revealing the landscape of rx-to-otc switching wolters kluwer...– nielsen company homescan –...

Confidential & Proprietary • Copyright © 2009 The Nielsen Company and Wolters Kluwer Health

Revealing the Landscape of Rx-to-OTC Switching

Case Study

June 5, 2009

Confidential & Proprietary

Copyright © 2008 The Nielsen Company

Agenda

• Reflections on Current Rx-to-OTC Switch Landscape

• Validating Switch Perceptions:

– Zyrtec Rx-to-OTC Switch Case Study

• Impact of the National TV ad campaign on year 1 performance

• Q&A



• Rx-to-OTC switches evolving rapidly

• Increased “consumerization” of medical landscape– Self-diagnosis / medication trends– Internet-enabled individual research– Explosion of direct to consumer advertising– Expanded role of professional marketing– HMO and high-deductible medical plans– Emergence of in-store clinics

• New OTC categories created:– Smoking cessation– Allergy– Anti-fungal

The Rx-to-OTC Switch Landscape

– Gastrointestinal– Anti-dandruff



Rx-OTC Switching is Not a New Phenomenon• Many of the OTC products we take today were originally available only

by prescription• Prevacid recently approved for Q42009 switch



• Traditionally difficult to measure patient conversion dynamics of Rx-to-OTC switches – Sales data valuable, doesn’t show switching behaviors– Longitudinal Rx and OTC consumption data difficult to integrate– HIPAA challenges– Self-reported capabilities available, but subject to bias and low

sample

Validating Switch Perceptions



Allergy market under close scrutiny in 2008

• Regulators, retailers, managed care and manufacturers very focused on Zyrtec switch and its impact on product choice– Cost savings to consumers, healthcare system– Impact on branded Rx and OTC market share– Role of private label



Zyrtec Switch to OTC was a Major Industry Event

• At its peak in 2007, Zyrtec sold over $500MM in 2007 Q2• Precipitous drop in 2008 as Zyrtec Rx runs out of the supply chain

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Zyrtec Switch to OTC was a Major Industry Event• In its last year of Rx status, Zyrtec held a 36% market share among Rx

antihistamines, including generics

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Zyrtec Rx Dominated Allergy Class• Even when compared to Nasal Steroids and Singulair (factored for

allergy use), Zyrtec was the most widely prescribed allergy medication in the U.S.

• With removal of Zyrtec from Rx status, generic Fexofenadine HCl takes the top spot



On the OTC side, Claritin Held a Dominant Position• Claritin, which switched to OTC status in 2002, dominated the OTC market

in 2007– In addition, availability of Private Label further increases the reach of the

Loratadine molecule• “Back of Store” OTCs – OTC products adjudicated as scripts at pharmacy

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Total magnitude of the Zyrtec switch is evidenced by the impact on the total allergy category

• Zyrtec Rx/OTC switch drove the Rx category downward, while OTC products took up the slack

• INS category stayed reasonably steady



• The only single-source solutionnow available

– Direct match of transaction data• Advances in linking Rx and OTC

longitudinal data help all stakeholders gain further insight into product utilization

– Not just “what” but the “who”– Clues as to “why”

• Matched “gold standard” data– Nielsen Company Homescan– Wolters Kluwer Health Source Lx

• Single source• HIPAA-certified• History to Jan 2005

HealthScapeTM Consumer NEW Insight Gauging Consumer Reaction to changing Market Dynamics



HealthScapeTM Consumer• Analysis Business Rules

– 57,000 households w/ allergy transactions– Study period: Oct 2005 – Dec 2008

– Zyrtec OTC/Private Label Cetirizine: Jan 2007 – Dec 2008– Pre-period: 15-mo span– Analysis currency

– Households– Days Supply:

– Rx: Days Supply from Rx claim– OTC: Maximum Daily Dose from package label

– Dollars:– Rx: patient out-of-pocket payment– OTC: retail price

– A note on Benadryl:– Not strictly considered a competitor to Second Generation

Antihistamines (pro-active products vs reactive)– About 12-15% of Zyrtec OTC’s users are also using Benadryl in one capacity or another



Where did Zyrtec OTC source its business after the switch?…



• About 25% of householdsthat used Zyrtec OTC in 2008 purchased the Rx form in 2007

• The majority of 2008 Zyrtec OTC households were non-Zyrtec Rx users in 2007

Zyrtec OTC sourcing patterns2008 Zyrtec OTC Users’

Zyrtec Rx History (Households)



“Lighter” Zyrtec Rx users make up the bulk of converted households

• Lighter users of Zyrtec Rx (1-4 Rxs filled in 2007) make up the bulk of the households that converted to Rx form.

