Click to download the PDF to view the full issue

 

Global growth being driven by emerging markets

 

The global market for consumer-care products generated slower growth in 2010 than during the previous year, partially because of a weaker flu season in North America and Europe. However, emerging markets for OTC products continue to expand, lead by China. The markets in India and Latin America also remain on a solid growth pattern.

Driving forces in the U.S. over-the-counter market include Rx-to-OTC switches of former blockbuster brands as well as consumers’ increasing usage of self medication. More than 300,000 OTC products are on the U.S. market, separated by the Food and Drug Administration into 80-plus classes based on their intended therapeutic uses. Leading therapeutic categories/medical-usage areas for OTC products include cholesterol therapy; contraception; cough, cold and allergy; dermatology; gastrointestinal disorders; pain management; sexual dysfunction; and weight management/obesity. 

This first-time special report provides an overview of the worldwide consumer healthcare arena, profiles of some of the leading OTC companies, and various listings including FDA over-the-counter approvals as well as Rx-to-OTC switches.


The Global OTC Market

The worldwide consumer-care market grew more slowly in 2010 versus 2009. This performance was due mainly to a weak flu season in Europe and North America. The worldwide OTC market value in 2010 was about $115 billion, led by cough and cold preparations at around $20 billion. In terms of OTC market value for certain global markets:

  • The United States was estimated to have topped $30 billion in 2010 and could exceed $35 billion in 2012.
  • Europe generated about $44 billion in 2010. South Europe (Portugal, Spain, Italy, Greece and France) comes in at about 6.5 billion euros in a mature but extremely fragmented region. Eastern Europe (Czech Republic, Poland, Romania, Bulgaria, Hungary, Slovakia) registers more than 2 billion euros, with some countries generating annual double-digit growth.
  • BRIC (Brazil, Russia, India and China) countries combined to produce about $21 billion for 2010 and are on track to near $24 billion in 2012.
  • Japan generated more than $12 billion during 2010, but annual growth is in the low single digits.

A significant factor driving the OTC arena is emerging markets. During 2010, demand for consumer-care products in China and India markedly improved. China is considered the No. 2 consumer healthcare country after the United States. Solid market growth was registered in Latin America and other parts of Asia in 2010.

In addition to emerging markets, Rx-to-OTC switches will significantly help drive the consumer-health marketplace forward in the years to come. Because over-the-counter medicines are cost-effective first-line therapies for many ailments, the Rx-to-OTC switch process has a positive impact on America’s healthcare system process by driving down overall healthcare costs. For instance, according to a study performed by researchers at Northwestern University, using OTC products to treat certain upper respiratory infections could save $4.75 billion per year.

More than 100 ingredients and dosage strengths have been switched from Rx to OTC status or have been newly approved by FDA during the past 35 years. This grouping includes some blockbuster prescription brands. For a listing of these products, please see page 65.

Another market driver is the growth in self medication by consumers. Each year consumers increasingly become more willing and better able to medicate themselves with the help of online sites and other resources. With this easily accessible and increased knowledge comes more self medication with OTC products.

Plus, with traditional healthcare costs rising higher, the aging population is increasingly looking for alternative self-care treatments. And as the overall population trends toward a healthier lifestyle, OTC products are becoming more popular.

The leading therapeutic categories/medical-usage areas for OTC products include cholesterol therapy; contraception; cough, cold and allergy; dermatology; gastrointestinal disorders; pain management; sexual dysfunction; and weight management/obesity.

Also helping drive the OTC landscape is the U.S. dietary supplement industry, which is valued at about $25.2 billion. This market is growing at a double-digit compound annual growth rate.

Companies that are Rx Brand Leaders and OTC Product Leaders

Seven of the top 10 pharma/biopharma companies based on 2009 revenue have a leading consumer-healthcare business: Johnson & Johnson, Pfizer Inc., GlaxoSmithKline Plc., Novartis AG, sanofi-aventis, Merck & Co., and Bayer. The following pages detail them and their consumer-health developments and strategies.

Johnson & Johnson

J&J has 250-plus operating companies in 57 countries and 114,000 employees. Johnson & Johnson has a diverse range of consumer products, prescription medicines, and medical devices and diagnostics marketed around the globe.

J&J reported 2010 global sales totaling $61.6 billion, down 0.5% compared to 2009. Global Consumer sales amounted to $14.59 billion in 2010, a 7.7% decline versus the previous year. There was an operational decrease of 8.9% and a positive impact from currency of 1.2% for this business segment in 2010. Domestic sales were down 19.3% to $5.52 billion versus 2009. International sales grew 1.2% to $9.07 billion, reflecting an operational drop of 1% and a positive currency impact of 2.2%.

According to J&J, it is the world’s sixth-largest consumer-healthcare company. J&J’s Consumer business breaks down into six segments. Sales in 2010 for OTC/Nutritionals decreased 19.2% year over year to $4.55 billion. Global Skin Care sales totaled $3.45 billion in 2010, down 0.4% versus 2009. Baby Care sales amounted to $2.21 billion, up 4.4%. Women’s Health sales dropped 2.7% to $1.84 billion. Oral Care sales also dropped 2.7% in 2010, coming in at $1.53 billion. In the Wound Care/Other segment, sales in 2010 totaled $1.01 billion, down 10.4% versus 2009.

J&J’s overall worldwide Consumer sales performance was significantly impacted by the previously announced recalls of certain OTC medicines and the suspension of manufacturing at the McNeil Consumer Healthcare Fort Washington, Pa., facility as well as the currency devaluation in Venezuela.

With respect to the McNeil Consumer Healthcare product recalls, J&J CEO William C. Weldon said on Jan. 25, 2011, “We have made a commitment to restoring these products to the levels of quality and compliance that consumers expect of Johnson & Johnson.”

McNeil-PPC Inc.’s McNeil Consumer Healthcare in January 2011 began voluntarily recalling at the wholesale level certain lots of Tylenol 8 Hour, Tylenol Arthritis Pain, and Tylenol upper-respiratory products. Also voluntarily recalled are certain lots of Benadryl, Sudafed PE, and Sinutab products. The impacted regions are the U.S., Caribbean, and Brazil.

These products were manufactured at the McNeil plant in Fort Washington, Pa., before April 2010, when production at the facility was halted. McNeil is initiating the recall as a precautionary measure after an extensive review of past production records pinpointed instances where equipment cleaning procedures were insufficient or that cleaning was not adequately documented. J&J said it is very unlikely that this impacted the quality of these products.

McNeil Consumer Healthcare additionally initiated as of January 2011 a voluntary recall of certain product lots of Rolaids Multi-Symptom Berry Tablets distributed in the United States to update the labeling. McNeil initiated the recall after determining that the product labeling does not include the language “Does not meet USP” as required by regulation.

Both recalls were initiated at the wholesale level. No action is required by consumers or healthcare providers, and consumers can continue to use the products. These actions were not undertaken on the basis of adverse events.

McNeil identified the inadequacies as part of a thorough, proactive product quality and process assessment of all of its produced products. McNeil has implemented a Comprehensive Action Plan at its U.S. manufacturing sites to improve the quality systems at those locations. This product assessment is a key milestone in the plan’s implementation, and the actions undertaken as a result of the assessment are part of McNeil’s continuing commitment to ensure that all its products meet the high quality standards expected by consumers.

During November 2010, J&J recalled about 4 million packages of Children’s Benadryl allergy tablets and roughly 800,000 bottles of junior-strength Motrin caplets due to manufacturing lapses.

