The rapid proliferation of drugs being switched from prescription (Rx) to over-the-counter (OTC) status has raised a number of important consumer behaviour and public policy concerns. Given the increasing assortment and widespread availability of Rx to OTC switch drugs, how might consumers' health care preferences change? That is, what factors influence whether a consumer is more likely to visit their physician rather than self-medicate symptoms of heartburn and indigestion with a new switch drug? Patents for all brand name prescription drugs eventually expire. When this happens, manufacturers of generic drugs quickly enter the market, drastically reducing the profits of the pharma firm that developed, tested, and originally introduced the drug to the market.
One way a pharmaceutical firm, whose patent for a specific drug has expired, can expand their market, is to switch that drug from prescription (Rx) to OTC (over-the-counter) status (Liza Gibson, (2003). In the USA during the last 20 years, more than 600 drugs containing ingredients that were once available by prescription only are now sold OTC, that is, without a physician's prescription. (E.H. Creyeret.al 2001)
In fact, many drugs that were switched from Rx to OTC status outsell traditional OTC brands in their product categories. For example, popular and familiar brands such as Tylenol, Advil, Benadryl, Motrin, Tagamet, Gelusil, Benadryl, Revital and Rogaine successfully switched from being available by prescription only to being available OTC at most convenience drug, supermarket, and discount stores. Drugs that have been switched from Rx to OTC status are unique, possessing characteristics of both Rx and the OTC products. (Longo, Don, 2003)
Some of the prominent drugs (generics) that are sold over the counter are Paracetamol, Cetrizine, Ibuprofen. Likewise, some of the brands that are sold OTC are Crocin, Corex, Anacin, Benadryl, Aspirin, D'cold in India. In OTC selling there is another category of products, which have now shifted from medicinal product category to FMCG category, prominent among them are brands like: Dettol, Moov, Borosoft, Itch guard, Krack, Dermicool etc. The Indian OTC pharmaceuticals market has reported excellent rates of expansion for the last five years. The market has grown steadily year on year, culminating in growth of 8.6% in 2004. The Indian OTC pharma market generated total revenues of $2.1 billion in 2004, representing a CAGR of 7.4% for the five-year period spanning 2000-04. In comparison, the Japanese market has witnessed a moderate expansion, with a CAGR of 1% for the equivalent period leading to total 2004 revenues of $13.7 billion.
The leading revenue source for the Indian OTC pharma market is the traditional medicines sector, which generated total revenues of $645.5 million in 2004, equivalent to 30.4% of the market's value. In comparison, the cough and cold preparations sector was worth $369.5 million, which represented 17.4% of the market's revenues.
Looking forward, the market is forecast to decelerate its current performance, with an anticipated CAGR of 7.3% for the five-year period 2004-09 expected to drive the market to a value of $3 billion by the end of 2009. To continue the earlier comparison, the Japanese market is expected to see market growth halt in the forecast period, with a projected CAGR of 3.5% expected to lead to total revenues of $16.3 billion by the end of the same year.
Literature review
Over-the-counter (OTC) products are that category of merchandise sometimes affectionately referred to as "slow-moving packaged goods (L. Gary, 1998). In 2002, almost $421 billion was spent on promotion in USA, including over $2.6 billion on direct to advertising (Canadian Medical Association Journal, 2003). The ORG-Marg study conducted in 2001 in India has indicated that healthcare advertising expenditure grew faster (50% growth rate) than the average growth (of 25%) in advertising for all products in the industry (Shankaran, (2002). Many misleading advertisement tactics are good for business. As a result, voluntary codes tend to be reactive, they lack transparency, they omit large areas of concern (P. Noms et. al., 2005). However, correct approach can give better success. Taking Zovirax (acyclovir) cold sore cream as an example, the rational features are its ability to abort cold sore lesions if treated early through its unique antiviral action. In benefit terms, that means saving the cold sore sufferer from the embarrassment of a full-blown cold sore outbreak. Zovirax's ethical heritage provides an important reassurance of trust and implied physician endorsement. Price/volume studies that Glaxo and its marketing partner Warner-Lambert have conducted consistently confirm that most consumers are willing to pay if they believe that the core proposition is relevant, unique, and delivered by the brand (Lyon, Gary, 1998). In 2002, sample size almost all doctors aged over 50 had negative response to DTC advertisement (Petroshius at.al,1995).
