OTC Growth Presents $89B US Opportunity

May 11, 2010

Growth for over-the-counter (OTC) drugs is strongest in emerging economies but is an $89 billion opportunity in the US, according to data from The Nielsen Company and Nicholas Hall and Company.

$44B Opportunity Exists in 12 US Categories
Nielsen conducted a historical macroanalysis of 26 prescription and over-the-counter categories in the US and found that in 12 currently marketed categories, a number of potential prescription brands and technologies have yet to switch from prescription to OTC. Assuming a historical OTC share of 20% of the prescription and OTC dollars in these 12 categories, a potential five-year forecasted opportunity of $44 billion exists.


Of the 12 categories, the top five comprise a significant share of the $44 billion:

1. Respiratory or Asthma
2. Antacids
3. Insomnia
4. Analgesics
5. Acne

The remaining seven categories include feminine hygiene, smoking cessation, athlete’s foot, cough-cold-allergy, diet-obesity, hair growth and laxatives. These values were adjusted with current share already achieved for the OTC products within combined prescription and OTC dollars.

$45B Opportunity Exists in Prescription-only Categories
Looking forward at potential Rx-to-OTC switches in categories that are currently prescription-only in the US, nine categories were identified: cholesterol reducers, hypertensive agents, diabetes insulin-non-insulin treatments, anti-infectives, oral contraceptives, osteoporosis, anti-fungals, overactive bladder-incontinence and sexual function-erectile dysfunction.


Before these categories are moved from prescription to OTC, several issues including regulation) need to be addressed. However, Nielsen values their dollar opportunity at $45 billion in the US, creating a total $89 billion opportunity when combined with prescription categories that currently include some OTC offerings. Of these categories, cholesterol-reducing, hypertension, and diabetes represent approximately 80% of the combined total.

Global OTC Markets Outpace GDP
Global OTC markets are forecast to outpace GDP by 21%, or 0.9 percentage points in 2010, according to Nicholas Hall & Company. The OTC industry continues to outpace global GDP, reporting growth from 2007 through 2009 ahead of GDP 0.2%, 1.1%, and 5.3%, respectively. The significant 2009 growth was 5.3% points ahead of GDP, which supports the consumer focus on healthcare and self-medication.

BRIC Produces Best OTC Growth
In the US, the largest OTC market, growth is forecast to be lower than in many other countries (3.2%), due largely to the fact that this market is mature. The emerging BRIC countries (Brazil, Russia, India and China) have and continue to experience double digit OTC growth.


Russia leads the BRIC countries with 15% growth forecast for 2010, followed by India with 11% growth forecast. Brazil and China both have 10% growth forecast. While Canada has a better growth forecast than the US (4%), the US still beats other established economies including Italy (1.7%), France and the UK (1% each), and Germany and Japan (0.1% each).

Heavy Drug Ad Spending Doesn’t Pay Off
Drug companies looking to increase growth should also consider that pharmaceutical brands which spent the most money on TV advertising in 2009 did not make the biggest impression on viewers, according to earlier data from The Nielsen Company. None of these four brands which had the highest levels of consumer recall for their TV ads in 2009 made the top 10 list for TV advertising spending last year.

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