J&J’s McNeil unit withdrew more than 40 types of children’s OTC liquid medicines during April 2010, forcing a suspension of production at a manufacturing plant. As a result, 2010 sales were reduced by about $600 million, according to industry reports. The U.S. House Oversight and Government Reform Committee has investigated Johnson & Johnson’s recall handling as well as a separate incident involving Motrin tablets.

In January 2010, J&J pulled 500 lots of drugs, including Rolaids, Motrin and some types of Tylenol, because of possible contamination from a chemical on shipping and packing materials. That recall was expanded in June 2010 after consumer complaints of a musty odor as well as reports of diarrhea, nausea and vomiting after people used the products.

J&J provided an update in January 2011 regarding McNeil Consumer Healthcare remediation and announced completion of the internal assessment phase of the comprehensive action plan. In July 2010, McNeil Consumer filed with FDA a Comprehensive Action Plan on quality improvement and “made a commitment to restore its operations to the level of quality and compliance that people expect of all Johnson & Johnson companies.”

As part of this commitment, McNeil undertook a thorough investigation of historical records dating back to 2007 for products sold in America and produced in McNeil’s internal manufacturing network. For every product, McNeil looked at whether the right processes had been identified and followed, and evaluated whether quality standards had been met. This assessment has been completed, which is a important milestone in the Comprehensive Action Plan.

The assessment identified various areas for improvement that are being addressed. For example, McNeil identified instances in which equipment cleaning procedures were insufficient or cleaning were inadequately documented. These issues took place at McNeil’s Fort Washington, Pa., manufacturing plant, before April 2010 when production halted.

McNeil additionally discovered one product for which the labeling did not include all info required by regulations. In line with the company’s unqualified dedication to quality and compliance, McNeil announced in January 2011 a wholesale-level recall of products affected by these issues. This recall did not result from adverse events.

“Steps we have taken under the Comprehensive Action Plan constitute an uncompromising and systematic effort to review quality and manufacturing practices at McNeil,” Mr. Weldon stated. “They help us assure that moving forward, any of our products in the marketplace live up to the trusted standards and expectations that consumers have for all products coming from a Johnson & Johnson company, anywhere in the world.”

As a continuing part of this effort, McNeil is performing assessments at other locations that manufacture its products. If these reviews point out any additional issues, McNeil intends to take whatever steps are necessary to ensure that its products meet world-class quality standards, including potential market action.

During February 2011, Johnson & Johnson Consumer Companies Inc.’s breakthrough Cytomimic Technology was featured in a scientific poster at the 69th Annual Meeting of the American Academy of Dermatology in New Orleans. This esteemed, award-winning, innovative technology stems from decades of research to harness the power of bioelectricity to improve skin rejuvenation. Cytomimic Technology will additionally be featured in scientific exhibits at the World Congress of Dermatology in Seoul, Korea during May 2011.

“Just one year after the unveiling of Cytomimic Technology for use in anti-aging at this prestigious forum, we are excited to present new clinical data on its potential to stimulate tissue repair,” stated Dr. Ying Sun, a Distinguished Research Fellow and Science Leader at Johnson & Johnson Consumer Companies. “Injured skin naturally generates a low level electrical signal to promote healing. The application of Cytomimic technology has clinically demonstrated the ability to mimic this healing signal for potential tissue healing and rejuvenation applications.”

A clinical trial was performed to determine if the biomimetic technology mimics the endogenous healing signal generated by the skin. Cytomimic Technology, consisting of a proprietary galvanic coupling of elemental zinc and copper, was assessed on the forearms of healthy males and females older than 18 years. The technology was compared to untreated skin, zinc oxide as well as zinc chloride. After cleansing, a small amount of each material was placed within defined 1.5-mm diameter circles and measured for electric fields covering the skin using a non-invasive instrument based on a vibrating probe technique. This technology has shown anti-inflammatory activity, collagen and elastin production, and clinically proven safety and effectiveness in reducing photoaging signs.

“Bioelectricity is found in every single body system and cell in the body,” Dr. Sun stated. “Combining this knowledge with our innovative technology, we can potentially continue to expand and find new uses and platforms for Cytomimic Technology to address countless additional needs in tissue repair applications.”

The clinical trial shows that the topical application of biomimetic signaling technology to the skin provides an electric field profile similar to that of the endogenous electric field that the skin generates at a wound site.

This patented technology was discovered in 2004 by Dr. Sun and his colleagues Dr. Jue-Chen Liu and Jeannette Chantalat. Johnson & Johnson Consumer Companies holds 10 U.S. patents for this technology, which are active until 2023. Multiple U.S. and international applications are pending.

Bioelectricity is the body’s native electrical signaling process that helps direct physiological activities at the cellular level, including the skin’s own rejuvenation process. Applied topically, Cytomimic Technology can aid in the rejuvenation and maintenance of healthy-looking skin.

As people age bioelectrical signals naturally diminish, which can result in decreased cell-to-cell communication, production of essential proteins such as collagen and elastin, and in healing abilities. This can lead to fine lines and wrinkles, loss of firmness and sagging skin.

The science of Cytomimic is centered on creating and delivering biological levels of electricity directly to the skin, naturally stimulating the intrinsic rejuvenation process. This innovation is based on the design of a proprietary technology – energized micro-particles of zinc and copper – captured in a unique delivery system that assists in stimulating the body’s own rejuvenation processes. When activated by moisture, these energized micro-particles act as “miniaturized batteries” that aid in jump-starting healthy skin function. These micro-particles remain on the skin’s surface and mimic the body’s native electrical signals, to rebuild and restore youthful-looking skin.

Cytomimic represents a major advancement in skin care as the first technology designed to deliver electricity at a scale that safely simulates the body’s own bioelectricity levels in the form of a topical treatment. This leads to improved cell activity, evidenced in vitro by enhanced expression of collagen and elastin; accelerated improvement in reducing the signs of aging, even in the delicate skin around the eyes; improved skin texture, firmness and radiance; and demonstrated anti-inflammatory activity to address a potential cause of aging

J&J Consumer Companies has evaluated Cytomimic on 1,000-plus individuals/subjects in clinical and safety trials for more than 3.5 years. The technology has shown improvement of the skin’s appearance within minutes of application and continued improvements over time.

Cytomimic is clinically proven to significantly reduce the hallmark signs of aging, in some cases in as little time as 30 minutes, by diminishing the appearance of bags under the eyes and periorbital fine lines and wrinkles; reducing the look of dark circles; reducing the look of fine lines and wrinkles; lifting appearance of the eyes; reducing the appearance of crow’s feet wrinkles; improving radiance and brightness; lifting, firming, and enhancing the look of jawline contours; and improving skin softness and smoothness.

Pfizer

New York-based Pfizer’s diversified worldwide healthcare portfolio includes human and animal biologic and small-molecule medicines and vaccines, nutritional products, and many well-known consumer brands. Pfizer’s 2010 revenue came in at $67.8 billion, up 36% versus the 2009 amount. Revenue for 2010 was significantly impacted by $18.1 billion, or 37%, due to legacy Wyeth products, and by $1.1 billion, or 2%, due to foreign exchange. The performance was negatively impacted by $1.4 billion, or 3%, due to legacy Pfizer products.

Pfizer in 2009 acquired the biopharma giant Wyeth, which was an active OTC player. Wyeth’s consumer healthcare business is reflected in the significant growth generated by Pfizer Consumer Healthcare during 2010. Sales for the Pfizer business segment totaled $2.77 billion compared to $494 million during 2009. Wyeth OTC products include the pain reliever Advil, the calcium supplement Caltrate and the multivitamin Centrum.

