SUMMARY

A shifting, global regulatory environment, complex consumer behavior, and unpredictable competitive response all contribute to the complexity of the Rx to OTC switch decision.

An effective strategy for maximizing the profitability of a switch begins prior to even Rx approval. The optimal timing of the actual switch may not always coincide with the end of patent protection, bottoming Rx sales, or loss of competitive advantage. Multivariate models are now available to help pharmaceutical marketers develop more preemptive strategies for switching.

The consensus among attendees at the Institute for International Research's recent RX to OTC Switch Marketers Forum-held November 19-21, 2003, in Philadelphia, PA-was that FDA Commissioner Mark McClellan is bringing a new emphasis on societal economics to the FDA, which has pharmaceutical marketers re-thinking their OTC switch strategies. According to Senior Associate Commissioner Jeff Weber, as reported in the February 10, 2003 edition of the Tan Sheet, McClellan has targeted the FDA's budgeting goals to anticipate an average increase of 50% for Rx-to-OTC switches.

The article:

• reviews the economic pressures in the US and Europe that drive earlier switching strategies,
• suggests when the appropriate time during a product's life cycle switching should be considered,
• describes a Switch Evaluation Tool -- a multivariate model -- designed to help marketers compare the timing requirements and financial merits of various switch strategies, and
• proposes ways that companies can start shifting the paradigm from risk to opportunity.

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PMN31-03
Issue: Vol. 3, No. 1: January 2004
ARTICLE CATEGORIES: CONFERENCE HIGHLIGHT | STRATEGY