for both claims would increase the chance that Pepcid AC could once again be rejected, in essence guaranteeing no chance of being first to market. However, JJM’s original viewpoint was that the prevention claim was far too