According to Pfizer, its Consumer Healthcare business ranks No. 5 among all OTC entities worldwide. Pfizer sells two of the world’s top 10 selling OTC brands, Centrum and Advil. The Consumer Healthcare unit has strong positions in various geographic markets, with its highest revenue volume in the U.S., Canada, China, Italy, Germany, Brazil and Australia.

Pfizer agreed during February 2011 to buy Ferrosan’s consumer healthcare business from Altor 2003 Fund GP Ltd. Ferrosan’s portfolio includes dietary supplements and lifestyle products.

Copenhagen, Denmark-based Ferrosan is an innovative and long-established consumer healthcare company with a portfolio of leading brands. Since 1920, the company has grown to serve a broader market including Russia, the Ukraine, Poland, Turkey and many countries in Central and Eastern Europe.

“Ferrosan is an excellent strategic fit that strengthens our presence in dietary supplements with a new set of compelling brands and product pipeline,” stated Paul Sturman, president, Pfizer Consumer. “The transaction will mark an important step towards expanding Ferrosan’s brands through Pfizer’s global footprint. As an immediate result of this acquisition, we will gain greater distribution and scale for Pfizer’s well-known brands such as Centrum and Caltrate in Ferrosan’s regions.”

Ferrosan’s product portfolio includes Multi-tabs, a popular multivitamin brand, Bifiform, a leading probiotic, Fri Flyt/Active Omega, an Omega 3 product, and Imedeen premium oral skin-care brands. These brands rank among the top-selling products in their respective categories.

According to Ferrosan President Ola Erici, “We are very pleased that Ferrosan’s innovative portfolio of leading brands will be joining Pfizer. We expect that, as part of the Pfizer portfolio, our products will build on their industry-leading positions and become available in more countries around the world. And, at the same time, Pfizer will be able to leverage its footprint in key Ferrosan markets with new Pfizer products.”

The deal is subject to customary closing conditions. The transaction is anticipated to be completed in second-quarter 2011. Financial terms were undisclosed.

GlaxoSmithKline

GSK is one of the top research-based pharma companies worldwide. GSK’s turnover for 2010 decreased 1% to £28.4 billion, with pharma down 2% year over year to £23.4 billion. Consumer Healthcare sales in 2010 advanced 5% versus 2009 to £5.01 billion. According to the company, the 5% improvement significantly outpaced market growth estimated to be 2%.

OTC medicines represented GSK’s leading Consumer Healthcare segment in 2010 with sales of £2.46 billion, up 3% at constant exchange rates. Oral healthcare sales in 2010 were £1.6 billion (up 6% CER). Nutritional healthcare came in at £952 million (up 9% CER).

GSK maintains leading positions in all of the company’s key consumer product areas. On a global scale, GSK ranks No. 2 in OTC medicines and No. 3 in Oral healthcare. GSK’s Nutritional healthcare is No. 1 in the U.K., Ireland and India.

According to GSK, the leading force behind its consumer-healthcare business is science. The company has four dedicated consumer-healthcare R&D centres and consumer-healthcare regulatory affairs. The business segment offers leading-edge capability in scientific innovation and marketing excellence.

GSK’s consumer-healthcare business includes well-known brands such as Panadol for pain relief, NiQuitin for smoking cessation, and the oral healthcare products Aquafresh and. Sensodyne.

In 2010, GlaxoSmithKline announced that its Consumer Healthcare segment going forward will have an increased concentration around ‘priority’ brands and emerging markets. Additionally, non-core OTC brands with yearly sales of roughly £500 million will be divested.

On March 1, 2011, GlaxoSmithKline Consumer Healthcare introduced new Sensodyne Repair & Protect. The new product is being launched in 50-plus European and International markets in 2011.

The breakthrough formulation is the first everyday fluoride toothpaste that contains patented NovaMin technology. This technology is scientifically proven to repair sensitive teeth by forming a tooth-like layer over exposed dentine. This process helps continually repair and protect sensitive areas.

Sensitive teeth are common, affecting 81% of U.K. adults. However, many do not know that the twinges they experience are a sign of sensitivity that results from exposed dentine. Rather than addressing the problem, many sufferers attempt to ignore the twinges or develop ways to avoid them, without realizing that their teeth have vulnerable areas.

“Tooth sensitivity is caused when the dentine is exposed,” according to Professor David Bartlett. “This dentine that makes up most of the tooth is porous, with thousands of tiny channels running through it to a nerve in the center. A layer of hard enamel on the crown of a tooth protects the underlying dentine, but if this dentine is exposed, a tooth can become sensitive and vulnerable.”

The NovaMin technology was initially developed to help stimulate bone regeneration, which seeks out the regions of teeth that are sensitive. The technology forms a tooth-like layer over exposed dentine that is 50% harder than healthy dentine, helping to continually repair and protect with twice-a-day brushing.

NovaMin reacts rapidly with water, so a challenge for GlaxoSmithKline Consumer Healthcare was to develop a non-water based formula that could be used in an everyday fluoride-based toothpaste. After being exposed to water or saliva, NovaMin releases calcium and phosphate ions, which are the building blocks for teeth that are naturally attracted to exposed dentine. The ions bind themselves to the collagen in the exposed dentine, and from first use, start to form a protective mineral layer that mimics the tooth’s natural make-up.

“Sensodyne Repair & Protect is a technological advance in everyday dental care,” according to Dr. Teresa Layer, VP of Oral Healthcare R&D Future Teams for GlaxoSmithKline Consumer Healthcare. “With twice-daily brushing it helps to continuously repair exposed dentine and provides substantive protection from sensitivity.”

Sensodyne Repair & Protect should be used twice a day like a regular toothpaste, which will continually help repair sensitive teeth and help prevent sensitivity. The product additionally provides the benefits of an ordinary daily fluoride toothpaste, such as all-round protection, cleaning and freshness.

Novartis

Concentrated purely on healthcare, Novartis’ diverse product portfolio includes innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and consumer-health products. Novartis claims to be the only company with top markets positions in these fields.

In February 2011, Novartis announced that its Consumer Health division would be separated into two segments: OTC and Animal Health. The separate businesses join these already-established Novartis divisions: Pharmaceuticals, Sandoz (generics), and Vaccines & Diagnostics. Additionally, following the completion of the merger between Novartis and Alcon Inc., Ciba Vision Corp. and Novartis ophthalmic medicines will be combined into the new Alcon eye-care division.

As of March 2, 2011 Naomi Kelman is heading the Novartis OTC Division and has become a permanent attendee to the Executive Committee of Novartis (ECN). Ms. Kelman reports to Novartis CEO Joseph Jimenez. Ms. Kelman came to Novartis from Johnson & Johnson, where she held several leadership roles within the Consumer and Medical Device & Diagnostic sectors. Her successful leadership spanning several businesses showed a strong concentration on innovation, and as a result delivered strong financial results.

“With the upcoming Alcon merger, we have decided to put additional focus on two important businesses which today comprise the Consumer Health Division: OTC and Animal Health, by streamlining and simplifying our decision-making process,” Mr. Jimenez stated on Feb. 17, 2011. “We look forward to Naomi joining our leadership team – her experience in consumer businesses, combined with her drive for results make her well suited to run our OTC business.”

Novartis Group’s continuing operations generated 2010 net sales of $50.6 billion. Novartis invested $9.1 billion (or $8.1 billion excluding impairment and amortization charges) on R&D during 2010. With headquarters in Basel, Switzerland, Novartis employs 119,000 full-time-equivalent associates (including 16,700 Alcon associates) and operate in 140-plus countries.

Novartis’ Consumer Health sales for 2010 totaled $6.2 billion, up 7% (+6% cc) versus 2009. All of the Consumer Health businesses generated growth ahead of their respective markets for 2010.