Doctors were ambivalent about the chance of treatment in 50% of cases where patients requested an advertisement drug in USA and Canada. (Mintez et.al (2001). About 67% remember the advertisement where risk factor was highlighted (Morris et.al,1984, Srivastava, 2005). Consumers' perceptions about risk of and access to non-prescription medications was studied and reported by Alexander et. al, (2005)).
Problems and issues
There are many issues like how to build consumer preferences towards the OTC products. There are various ways through which the preferences could be altered. This could be done through the effective brand building of the OTC product. The second issue could be on how to build a strong brand identity for the OTC product. The procedures and measures should be catered to in order to build strong brand equity. An analysis of the role of government's regulations and policies as a catalyst or barrier towards the OTC product can play a crucial role. Government's decision can play a strategic role in defining the future of the industry or the fate of the products and these procedures should be critically dealt. The third issue can be on the role of advertisements, celebrity endorsements and the concept of brand management in building an effective brand image of the OTC product. How an image of the OTC product is affected and what impact the modern ways of brand building and management have on the OTC products.
In the world of ethical pharmaceuticals, the physician is still of prime importance as has been the case in the past. Now, however, new marketing efforts are being directed at the consumer. Prime-time television advertising and whole page newspaper ads are happening now, certainly unheard of in the past. For OTC pharmaceuticals, the situation is reversed. While the consumer has been the primary focus in the past, and will certainly not be ignored in the future, campaigns to medical professionals are becoming more commonplace. As we can see, there are many changes in the roles of physicians and patients, and research has responded to these changes in a variety of ways. This research will address just a small portion of the types of research being done in the OTC and hospital areas.
Hypothesis
Consumers prefer OTC products as a substitute to Rx products. This was presumed to be null hypothesis. Alternate hypothesis could be consumers don't prefer OTC products as a substitute to Rx.
Objective of the study
" To find out the attitude of the consumers towards the OTC products as compared to the Rx products
" To find how effective is the advertising campaigns and other sales promotion tools for OTC products
" To understand the consumer behaviour and the influence of various factors like Brand, Media, Advertising and promotional schemes etc. towards OTC products
" How doctors react to OTC products in India?
Research methodology
The research was both secondary and primary in nature. The secondary research helped in understanding the prior work on the same or related topic and would also provide insights about the GAP that exists. It also helped us in analyzing the various trends in the OTC pharma industry and would provide an impetus to further narrow down our research and solve our hypothesis.
Further we formed a focus group interview of around 25 people from different strata of the economy. An in-depth discussion was carried out and then the major trends, views and insights were noted that helped us in designing the correct and relevant questionnaire.
A primary research was carried out with the help of the questionnaire in Mumbai, Nagpur and Chennai. Mumbai and Chennai are metro city and represent modern and conservative section of India. Nagpur is A Class city.
Research design - It was basically exploratory research. Data collection method was direct questionnaire to consumers.
Sampling design: Consumer sample size was 677 and doctors sample size were125.
Sampling procedure was convenient sampling, the samples were selected in Mumbai, Nagpur, and Chennai for both consumers and doctors.
Results and discussion
We conducted a survey of 677 respondents of different age groups to find out attitude of consumer towards OTC products. 66 percentage of consumer surveyed uses some or other OTC products. This is quite a significant number in view of the total pharma market. This is given in Table I.
Table I: Number of users of OTC products out of total surveyed
No wonder the Indian market estimated to be around $3 billion in 2009. 74% are dispensed at chemist level. However, with supermarket/mall growth this percentage may down as the share of supermarket will go up. Awareness about brands purchased and top five brands are listed in Table II
Table II: Awareness regarding the OTC products surveyed N= 677
Table II: Awareness regarding the OTC products surveyed N= 677
The analgesic is number one brand followed by cough and cold segment. According to Industry source, Cough and cold preparation, vitamins, analgesics, indigestion and medicated skin products have 17.4%, 12.5%, 11.4%, 5.2%, 2.6% share respectively. Paracetamol/Crocin has 28.32% that is highest TOM & unaided recall. Benadryl, Corex & Anacin has low recall hence clubbed together under others. Paracetamol as a whole has the highest brand awareness. Customer is expected to buy when there is need. For OTC product buying there is no such buying pattern, rather it's as and when need arises 69% purchase monthly and 14% buy on weekly basis. Reasons for purchasing OTC products were another area of research. Earlier prescription from a doctor, recommendation from a friend/relative, advertisements of a product and through product trial emerged as major reasons for purchasing OTC product. This is given in Table III.
