Another Punch in the Nose for Pfizer

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What's worse than having your drug's sales cut by 80% thanks to generic competition? Having its sales cut by 100% when the FDA changes the drug's status to over-the-counter.

That's what happened to Pfizer (NYSE: PFE) on Friday when the Food and Drug Administration approved ZYRTEC-D for over-the-counter sales. It will actually be more like "behind-the-counter-but-in-front-of-the-Plexiglas-that-shields-the-pharmacist" sales, because the allergy drug contains pseudoephedrine, which can be used to make methamphetamine. The 10-foot move the drug will make to its new shelf triggers a change in which company markets the drug. Johnson & Johnson (NYSE: JNJ) will be able to market the drug once the patent runs out at the end of the month because it purchased Pfizer's consumer health-care business last year.

The change in ZYRTEC-D's status is a good sign that the FDA will give regular ZYRTEC -- the same antihistamine without pseudoephedrine -- over-the-counter status soon. Even a fraction of the $1.6 billion a year in sales that prescription ZYRTEC fetches could help Johnson & Johnson justify the $16.6 billion it paid for Pfizer's consumer health-care business.

ZYRTEC will have to compete with OTC versions of Schering-Plough's (NYSE: SGP) Claritin and Johnson & Johnson's own oldie-but-goodie, Benadryl. But the OTC status should make it more accessible than prescription-only drugs such as Sanofi-Aventis' (NYSE: SNY) Allegra and Schering-Plough's CLARINEX.

The FDA's move was expected, so there weren't any wild moves in stock price in either direction for Pfizer or Johnson & Johnson, but you can add ZYRTEC-D to the laundry list of products that J&J sells. If J&J can continue to increase sales of its consumer health-care products and turn around its stent business, it would have a chance to get out of its funk.

More Foolishness for your stuffy nose:

• Adams On-and-Off With the FDA
• Quick Take: Johnson & Johnson Jilts Junior
• A Combination to Clear Your Head