According to Novartis, the group’s OTC business ranked No. 4 in the global sector during 2010. All regions contributed to Novartis’ 2010 sales growth in the OTC segment (+5% cc), supported by double-digit increases of the key brands Voltaren, Nicotinell and Excedrin. Voltaren Gel gained FDA clearance during November 2007 as the first approved topical prescription treatment for pain associated with osteoarthritis. Nicotinell is a Nicotine Replacement Therapy (NRT) for treating smoking addiction. Excedrin has been a leader in headache pain for almost 50 years.

During second-quarter 2010, the heartburn treatment Pantoloc Control was successfully introduced in 14 European markets. Pantoloc Control is anticipated to continue to support growth in Novartis’ gastrointestinal franchise. Novartis launched the OTC proton-pump inhibitor (PPI) through a joint-marketing pact with the product’s originator Nycomed.

Based in Zurich, Switzerland, Nycomed is a privately owned, worldwide pharma company. During 2009, Nycomed ranked No. 28 among global pharma companies and was the 16th-largest provider of OTC medicines, according to the company. For more details about Nycomed, please see page 26.

Pantoprazole is the first PPI and second product ever approved by the European Medicines Agency’s Committee for Medicinal Products for Human Use for OTC status through the EU’s centralized procedure. The first successful pan-European switch was GlaxoSmithKline’s weight-loss drug alli. The EMA cleared the switch of pantoprazole to OTC status in June 2009, one month after the Rx drug lost patent protection in 12 European countries, according to reports.

Pantoprazole is the active chemical in the Rx blockbuster brand Protonix/Pantozol/Pantoloc. These brands are marketed worldwide by Nycomed and Pfizer Inc. (via its 2009 acquisition of Wyeth).

Retail sales of Prevacid24HR have spurred Novartis’ U.S. OTC business into the fastest-growing in its peer group. Prevacid24HR contains 15 milligrams of lansoprazole, which is the main chemical in the blockbuster Rx medicine Prevacid/Takepron (lansoprazole). Prevacid/Takepron is marketed worldwide by Japan’s Takeda Pharmaceutical Co. The non-prescription version treats frequent heartburn that for 24 hours.

During fourth-quarter 2010, Prevacid24HR became one of the world’s top 20 OTC brands and Novartis’ second-leading OTC brand in the United States.

The company’s leading OTC product is Excedrin. The Novartis brand established itself as a top four brand in its category and as the No. 2 fastest-growing brand among its competitors during 2010. Containing acetaminophen, aspirin and caffeine, Excedrin treats pain due to headaches, backaches, colds and arthritis.

Novartis is acquiring some OTC eye-care products via its acquisition of Alcon. The most expensive healthcare M&A transaction of 2010, Novartis’ acquisition of Alcon occurred in various stages. Announced on the fourth day of 2010, Novartis agreed to purchase 52% of Alcon shares at a value of $28.3 billion. Having already acquired 25% of Alcon during July 2008, Novartis as a result had attained 77% majority ownership of the eye-care leader. Then during December 2010, Novartis obtained the remaining minority stake of 23% for $12.9 billion. Through the two transactions that combine for a value of $41.2 billion (and a total of $51.6 billion when including the initial 25% deal in 2008), Novartis becomes the premiere player in the worldwide eye-health arena.

Novartis and Nestlé first entered into the 77% majority-stake deal during April 2008 as part of a two-phase process. The total cost to Novartis for the 77% majority stake of Alcon was $38.7 billion, or $168 per share. During July 2008 and as the first phase, Novartis acquired a 25% stake in Alcon for $10.4 billion. The $168 per share reflects a 17% premium over $143.18, which was agreed by Novartis and Nestlé to be Alcon’s market price during April 2008.

Based in Hunenberg, Switzerland, Alcon is the largest and most profitable eye-care company with more than 15,500 employees in 75 countries. For 2009, the company had sales of $6.5 billion, operating income of $2.3 billion, and net income of $2 billion. Alcon’s product range includes pharmaceutical, surgical and consumer eye-care products to treat diseases, disorders and other conditions of the eye.

Alcon is the worldwide leader in IOLs based on the AcrySof family, which exceeded $1 billion in 2008 sales. Alcon’s portfolio of specialty medicines covers various eye diseases such as glaucoma and conditions in the front of the eye like infections and allergies. Alcon also provides a portfolio of contact-lens-care products, OTC dry-eye drops and ocular vitamins. Emerging markets has been a key growth driver for the company.

“The full merger is the logical conclusion of our initial strategic investment in Alcon,” stated Daniel Vasella, M.D., Novartis chairman. “With this step Novartis takes full ownership, becoming the global leader in eye care, a rapidly expanding, innovative platform based on the growing needs of an aging population.”

According to Mr. Jimenez, “The growth synergies here are significant, as Alcon will be the eye-care development engine for our best-in-class research organization, and will leverage the Novartis market-access capabilities outside the U.S. I am very pleased that we were able to come to this agreement and will be able to provide Alcon employees the full benefits of being part of the Novartis Group.”

According to Novartis, the eye-care industry offers additional growth opportunities underpinned by the increasing unmet needs of emerging markets and an aging population. The Alcon and Novartis eye-care portfolios address a wide array of these unmet needs. The companies have complementary pharma portfolios for diseases in the front and back areas of the eye as well as strong lens-care brands around the globe. Alcon is a worldwide leader in ophthalmic surgical products. Novartis possesses a broad contact lens portfolio and advanced eye-care technologies as well as an early-stage pipeline of innovative ophthalmic medicines.

The merger is anticipated to be finalized during first-half 2011. Implementation is expected to take six months from the closing of the merger. Following the completed merger, Alcon will be the new eye-care division of Novartis. Pro-forma sales of the new division for 2009 totaled $8.7 billion. The business will include Ciba Vision and ophthalmic medicines.

A worldwide leader that generates more than three-fourths of its yearly sales from contact lenses, Ciba has been growing due in part to new product introductions in the Air Optix family of monthly silicone hydrogel lenses and the Dailies range of disposable lenses. Ciba offers an array of lens-care products.

Novartis now is the clear-cut leading force in the eye-care segment. Bausch & Lomb Inc. is regarded as the No. 2 player in the worldwide eye-health market. Bausch & Lomb is committed to bringing visionary ideas to eye health. The corporation’s core businesses include contact lenses and lens-care products, ophthalmic surgical devices and instruments, as well as ophthalmic pharmaceuticals. Founded during 1853, Bausch & Lomb is based in Rochester, N.Y., and has 10,000-plus employees. The company’s products are sold in more than 100 countries. For more details about Bausch & Lomb, please see page 18.

sanofi-aventis

A leading global pharma entity, sanofi-aventis generated 2010 sales of EUR30.38 billion. The company’s broad portfolio of pharma products covers Rx medicines, generics, consumer healthcare and animal health. Sanofi-aventis is a global leader in human vaccines. With a broad and balanced presence in traditional and emerging markets, sanofi-aventis has 102,000 employees in 100 countries.

Sanofi-aventis became a significant force in the OTC arena upon its acquisition of Chattem Inc. This transaction was ranked as the ninth-largest M&A transaction of 2009 by PharmaLive editors.

Near the end of December 2009, sanofi-aventis entered into a definitive deal to acquire 100% of the outstanding shares of Chattem in a cash tender offer for $93.50 per share, or $1.9 billion. The pact created the world’s fifth-largest consumer healthcare company in terms of product revenue by joining the operations of Chattem with sanofi-aventis’ strong international presence in the sector.