2008 Zyrtec OTC Users’Zyrtec Rx History

(Households)



But, heavier Zyrtec Rx users are contributing more product volume (pills)• Lighter users of Zyrtec Rx (1-4 Rx’s filled in 2007) make up the bulk of the

households that converted to Rx form.• Heavier Zyrtec Rx users are contributing a greater share of product volume to

Zyrtec OTC sourcing.

HouseholdsHouseholds Days SupplyDays Supply

2008 Zyrtec OTC Users’ Zyrtec Rx History (Households vs Days’ Supply)



Many Zyrtec Rx users stayed with Rx products

• Many 2007 Zyrtec Rx users switched to other Rx therapies in 2008• OTC switch volume includes Zyrtec OTC



Zyrtec OTC sourcing patterns from other products

• Of the 75% of households that were not 2007 Zyrtec Rx users, many switched from Claritin OTC or even Private Label Loratadine

HouseholdsHouseholds Days SupplyDays Supply



Prior product use determined cost savings to switch to Zyrtec OTC

• Price paid only includes medication expense

• The average consumer paid $1.23 more to switch to Zyrtec OTC– Branded Users (Rx + OTC) spent

less to buy Zyrtec OTC (avg of $4.33)

– Generic and Private Label spent more to buy Zyrtec OTC (avg of $18.41)



Private Label Cetirizine sourcing looked similar to Zyrtec OTC, with an even stronger Private Label skew

• Significantly more sourcing from Private Label Loratadine• Less volume from Claritin OTC

Days SupplyDays SupplyHouseholdsHouseholds



Private Label Cetirizine use resulted in more widespread savings

• Price paid only includes medication expense

• Private Label Cetirizine users buy larger supplies of product – 46 days vs 34 days for Zyrtec

OTC users)

• The average consumer saved $11.70 to switch to Private Label Cetirizine– Branded Users (Rx + OTC) spent

less (avg of $4.33)– Generic and Private Label spent

more (avg of $18.41)



Utilization is only one dimension to understanding switching dynamics …



Utilization is one thing, but who these users are is the road to successful tactics • Review of key demographics by user group makes an important

distinction between “what” consumers are buying and “why” they are buying it– “Why” helps understand the category and target/promote to key groups– For this presentation, focus on household income

– Income is only one of the demographic dimensions at our disposal(geography, ethnicity, syndicated and custom segmentation)



Total allergy category (Rx and OTC) has consistently sourced business from certain income levels

• Establishing a baseline with migration of Zyrtec to OTC from Rx, user income profile hasn’t changed at all



Distinct differences in HHs that used Zyrtec in 2007 vs. those in 2008 Zyrtec Rx 2007 vs Zyrtec OTC 2008 User HH Income

• Includes all users, not just switchers (new to market, etc)

• HHs choosing to use Zyrtec OTC in 2008 are wealthier than those that used the Rx form 2007– How does this inform

all manner of marketing tactics?– Pricing– Promotion



Skew is even more pronounced among Zyrtec OTC users who switched from another allergy product

• 2008 Zyrtec OTC Switchers with previous product use in either Rx or OTC products

• For Switchers, the skew toward higher incomes is even more pronounced.

• Ability to pay is enhanced, but size of switching population is reduced.



In fact, Zyrtec OTC switchers look a lot more like Claritin OTC users

• Zyrtec OTC is sourcing business from the same household profile as Claritin OTC

• This goes a long way to explaining the “why”when we look back at the significant Claritin OTC source of volume



Allergy market under close scrutiny in 2008

• Through new linking capabilities between Rx and OTC longitudinal data, we gain new insight into the “whys”behind product choice– Zyrtec Rx conversion was significant, but not the largest source of

Zyrtec OTC users– Several OTC products played a prominent role in Zyrtec source of

users– Private label consumers saw significant savings

– Demographic profiling helps understand Zyrtec OTC sourcing and gives clues to predict future consumer reaction to Rx/OTC switches



Impact of the National TV ad campaign on Year 1 Performance

Source: Nielsen IAG



Both Zyrtec OTC and Claritin have had a healthy investment in national primetime TV advertising.

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The media weight backing the advertising for the Zyrtec OTC launch on national prime skewed more heavily to cable programming.

Airings 1.24.08 – 5.3.09

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Source: Nielsen IAG



The Foundation for Successful Advertising is based on Break-Through Creative

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Effective advertising is driven by the strength of thecreative and reinforced by engaging programming

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• Viewers who are watching the programs closely will watch your ads more closely too

• Strong correlation with recall; seek placement of your ads in high-engagement programming such as:

Engaging / Attentive Programming

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Nielsen IAG has proven that when viewers are paying more attention to a program, they will also pay more attention to the ads that air within them.

