OTC Market Not Largely Impacted by Recession

The overall OTC market grew 3.2% during non-​recession years and only 1.2% during recessions according to the latest research Impact of Recessions on the U.S. OTC Market from worldwide consulting and consumer-spend-insightsresearch firm Kline & Company. The impact of recessions on the OTC market mainly comes from erosion of branded OTC sales by private-​label products and is reflected in slower growth rates. The level of erosion varies by product classes and categories. However, Rx-​to-​OTC switches, major innovations, and new product launches with related promotion that occur during recessions help cancel the effect of private-​label erosion. While overall the U.S. OTC market grows at slower rates than during non-​recession periods, private-​label OTC medicines outgrow 2007 rates by 5.7% over the same time period, suggesting that consumers are more aware of private-​label products and are generally satisfied with the efficacy and price. Private-​label products in categories such as general pain relievers, antacids, and allergy medicines posted the highest growth, driven primarily by launches of private-​label omeprazole (Procter & Gamble's Prilosec OTC) and cetirizine (Johnson & Johnson's Zyrtec). Sales of Rx-​to-​OTC switch brands are either not impacted or are less impacted than regular OTC brands by recession. For instance, the Rx-​to-​OTC switch of Claritin in 2003 only lost 18% of sales to its sales to private-​label competitors in the non-​recession period, while private-​label equivalents of Zyrtec launched in early 2008 seized one-​forth of brand sales during 2009, a recession year. "There is clear evidence that private-​label OTCs grow at significant rates during a recession. Consumers did trade down to private label, and branded products lost considerable shared private label, but at the same time, several switch products still did really well as consumers are still willing to pay extra for a product they feel is more innovative and offers more relief," says Laura Mahecha, healthcare industry manager at Kline. In previous recessionary periods, overall OTC sales declined two years in a row; from 1999 to 2000 overall manufacturers' sales were down 0.6%, and then declined again from 2000 to 2001 by 0.5%. Declines for the market were not very steep and this may be a result of sustained private-​label sales. Source: "Impact of Recessions on the U.S. OTC Market," conducted by Kline & Company, July 15, 2009.  Website: www​.klinegroup​.com.

C. Lee Smith

C. Lee Smith

CEO and Founder at SalesFuel
C. Lee Smith is the President/​CEO of SalesFuel — a firm he founded in 1989. He was named one of the 14 Leading Sales Consultants by Selling Power magazine in 2018. Lee is the creator of the AdMall® and SalesFuel COACH™ SaaS platforms. He is also a Gitomer Certified Advisor, expert on the Sales Experts Channel and a C‑Suite Network Advisor.
C. Lee Smith


CEO of @SalesFuel | Bestselling Author of "SalesCred" and "Hire Smarter, Sell More!" | Keynote Speaker | Certified Behavioral Analyst | Sales Credibility Expert
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C. Lee Smith