Chattem has been a top marketer and manufacturer of a broad portfolio of branded OTC healthcare products, toiletries and dietary supplements. Chattem’s products target niche market segments and are among the market leaders in their respective categories across food, drug and mass merchandisers. Chattem has regularly shown the ability to sustain regular growth in terms of sales and profit via the development of its own brands and the successful integration of acquired products. The 130-year-old company’s well-known brands include Gold Bond, Icy Hot, ACT, Cortizone-10, Selsun Blue and Unisom. Chattem carries out a portion of its business via subsidiaries in the United Kingdom, Ireland and Canada. For 2008, Chattem recorded revenue of $455 million and had 488 employees.

OTC and consumer brands are core growth platforms identified in sanofi-aventis’ broader strategy for generating sustainable growth. Although the Group generated roughly EUR1.4 billion in global OTC sales during 2009, a direct U.S. presence had yet to be established for sanofi-aventis until the arrival of Chattem.

“The acquisition of Chattem will be a significant milestone in sanofi-aventis’ transformation strategy and will provide us with the ideal platform in the U.S. consumer healthcare market, which represents 25% of the current worldwide opportunity,” according to Christopher A. Viehbacher, sanofi-aventis CEO, at the time of the acquisition announcement. “In addition, we believe our ability to convert prescription medicines to OTC products will be enhanced by Chattem’s leading sales, marketing and distribution channels. We have great respect for Chattem’s world-class management team, which has an excellent track record of sales and earnings growth based on building strong brands. With the potential access to switch products such as Allegra, I believe this team will take Chattem to even higher levels.”

“This transaction offers immediate and significant value for Chattem’s shareholders and important benefits to our employees, customers and community,” said Chattem CEO Zan Guerry at the time of the acquisition. “I am excited to work with the sanofi-aventis team to capture the significant growth opportunities this combination creates, as highlighted by the planned launch of Allegra. Chattem will form the base of a new consumer healthcare business in the United States for sanofi-aventis, and the headquarters, manufacturing and leadership team will continue to be based in Chattanooga.”

Mr. Guerry and Chattem’s senior-management team agreed to lead sanofi-aventis’ U.S. consumer health division following the close of the transaction. Sanofi-aventis is dedicated to Chattem’s current operations and entrepreneurial spirit as it builds a sizeable presence in the U.S. consumer-healthcare sector. Sanofi-aventis has maintained both of Chattem’s existing manufacturing facilities and continued construction on a third. The corporate brand of Chattem remained intact.

Editor’s note: For more details regarding the top 10 M&A industry deals of 2010, 2009 and other significant transactions throughout the healthcare arena, please visit PharmaLive.com/Special_Reports (Mergers & Acquisitions, Partnerships, & Collaborations Review and Outlook).

During December 2009, sanofi-aventis management announced that the company would seek to convert the antihistamine Allegra (fexofenadine HCl) from a prescription drug to an OTC product. Upon Allegra’s conversion, Chattem would assume responsibility for the brand as part of becoming the platform for sanofi-aventis’ U.S. OTC and consumer healthcare business. As a prescription medicine for allergies and other conditions, Allegra generated blockbuster sales throughout the last decade.

The Chattem acquisition has provided sanofi-aventis with a new platform that enables the conversion of prescription medicines to over-the-counter products. Allegra represents sanofi-aventis’ first Rx-to-OTC conversion.

During January 2011, FDA approved the Allegra family of allergy medication products for OTC use in adults and children 2 years of age and older. Allegra-D, which relieves nasal congestion and sinus pressure, was made available without a prescription at the pharmacy counter for use in adults and children 12 years of age and older. Allegra and Allegra-D were introduced during March 2011 in their original Rx strengths without a prescription.

More than 40 million American adults suffer from indoor and outdoor allergies. Allegra provides fast, non-drowsy, 24-hour relief of allergy symptoms: sneezing; runny nose; itchy, watery eyes; and itchy nose or throat. The product has provided allergy sufferers with relief of symptoms for nearly 15 years.

“Leveraging our U.S. Consumer Healthcare platform to convert prescription medicines to OTC products is a key growth driver for sanofi-aventis to become a diversified healthcare company also in the United States,” says Hanspeter Spek, president, Global Operations. “The approval of Allegra for OTC use further validates our vision to increase our presence in the U.S. consumer healthcare market.”

Mr. Guerry says, “We’re pleased to provide U.S. consumer access to Allegra, the No. 1 U.S.-prescribed allergy treatment, allowing allergy sufferers to conveniently obtain a safe and effective medication without a prescription,”

The Allegra family of OTC products is available without a prescription for allergy sufferers in drug, grocery, mass merchandiser and club stores throughout America. This includes Allegra 24-Hour and 12-Hour Tablets for adults and children 12 years of age and older; Children’s Allegra 12-Hour Tablets for 6 years of age or older, and Liquid for use in 2 years of age and older; Children’s Allegra 12-Hour Orally Disintegrating Tablets for use in 6 years of age and older; and Allegra-D 24-Hour and 12-Hour Allergy and Congestion Extended Release Tablets (with a decongestant) for use in children 12 years of age and older.

The Chattem acquisition is part of a strategy by sanofi-aventis to diversify, particularly into sectors with stable product revenue as the company will face patent expirations in the next few years, including the blockbuster brands Plavix and Avapro. For 2010, sanofi-aventis reported sales of EUR6.9 billion for Plavix/Iscover and EUR2.06 billion for

Avapro/Aprovel/Karvea.

Sanofi-aventis’ transformation strategy was evident in the third quarter of 2009 as the company reinforced platforms for growth and forged ahead with its policy of R&D alliances and targeted acquisitions. On Oct. 30, 2009, the Group announced the signing of a deal to acquire all shares of Laboratoire Oenobiol, the French leader in nutritional supplements for health and beauty. During 2008, Oenobiol reported turnover of EUR58 million, of which 85% was generated in France.

Sanofi-aventis made another OTC company acquisition during 2010. On Oct. 28 of that year, a deal was struck in which Sanofi Pasteur, the vaccines division of sanofi-aventis, agreed to acquire all outstanding shares of BMP Sunstone Corp. for cash consideration of $10 per share, or a total of $520.6 million on a fully diluted basis. The acquisition was structured as a merger of BMP Sunstone, which as a result becomes a wholly owned subsidiary of sanofi-aventis.

The price per share represented a 30% premium above the closing price of BMP Sunstone’s shares as of Oct. 27, 2010. BMP’s board of directors unanimously approved the deal. BMP generated sales of $147 million in 2009. Almost 60% of those sales derived from the consumer-healthcare segment, where BMP has had access to retailers, county hospitals and community clinics in Tier III and Tier IV markets. In this area, BMP has established two of China’s most recognized brands: “Hao Wa Wa” (GoodBaby), which has been recognized as the No. 1 pediatric Cough & Cold brand in China, and “Kang Fu Te” (Confort), a hygiene brand for women’s healthcare.

Following the October 2010 establishment of the joint-venture Hangzhou Sanofi Minsheng Consumer Healthcare Co. Ltd. in partnership with Minsheng Pharmaceutical Co. Ltd., the acquisition of BMP gives sanofi-aventis a leading consumer-healthcare presence in China with a strong position in Vitamins & Minerals Supplements and Cough & Cold. These are the two largest categories of that market.

“The acquisition of BMP Sunstone will not only leverage our consumer-healthcare business in China, but will also bring us unique access to new expanding distribution channels which are expected to account for a third of the pharmaceutical market in China in the coming years” Mr. Viehbacher stated. “This transaction represents another strategic move for sanofi-aventis to reinforce its leadership position in China.”

BMP CEO David (Xiao Ying) Gao said, “This transaction offers immediate and significant value for BMP Sunstone stockholders and important benefits to our employees and customers. I am excited to work with the sanofi-aventis team to capture the significant growth opportunities this new combination will create in the consumer-healthcare market in China.”