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The Zyrtec OTC ad “2-Hour Woman in Yellow”realized a +38% lift in ad recall when airing within high vs. low engagement programs.

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• Select programming that is engaging and particularly relevant to a specific program audience

• Airing in programs with above average indices of target viewers (e.g. ailment sufferers) can go a long way towards building awareness and ultimately, conversion

Program Audience Concentrations

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TV Ad Effectiveness Measurement – Day After Recall based on Known Exposures

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• Response to program content and commercial airings on Broadcast primetime (8-11pm)

• and Cable primetime (6pm – midnight)

Background

Source: Nielsen IAG



National TV Ad Campaign Launch Performance

Source: Nielsen IAG



Zyrtec OTC Launch Ad Campaigns

Source: Nielsen IAG



Ad Recall Trends among Allergy Sufferers 25-54Airings 1.24.08 – 5.3.09

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The allergy market is extremely cluttered with national TV advertising across both Rx and OTC brands



Highly memorable advertising among allergy sufferers supported awareness efforts for the launch of Zyrtec OTC

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Source: Nielsen IAG Weekly Ad Recall Trends among Allergy Sufferers 25-54Airings 1.24.08 – 5.3.09

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Source: Nielsen IAG Zyrtec Break-Through by Media Weight vs. Database Norms



However, building recognition for Zyrtec OTC as the brand advertised was more of a challenge at launch

Source: Nielsen IAG Weekly Brand Recall Trends among Allergy Sufferers 25-54Airings 1.24.08 – 5.3.09

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Zyrtec OTC national TV advertising in its first year on air was well above average in persuading purchase interest among allergy sufferers.

Source: Nielsen IAG Weekly Purchase Intent Trends among Allergy Sufferers 25-54Airings 1.24.08 – 5.3.09

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Loratadine users were the most likely to state purchase interest following exposure to Zyrtec OTC advertising during launch.

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Claritin Advertising –Competitive Zyrtec OTC messaging

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Competitive advertising launched by Claritin to defend against Zyrtec OTC was not as effective in driving purchase interest

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Impact of Program Selection on Ad Performance

Source: Nielsen IAG



During the launch period, Zyrtec OTC’s primetime schedule was less effective in capturing an engaged base of viewers vs. Claritin and the database norm.

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A heavy skew to cable programming in addition to airings in less engaging broadcast programming suppressed Zyrtec’s recall potential.



Zyrtec OTC’s broadcast schedule during launch delivered less engaging programming vs. Claritin.

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On broadcast, Claritin was more effective than Zyrtec in allocating weight to the most engaging programs.

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The minority of Zyrtec OTC weight in Broadcast primetime during launch skewed to shows that both high in viewer engagement and dense with allergy sufferers.

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Placement in high vs. low engagement programs drove fluctuation in Zyrtec weekly ad recall.

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However, Zyrtec OTC’s cable schedule during launch was more favorable than Claritin’s.

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A more engaged base of viewers for Zyrtec OTC advertising was supported by its strong presence on cable’s most engaging network, BRAVO.

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In Conclusion…

Source: Nielsen IAG



Summary

• Switch dynamics are becoming increasingly complex, and utilization metrics are just one tool to understand how consumers will make product decisions in future switches– Brand migration/sourcing– Cost savings

• Beyond utilization, it is important to understand “the why behind the buy” to better forecast consumer reaction to Rx products newly available as OTC– Income shift of Zyrtec Rx vs OTC user a key factor in explaining

OTC product sourcing

• A break-through advertising campaign further supported the success of the switch– Compelling creative that was particularly persuasive to Private Label

Loratadine users fueled purchase interest following ad exposure



Implications

• Product marketers need to look closer at linking the utilization of the current user base with demographic/behavioral tools to succeed in their categories– Know who your customer is (and who your customer isn’t)– Know why they choose your brand (or why they don’t)– Ensure your strategic and tactical planning for a switch (either yours

or a competitor)

• The impact of break-through advertising needs to be optimized by the media plan– It’s no longer just about reach and frequency– Program selection through new metrics (program engagement) is

becoming an integral part of campaign effectiveness and efficiency



Thank You!

For more information…Fariba ZamaniyanSVP, [email protected]: (212) 871-5273

Dennis CallahanDirector of Health Panel Services [email protected]: (856) 321-2513

Rick CrangleNational Account DirectorWolters Kluwer [email protected]: (215) 860-4625

revealing the landscape of rx-to-otc switching wolters kluwer...– nielsen company homescan –...

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