Table III: Reasons for purchasing OTC products N=677
Table III: Reasons for purchasing OTC products
Reasons for purchasing a brand were studied. When it came to rating the important parameters, respondents gave the highest weight age to efficacy of product followed by its brand name & pricing. Advertisements substantially affect consumer behaviour towards OTC products in building brand equity. No wonder, advertisement budget grew by 50% as reported by Shankaran, (2002). In 2002, almost $421 billion was spent on promotion in USA, including over $2.6 billion on direct to advertising. With 95% confidence that in the entire population, all the features except for pricing bear the same percentage as the sample. But we do not have sufficient evidence to comment about the pricing aspect. Table IV gives the above data.
Table IV: Most important factors for buying an OTC product
Z test with 95 % confidence level and equal probabilities across all the features
Z test with 95 % confidence level and equal probabilities across all the features
Media play an important role in influencing the purchase decision. Survey shows that reach of Television Advt. is highest among other medium with share of 365 (out of 554), whereas pamphlets, seminars & internet found having lowest reach among consumers for OTC products. 64% of consumers were able to recall the Advt. of product they consume. Most recalled advertisements are of Crocin, and Vicks Action 500. Majority of the consumers (76%) don't know the parent company of brand consumed. This data is given in Table V.
Table V: Medium of communication where OTC advertisements are found to be influencing the consumer preferences?
Table V: Medium of communication where OTC advertisements are found to be influencing the consumer preferences?
In OTC buying earlier prescription from doctors is most preferred reason for buying. Efficacy is found as most important feature followed by brand name of the product. Most common and oldest OTC product Crocin (Generic-Paracetamol) is found to have highest brand awareness. Survey shows that reach of television advt. is highest among other medium of advertisement. Another interesting aspect was to find out the preference for OTC drugs. Earlier study reported that doctors were ambivalent about the chance of treatment in 50% of cases if patients requested an advertisement drug in USA and Canada. The research figures revealed that in India about 78% of doctors above 50 years had a negative response towards OTC products. Infact, even young doctors don't like to prescribe OTC products. This corroborates the earlier finding of Petroshius at. al, (1995). The gap and internet explosion has not changed the behaviour of doctors. The finding is given in Table VI.
TableVI: Doctor's survey regarding preference for OTC drugs
TableVI: Doctor's survey regarding preference for OTC drugs
Conclusion
This survey conducted in Mumbai, Chennai and Nagpur and the finding gives us an insight regarding consumers' attitudes/preferences towards OTC products. As OTC product today enjoy a good market share and also in coming future as numbers of drugs are going off-patent, so OTC market is going to see increasing market share. 66 percentage of consumer surveyed uses some or other OTC products. The analgesic is number one brand followed by cough and cold segment Paracetamol/Crocin has 28.32% that is highest TOM & unaided recall. Benadryl, Corex & Anacin has low recall. Earlier prescription from a doctor, recommendation from a friend/relative, advertisements of a product and through product trial emerged as major reasons for purchasing OTC product. Efficacy of product followed by its brand name & pricing can play role on purchase behaviour. Advertisements substantially affect consumer behaviour towards OTC products in building brand equity majority of the consumers (76%) don't know the parent company of brand consumed. Thus, study corroborates consumers prefer OTC products as a substitute to Rx products. Doctors' irrespective age do not like to prescribe OTC products.
Limitation of study
The study was conducted in Western, South but Eastern and North part of India was not taken. Gender, education variation was not taken for analysis as study was more confined to the objective.
(The author is emeritus professor and research guide, University of Bombay).