Consumer healthcare is one of the core growth platforms pinpointed in sanofi-aventis’ strategy for attaining sustainable growth. As of October 2010, Sanofi-aventis was the No. 5 consumer-healthcare company worldwide, and it continues to expand its presence in this field via organic and external growth.

With an estimated size of EUR12 billion in 2010, the consumer-healthcare market in China represents the second largest worldwide after No. 1 United States. China’s consumer-healthcare market has grown at a CAGR of 11% since 2005. This trend is expected to continue during the coming years, spurred by continued urbanization and improvement of patients’ affordability, a rising trend of self-medication, and the development of pharmacy chains and expanded retail offerings of consumer healthcare products.

Sanofi-aventis was the first foreign pharma company to debut offices in China. Sanofi-aventis has become one of the fastest-growing healthcare companies in that vast country with 5,000 people in 200-plus cities. From prevention to treatment, sanofi-aventis is uniquely set up to take on public-health needs in China. Sanofi Pasteur is a leading vaccines there.

Sanofi-aventis as of October 2010 had three manufacturing facilities in China: in Beijing, Hangzhou, and Shenzhen. Sanofi-aventis is constructing three new facilities, each set to start commercial production in 2012, to meet the growing demand of the Chinese market. The company is engaged in integrated R&D in China from drug target identification to late-stage clinical development. Sanofi-aventis’ China R&D Center and Asia Pacific R&D Center are located in Shanghai.

Sanofi-aventis’ Consumer Health Care business generated 2010 sales of EUR2.22 billion, up 45.7% at constant exchange rates year over year. Growth was lead by Emerging Markets, where net sales advanced 44.4% at constant exchange rates to EUR1.05 billion. These figures consolidate the consumer-health products of Zentiva NV from April 2009, Oenobiol as of December 2009, Chattem as of February 2010, and Nepentes SA from August 2010. On a constant structure basis and at constant exchange rates, the division recorded 2010 sales growth of 6.9%, driven by Emerging Markets.

On March 11, 2009, sanofi-aventis successfully completed its offer for the Eastern European generic player Zentiva. As of Dec. 31, 2009, sanofi-aventis held about 99.1% of Zentiva’s share capital. The total purchase amount was EUR1.2 billion, including acquisition-related costs. Following the buyout of the remaining non-controlling interests, sanofi-aventis held a 100% equity interest in Zentiva effective Dec. 31, 2010. Sanofi-aventis previously had a 24.9% interest in Zentiva, which was accounted for as an associate by the equity method.

The August 2010 acquisition of a 100% equity interest in the Polish company Nepentes for PLN 425 million (EUR106 million) was intended to diversify sanofi-aventis’ consumer health portfolio in Poland, and in Central and Eastern Europe generally.

Merck

Merck is a worldwide healthcare leader known as MSD outside the United States and Canada. Through Rx medicines, vaccines, biologic therapies, as well as consumer-care and animal-health products, the company has a presence in 140-plus countries via 94,000 employees. In 2010, Merck generated sales of $46 billion and GAAP net income of $861 million.

Merck’s Consumer Care sales totaled $1.3 billion in 2010. This performance reflects continued strong performance of various key brands such as Dr. Scholl’s and Coppertone. Consumer Care includes footcare and suncare consumer products as well as OTC medicines.

Dr. Scholl’s and Coppertone came to Merck through the company’s 2009 acquisition of Schering-Plough Corp. On March 9 of that year, the two companies agreed to a reverse merger transaction amounting to $41.1 billion. The acquisition provided Merck with patent-protected blockbusters and a strong product pipeline. With Schering-Plough’s 18 Phase III projects, the new Merck became one of the leading R&D players. Schering-Plough also provided Merck with a significant consumer-products presence.

Merck’s Consumer Care business includes the company’s U.S. and Canada consumer-product sales. Consumer-product sales for the rest of the world under MSD are included in the company’s Human Health segment. For 2010, global Human Health sales (which includes the prescription-drug business) totaled $39.81 billion and Consumer Care sales amounted to $1.34 billion.

Merck’s leading consumer-care product in 2010 was Claritin, which was acquired from the Schering-Plough transaction. The former prescription blockbuster generated 2010 OTC sales of $401 million for Merck. Including 2009 sales from Schering-Plough, Claritin OTC produced $367 million during that year.

Claritin is the leading physician-recommended and pediatrician-recommended non-drowsy OTC brand for allergies. The Claritin Rx-to-OTC switch during 2002 was the largest such switch ever as well as the first for a non-drowsy antihistamine.

Claritin offers powerful non-drowsy allergy relief for 12 hours or 24 hours in various forms, including Claritin Tablets; Claritin Liqui-Gels, an easy-to-swallow liquid-filled capsule; as well as Claritin RediTabs tablets, a quickly dissolving tablet for patients ages 6 years and older. Claritin 12-Hour RediTabs tablets offer the flexibility to manage allergy symptoms all day or night.

Claritin-D is available behind-the-counter in 12-hour or 24-hour extended-release tablets. Claritin-D includes the decongestant pseudoephedrine for powerful nasal congestion relief.

Dr. Scholl’s is the leading brand of footcare products in the U.S., providing comfort to millions for more than a century. The brand offers more than 120 footcare products. According to Merck, Dr. Scholl’s uses the latest podiatric medicine and research to revolutionize the way Americans think of and care for their feet.

Dr. Scholl’s For Her is the first full line of footcare products designed specifically for women. Products range from pedicure-related to heel insoles.

Dr. Scholl’s For Her Fast Flats was launched in August 2010. The compact and foldable shoes fit discreetly in a purse and come with a wristlet for easy storage and portability. The spare pair is convenient for nights out, weddings, traveling through airports, and other times when a long trek in heels is uncomfortable. As of August 2010, Fast Flats was the only brand of portable flats available at most drug and mass retailers in America. The flats come in female sizes 5-6, 7-8, and 9-10.

Merck Consumer Care introduced Dr. Scholl’s Custom Fit Orthotic Centers during July 2010. These kiosks help people find customized solutions for their tired, achy feet. The kiosks use revolutionary FootMapping Technology to measure arch type and the areas where people put the most pressure on to recommend the most appropriate Custom Fit Orthotic.

The FootMapping Technology was developed by Dr. Scholl’s scientists and evaluated in five clinical trials. The technology uses 2,000-plus pressure sensors to measure foot areas where the most pressure is applied, arch type and foot length. Based on these criteria, the technology recommends the Dr. Scholl’s Custom Fit Orthotic that is best suited for one’s feet. They offer all-day relief of tired, achy feet and eliminate foot discomfort immediately.

“Fifty percent of adults suffer from tired, achy feet, especially if they have jobs that keep them on their feet all day,” according to Dr. Leslie Campbell, a podiatrist at the Plano Physician’s Group in Plano, Texas, and a consultant to the makers of Dr. Scholl’s. “A customized solution can make a real difference in foot comfort, and these revolutionary Dr. Scholl’s Custom Fit Orthotic Inserts are a great, affordable way for people to relieve their tired, achy feet.”

The Coppertone line of products includes sun-care lotions, sprays and dry oils. The brand dates back to 1944.

The Coppertone Solar Research Center in Memphis, Tenn., is one of the largest corporate facilities for testing sunscreen effectiveness and performance. Suncare scientists carry out hundreds of tests on sunscreen formulas at the center every year to ensure products meet both consumers’ needs and rigorous testing standards. The R&D team oversees the development of a many different global suncare products that are manufactured and marketed worldwide, including in Europe and Japan.

