2. How will sales of OTC Pepcid affect sales of prescription version or JJM’s Mylanta antacid?

Why did JJM buy Mylanta if it was planning to switch to Pepcid?

OTC Pepcid has been the fastest growing sector of the pharmaceutical industry over the

recent years. People have switched to more of consumerdriven healthcare, which is spreading

quite fast. Every consumer prefers to be selfmedicated, instead of visiting a physician. This is

attributed to the long waiting times, increased hours for every procedure, high cost and increased

documentation for even a basic heartburn. This mainly led to consumers preferring OTC market

for the purchase of their drugs. The government and the consumers, want to reduce their

healthcare costs and the OTC markets will further increase sales. This consumer preference for

less cost and easier access to drugs will highly cannibalize the sales of the prescription drugs.

Even the Bases research has estimated that they are going to have high profits. If people are

relieved of their symptoms with the low dose drug offered over the counter, then they will not be

willing to switch back to the prescription drug, due to the inconvenience involved in getting a

prescription drug in a timely manner.

JJM bought Mylanta because the market share was exceedingly high for the OTC antacid

market. There was this huge opportunity to be able penetrate in the OTC antacid market and high

potential that cannot be ignored. When the competition had all been switching to the OTC

market, JJM wanted to establish their foot in the antacid OTC market. With only 6 months

remaining for their patent to expire, JJM had to step into the OTC market and with the purchase

of Mylanta, which has continuing highly profitable sales. This will open new opportunities for

JJM in marketing products in the OTC market.

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2. How will sales of OTC Pepcid affect sales of prescription version or JJM’s Mylanta antacid? Why did JJM buy Mylanta if it
was planning to switch to Pepcid?

The OTC market has been the fastest growing sector of the pharmaceutical industry over recent years. Healthcare is

quickly becoming more consumer-driven. Rather than visiting a physician, these consumers prefer to be self-medicated to avoid

long wait times, cumbersome procedures and high medical costs for a basic heartburn diagnosis. This consumer preference for

less cost and easier access to drugs will increase the sales of OTC heartburn drugs; which, in turn, would cannibalize the sales of

the prescription drugs. JJM’s Bases II research revealed that two-thirds of OTC Pepcid’s first year sales would come at the cost

of existing antacids while one-third would come from prescription medications. The projections determined that OTC Pepcid

would attract sales away from Mylanta; however, it would just amount to 11% of OTC Pepcid’s first year dollar volume.

Likewise, only 8% of OTC Pepcid’s first year dollar volume would come out of prescription Pepcid’s sales.

Like its competitors, JJM anticipated fast-paced growth in the OTC market as consumers were seeking to diagnose and self-
medicate their basic ailments. To capitalize on this growing trend and penetrate the OTC market, JJM acquired ICI America, Inc.,
which owned Mylanta. The purchase gave JJM a strong presence in the OTC market as evidenced by Mylanta’s high retail sales
and growth potential in the antacid market. The acquisition also provided JJM with a stronger marketing platform from which to
switch Pepcid from prescription to OTC; and, if the test case was successful, JJM would introduce future products to the OTC.