Congestion in the OTC Market

Recs

5

Usually, drug companies get years of exclusive marketing rights before a drug runs into generic competition, but that's not the case for Johnson & Johnson (NYSE: JNJ) this time around. About a month after it was able to persuade the FDA to allow Zyrtec and its drugged-up cousin Zyrtec-D to be sold over the counter, Zyrtec is already running into generic competition.

On Friday, both Perrigo (Nasdaq: PRGO) and Mylan (NYSE: MYL) announced that the FDA had approved their generic versions of Zyrtec. The competition will come quickly, as Mylan said that it will begin shipping the drug immediately.

J&J acquired the rights to the over-the-counter version when it purchased Pfizer's (NYSE: PFE) consumer health-care business last year, but had to wait until the patent ran out before it could begin selling the drug. Pfizer's $1.6 billion Christmas gift to J&J was that it would finally be able to start selling Zyrtec on Dec. 25.

With generic competition, J&J won't be able to fetch nearly as high a price for the drug, but the over-the-counter status should help it reach a larger audience than Pfizer's prescription version did. In its new shelf spot, it will have to compete with other over-the-counter antihistamines including Schering-Plough's (NYSE: SGP) Claritin and Johnson & Johnson's own Benadryl.

For a company the size of J&J, a little added generic competition isn't going to have too large an effect. But it is a sign of the growing patent problem for Big Pharma in general and J&J specifically -- both its antipsychotic Risperdal and its Alzheimer's medication Reminyl lose patent protection next year.

More Foolishness available OTC:

Help us in our goal to give every young person around the globe a financial education! Learn more about the new direction of Foolanthropy, now in its second decade, here.

Like this article? Get our best articles delivered direct to your inbox at no cost. Sign up for Foolwatch Weekly by entering your email below.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

TD AMERITRADE
more info
ShareBuilder
more info
Power E*Trade

more info
Scottrade
more info
Fool Disclosure

DocumentId: 557630, ~/Articles/ArticleHandler.aspx, 11/21/2009 11:36:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

The Must-Read Story on Fool.com
An Open Letter to the Federal Reserve

Related Tickers

11/20/2009 4:00 PM
JNJ $62.31 Up +0.37 +0.60%
Johnson & Johnson CAPS Rating: *****
PFE $18.36 Up +0.25 +1.38%
Pfizer, Inc. CAPS Rating: ****
SGP $28.15 Down +0.00 +0.00%
Schering-Plough Co… CAPS Rating: ****
MYL $17.55 Up +0.12 +0.69%
Mylan Laboratories… CAPS Rating: ***
PRGO $39.31 Up +0.14 +0.36%
Perrigo Company CAPS Rating: ***

Community: Investing Wiki

Term Of The Hour

Cost of goods sold: The cost of goods sold, or COGS, is the cost of the inventory or services that was sold.

Want to learn more or edit this definition?
Click here to read more!