No Barrier to Deals Like This

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In the latest example of overlap between the pharmaceutical and consumer-health care industries, Barrier Therapeutics (Nasdaq: BTRX) announced last week that it would package one of its lead prescription drugs with a shampoo long sold by Procter & Gamble (NYSE: PG)

Barriers' drug, Xolegel, is a treatment for a type of dermatitis that often occurs on the face. It was approved for marketing by the FDA in 2006. The deal with Procter & Gamble will allow Barrier to sell this dermatitis drug in combination Head and Shoulders dandruff-treatment shampoo.

Many of the largest drugmakers, including Johnson & Johnson (NYSE: JNJ), Pfizer (NYSE: PFE), and GlaxoSmithKline (NYSE: GSK), all have long histories with consumer health-care products such as Johnson & Johnson's Neutrogena dermatology products, Neosporin, and Rolaids.

There are good reasons for a drugmaker to have a consumer health-care division, or for a consumer-goods specialist like Procter & Gamble to dabble in the drug-development space. Once a particularly safe drug's patents expire or are near expiration, companies can prolong its sales by trying to win FDA approval for its over-the-counter (OTC) use.

Drugmakers that can guide their compounds from pure prescription drugs to OTC status can rack up hundreds of millions of dollars in additional sales, as Glaxo has done with its weight-loss treatment alli since last year. Alas, even for a tiny drugmaker like Barrier, with $8.4 million in first-quarter revenue, this particular deal probably won't drive many additional sales.

Further Foolishness, no prescription required:

• Panel Kills Merck's Hope of OTC Status
• Free Drugs
• Another Punch in the Nose for Pfizer