During April 2010, Zegerid OTC for treating frequent heartburn became available in drug stores, grocery stores, mass merchandisers and club stores throughout America. FDA approved Zegerid during December 2009 for OTC use. Please see page 15 for more details.

Bayer

Germany’s Bayer is a worldwide enterprise with core competencies in the areas of healthcare, nutrition and high-tech materials. The Bayer Group generated 2010 sales of EUR35.09 billion, up 12.6% compared to 2009. The three primary business areas are HealthCare, CropScience, and MaterialScience.

Bayer HealthCare AG is a researcher, developer, manufacturer and marketer of innovative products for disease prevention, diagnosis and treatment. Sales in 2010 for the HealthCare business grew 5.8% to EUR16.91 billion. The currency-adjusted and portfolio-adjusted increase was 1.7%. The HealthCare subgroup is divided into the Pharmaceuticals and Consumer Health segments.

Within the HealthCare business, Pharmaceuticals sales for 2010 rose 4.2% (Fx&p adj. 0.9%) to EUR10.91 billion. Bayer’s Consumer Health Sales improved 8.8% (Fx&p adj. 3.4%) to EUR6.01 billion versus 2009, with all regions – particularly North America – contributing to the growth. The Consumer Health segment consists of the Consumer Care, Medical Care and Animal Health divisions.

In the non-prescription medicines business (Consumer Care), the pain reliever Aleve recorded the highest 2010 sales growth at 18.7% (Fx adj.). The Bepanthen/Bepanthol line of skincare products additionally performed very well, with sales up advancing 12% (Fx adj.). Business in Bayer’s Medical Care Division was hampered by the negative trend in the U.S. diabetes-care market (blood-glucose meters, etc.), where sales of the division declined 20.3 % (Fx adj.) due to price and volume reasons. On the other hand, the Animal Health Division “posted a very satisfactory trend, benefiting from a 14.6% (Fx adj.) increase in sales of the Advantage line of flea, tick and worm control products that was driven by gains in the United States.”

For 2011, Bayer anticipates for its Consumer Health segment above-market sales growth after adjusting for currency and portfolio effects. Sales and EBITDA before special items are projected to rise by mid-single-digit percentages.

Bayer’s Consumer Health segment primarily markets OTC products. The Consumer Care division is a leading player in the nonprescription-drug market. The Consumer Care product range includes the pain relievers Aspirin and Aleve as well as the dermatology products Canesten and Bepanthen/Bepanthol. Nutritionals include Supradyn, One A Day, Berocca and Redoxon; antacids; and cough-and-cold products.

According to Bayer, its Consumer Care division is the No. 2 OTC company worldwide. Based in Morristown, N.J., Bayer Consumer Care has operations in 140-plus countries. Formed in 1995, the division has benefitted from significant growth and development of its Intendis prescription dermatology business.

Intendis is an integrated pharma business with headquarters located in Berlin, Germany. As part of Bayer HealthCare, Intendis is committed to dermatology. The company is concentrated on the development and marketing of high-quality, innovative topical therapies targeted to treat skin disorders. Intendis’ product portfolio consists of treatments for eczema disorders, including atopic dermatitis as well as psoriasis, acne, rosacea, hemorrhoids and fungal skin infections (mycoses).

Although the Consumer Care division’s sales and distribution channels outside Europe are generally supermarket chains, drugstores and other large retailers, pharmacies are the usual distribution channel in Europe.

Bayer is considered one of the leading companies in the market for blood-glucose-monitoring devices. The company’s Medical Care division offers user-friendly blood-glucose-monitoring devices such as the single-strip Contour system and the multi-strip Breeze system. Bayer additionally markets the Contour usb meter, which features integrated diabetes-management software and direct plug-in to computers, as well as the A1CNow system for determining long-term blood glucose control (A1c). Outside Europe, these products are mainly sold to consumers via pharmacies, drugstores, mass merchants, hospitals or wholesalers. In Europe, they are primarily sold through pharmacies.

Within the Medical Care segment, Bayer is the world’s leading supplier of contrast-agent injection systems for diagnostic and therapeutic medical procedures in computed tomography, magnetic resonance imaging and molecular imaging as well as mechanical systems for removing thrombi from blood vessels. Bayer offers service products for these systems. The products are marketed to cardiologists, radiologists and vascular surgeons in hospitals and out-patient clinical sites via a worldwide direct sales organization that is supplemented in some cases by local distributors.

The Animal Health division concentrates on the health of companion animals and livestock, for which bayer we provides pharmaceuticals and grooming products. The largest product line is Advantix and Advantage for the prevention and treatment of flea infestation in dogs and cats, followed by Baytril for the control of infectious diseases, Drontal and Drontal Plus wormers, and Baycox to treat pig coccidiosis.

Bayer Animal Health has leading positions in individual countries and product segments. Bayer is the world’s No. 4 animal-health company based on sales. Depending on local regulatory frameworks, its animal-health products may be available to end users as prescribed by a veterinarian or prescription-free from veterinarians, pharmacies or retail stores.

In February 2011, Erica L. Mann was named president of Bayer Consumer Care. She additionally was appointed a member of the Bayer HealthCare executive committee. Ms. Mann join the company effective March 14, 2011. She most recently was president and general manager of Pfizer Nutritional Health, a worldwide business unit with operations in 80-plus countries.

Ms. Mann joined Pfizer upon its acquisition of Wyeth, where as senior VP of Nutrition she helped form the shape and strategic direction of that new business unit. As managing director of Wyeth Australia & New Zealand, she launched a range of significant medicines and nutritionals. Ms. Mann additionally steered Wyeth’s Pharmaceutical business in South Africa for more than a decade as managing director and CEO. She holds the distinction of being the first female CEO of a pharma company in that country.

“Over the past 25 years, Ms. Mann has become noted in the industry for her strong record of delivering business results. Her outstanding experience and insights will drive Consumer Care to take advantage of the sustained growth forecast for the OTC market,” according to Dr. Jorg Reinhardt, chairman of Bayer HealthCare’s board of management and chairman of Bayer’s HealthCare executive committee. “I am confident that she will continue to drive the exceptional growth experienced under the leadership of Gary Balkema, who has made the decision to retire after 16 years with Bayer at the end of March.”

Gastrointestinal disorders

One of the most competitive therapeutic categories in the OTC product arena is gastrointestinal disorders. In late March 2010, the OTC heartburn-treatment category received another competitor: Zegerid OTC.

The Merck drug was approved by FDA in December 2009 and provides a unique alternative for the 50-plus million Americans suffering from frequent heartburn. Zegerid OTC is the only over-the-counter proton-pump inhibitor product with two active ingredients. The patented dual-ingredient formulation joins together a prescription-strength acid-reducing medicine (omeprazole) and a secondary ingredient (sodium bicarbonate) that enables efficient absorption.

Zegerid OTC capsule is available as its original 20-mg prescription-strength version. The prescription medicine has a significant six-plus year track record with physicians. The Rx brand is marketed by Santarus Inc., which is losing revenue for the product due to the availability of generic versions. Par Pharmaceutical Companies Inc. introduced a generic version of Zegerid Capsule during late June 2010. Other generic players have done the same, including privately-held, Cincinnati-based Prasco Laboratories.

Santarus reported that net product sales for Zegerid brand prescription products and sales of the authorized generic version of Zegerid Capsule totaled $11 million in third-quarter 2010. In comparison, net product sales were $31.5 million for Zegerid brand prescription products during July-September 2009. Before generic competition set in, yearly U.S. sales of Zegerid capsule amounted to about $195 million.

San Diego-based Santarus is a specialty biopharma company concentrated on acquiring, developing and commercializing proprietary products that address the needs of patients treated by physician specialists.

Woodcliff Lake, N.J.-based Par Pharmaceutical Companies develops, manufactures, markets and distributes high-quality pharmaceuticals via two divisions. Par Pharmaceutical Inc. of Spring Valley, N.Y., is the generic drug division. Strativa Pharmaceuticals Inc. of Woodcliff Lake is the proprietary products division.

On Sept. 24, 2010, Perrigo Co. announced a filing an Abbreviated New Drug Application (ANDA) with FDA for omeprazole 20mg/sodium bicarbonate 1,100mg. Also, the company provided prior notice of this filing to Schering-Plough HealthCare Products Inc., a subsidiary of Merck, and the Curators of the University of Missouri, the listed patent owner. Merck is the owner of the brand regulatory approval.

Four days earlier, Schering-Plough filed suit alleging patent infringement in the U.S. District Court of New Jersey to prevent Perrigo from proceeding with the commercialization of the product. This action formally started the process under the Hatch-Waxman Act. Santarus and the Curators of the University of Missouri, licensor and owner of the patents, were joined in the lawsuits as co-plaintiffs. In connection with litigation relating to Zegerid brand prescription products, the U.S. District Court for the District of Delaware ruled during April 2010 that the same patents that are the subject of the aforementioned action were invalid due to obviousness. An appeal of that decision was filed during May 2010, and the appeal reportedly is pending.

Perrigo’s product is generically equivalent to Schering-Plough’s Zegerid OTC (omeprazole 20 mg/sodium bicarbonate 1,100mg) antacid indicated for the treatment of frequent heartburn. Annual sales for the OTC brand are estimated to be about $60 million.

“This filing is an example of our focus on bringing new Rx-to-OTC switch products to market,” said Joseph C. Papa, chairman and CEO of Perrigo. “It is a great addition to our diverse offering of gastrointestinal products.”

Perrigo is a top worldwide healthcare supplier that develops, manufactures and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients (API), as well as pharma and medical diagnostic products. Perrigo is the world’s No. 1 store-brand manufacturer of OTC pharma products and infant formulas. The Allegan, Mich.-based company’s primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico, the United Kingdom and Australia. Perrigo reported sales of $1.36 billion for the six-month period ended Dec. 25, 2010, compared to $1.11 billion year over year.

Allergies

Perrigo is an active competitor in the allergy OTC market. On July 26, 2010, the company gained final U.S. approval to manufacture and market OTC Cetirizine Cherry Syrup, 1mg/ml. Shipments started during Perrigo’s fiscal first-quarter 2011, which ended Sept. 25, 2010. Cherry joined Perrigo’s already-available grape flavor cetirizine syrup in its product portfolio, giving patients a choice of flavors.

The product is marketed under store-brand labels and is comparable to McNeil Consumer Healthcare’s Zyrtec Children’s Allergy Syrup. That Pfizer brand is indicated for indoor and outdoor allergy relief. Brand sales for the Zyrtec line of products, which includes cherry syrup, were reportedly $580 million during the 52-week period ended July 4, 2010.

Zyrtec is not the only high-profile allergy OTC brand that has been targeted by Perrigo. During June 2010, the company acquired the exclusive U.S. store brand rights to sell and distribute OTC versions of Fexofenadine HCl 180 mg and 60-mg tabs, as well as Fexofenadine HCl 60 mg and Pseudoephedrine 120 mg tabs. These products represent the generic versions of sanofi-aventis SA’s Allegra and Allegra D-12 products.

As of June 2010, the world’s leading generic company Teva Pharmaceutical Industries Ltd. had Rx approval for these products. Teva and sanofi-aventis, one of the top pharma players globally, have settled their Paragraph IV/Hatch-Waxman litigation.

Allegra 180 mg, 60 mg, and Allegra D-12 are indicated for relieving symptoms associated with seasonal allergies. Sanofi-aventis applied to FDA for the Rx-to-OTC switch of these products. Before generic competition entered the Fexofenadine Rx market during 2005, Allegra 180 mg and 60 mg had joint yearly sales of $1.5 billion. For 2009, Allegra D-12 reportedly recorded sales of $600 million.

“This is another example of Perrigo’s strategic focus on making quality healthcare more affordable to American consumers by introducing new Rx-to-OTC switch products,” Mr. Papa said.   Other acquisitions

Perrigo announced on March 1, 2010, the singing of a definitive deal to acquire Orion Laboratories Pty. Ltd. for $48 million in cash. Located in Perth, Western Australia, the privately held company is a leading supplier of over-the-counter store-brand pharmaceuticals in Australia and New Zealand. Orion manufactures and distributes pharma products supplied to hospitals in Australia. The acquisition is expected to add $30-plus million in yearly sales and be accretive to Perrigo’s earnings in the first year.

“The acquisition of Orion expands our global presence, complements our existing business and increases value for our shareholders,” Mr. Papa commented. “By leveraging Orion’s product pipeline and local marketing and distribution expertise, Perrigo is expanding its ability to meet the world’s growing need for quality, affordable healthcare.”

Perrigo additionally confirmed on March 1, 2010, that it closed the previously announced sale of the Israeli Consumer Products business to Emilia Group on Feb. 26th, 2010. The proceeds from this divestiture were used to fund the strategic acquisition of Orion.

Dosing controversy

During December 2010, controversial results were released from an NYU one-year research study on pediatric dosing instructions on liquid medication. The findings were revealed in the Journal of the American Medical Association’s December issue. A comprehensive review of 200 of the leading children’s liquid medications found inconsistencies across all the medications, with many having a problem.

Under the direction of Dr. H. Shonna Yin, assistant professor of pediatrics at NYU School of Medicine, researchers found that one-quarter of the OTC liquid medications do not contain a dosing device like a cup, dropper, or dosing spoon for administering medication. “We also found that 99% had markings on the dosing device and directions on the label that do not match up exactly,” according to Dr. Yin.

Cornell University in early 2010 reported gross inadequacy of dosing with a household spoon that conclusively leads to overdosing and underdosing. These finding came after FDA called for greater consistency in dosing during November 2009.

AccuDial Pharmaceutical Inc., the maker of Children’s AccuDial pediatric medications, during 2007 recognized that children were not being accurately dosed. The widespread amount of parents that were unintentionally overdosing and underdosing their children, and arriving at all hours at hospital emergency rooms across the country, was reaching epidemic proportions.

As a result, AccuDial created a next-generation solution. The company developed the only patented rotating weight-based dosing system designed specifically to properly calculate and administer children’s pediatric liquid medications. The product’s dosing label dials in a child’s weight in two-pound increments and shows the correct weight-based dose in milliliters (mL).

The medicine is then administered with an accurately calibrated dosing spoon in mL and ½ mL that is included in each package. AccuDial offers parents a foolproof method of minimizing dosing errors, with weight-specific dosing and a perfectly matched dosing spoon.

AccuDial is the industry leader in meeting the critical issue of inaccurate dosing of OTC children’s medications. “Measuring dosages using a specific formula based on weight is standard practice among health care professionals such as doctors, nurses, and pharmacists,” stated Bob Terwilliger, CEO of AccuDial, in December 2010. “Children’s AccuDial is a game changer in the pharmaceutical industry with its line of eight children’s medications, with weight-specific dosing, available in more than 4,000 pharmacies and stores across Canada. AccuDial expects to have products available in U.S. pharmacies next year.”

AccuDial Pharmaceutical intends to change the way liquid medications will be dosed on a worldwide scale. AccuDial is the only brand with a patented rotating weight-based dosing system designed to administer OTC medications safely and effectively.