The UK market for OTC medicines is highly competitive and being largely a mature market, manufacturers have increasingly turned towards line extensions as a way of growing market share. Any real market growth however, has come from the continued switching of POM status drugs to P status. This has been particularly successful where a switch is accompanied by a new indication such as the case with vaginal imidazoles for the treatment of thrush. The government has developed two methods for increasing the number of medicines now available over-the-counter. Firstly, there is the Selected List, which specifies to GPs certain brands of drug that can no longer be prescribed. Most of the product categories effected are for self-limiting conditions and manufacturers with products excluded from the selected list have therefore turned to the OTC market for sales. Secondly, there has been continued deregulation of certain prescription ingredients to be available in OTC formats. This trend is likely to continue with more drugs switching status and thereby providing a further boost to the expansion of the OTC medicines market.

One factor however, that will have a great bearing on the market is the current investigation by the Office of Fair Trading (OFT) into the Resale Price Maintenance (RPM) agreement that still exists in this market. This exemption which allows manufacturers to set retail prices has been broken by some of the grocery multiples, particularly Asda over recent years and has led to injunctions taken out by OTC manufacturers to have their prices reinstated. The OFT has announced their intention to refer RPM to the Restrictive Practices Court, but a final decision will not be known until 1998. If RPM is removed, manufacturers will be faced with an even more competitive environment and with sales volumes expected to remain fairly static, sales revenues will come under pressure. Furthermore, many small independent retail pharmacies could be forced out of business.

In the UK, many OTC medicines are available for purchase through a wide variety of distribution outlets. However, the majority of sales in most market sectors are still through pharmacies. This is because where consumers appear to be confident in diagnosing which ailments need medical attention and which can be treated with an OTC medicine, many will seek a pharmacist's advice and reassurance as to which specific OTC medicine is most appropriate to their symptoms. Boots is the single main outlet for the purchase of OTC medicines, claiming a 25 percent market share.

Advertising and promotion in this market has seen a major increase in investment in recent years as many previously POM products have been switched to P status. Manufacturers have shown that they are prepared to put major resources behind the launch of such products. For example, the indigestion remedy, Zantac was launched by Warner Wellcome with a budget of £3 million and Whitehall Laboratories has invested £6.4 million in the launch of the US painkiller, Advil.

Despite the general acceptance of self-medication by consumers, they often remain very conservative in their repertoire of brands, preferring to stick to products previously used. Therefore, manufacturers can find it difficult to gain trials for new medicines. Owing to this, many manufacturers emphasise the ethical heritage of their OTC brands, often only selling them through pharmacies even though they may have GSL status.

Consumer lifestyles have become increasingly stressful and the incidence of headaches, digestive problems and vulnerability to cold and flu viruses shows no sign of abating. Demographic changes will also benefit the OTC medicines market, as there will be greater numbers of young people and much older 45-64 year olds, who are all more susceptible to certain ailments.

Exclusive research commissioned by Market Assessment from the National Opinion Poll showed an increase in consumer purchasing of OTC remedies across all categories except for cold remedy inhalants. The most frequently purchased products were paracetamol (71 percent), medicated confectionery (54 percent) and vitamins and food supplements (48 percent). The highest growth levels were seen for cold remedy liquids (+173 percent), cold remedy tablets (+118 percent) and aspirin (+100 percent).

The OTC medicines market has been dominated by a small number of well-established manufacturers, who are generally represented across most of the major product categories. Recently the market has seen a number of joint ventures and alliances as POM manufacturers team up with those more experienced in consumer marketing to maximise the potential of deregulated drugs. The most significant of these was between Warner-Lambert and Glaxo Wellcome who formed Warner Wellcome to market certain OTC products. However, this alliance has now been disbanded, with Warner-Lambert purchasing those OTC brands previously owned by Wellcome and a separate marketing agreement has been formed with Glaxo Wellcome to market their POM to P switches.

The leading manufacturer in the UK market is SmithKline Beecham operating as SB Consumer Healthcare. The company's major brands include Solpadeine, Panadol, Andrews, Beechams Powders, Setlers Tums, DayNight Nurse and Contac 400. Warner-Lambert's leading brands include Benylin, Sinutab, Zantac, Zovirax, Sudafed, Actifed and Calpol. Other leading manufacturers include Crookes Healthcare owned by The Boots Company (Nurofen, Strepsils and E45); Reckitt & Colman (Lemsip, Disprin, Gaviscon and Dettol); Roche Consumer Products (Aspro, Paracodal, Sanatogen, Rennies, Feminax and Redoxon); Seton Healthcare (Meltus, Asilone, Diocalm, Ralgex, Paramol and J Collis Browne) and Whitehall Laboratories (Anadin, Bisodol, Centrum and Advil).

Over the past five years, the OTC market as covered by this report has increased sales by 40 percent to reach an estimated £1,164 million in 1997. Sales growth was particularly high during 1993 and 1994, when there was much activity in switching POMs to P status. The dominant sector of the market is cough and cold remedies taking a 30 percent share in 1996. This was followed by vitamins and supplements with 28 percent; analgesics with 20 percent; digestive remedies with 13 percent and wound treatments with 9 percent of the market.

The fastest growing sectors since 1992 have been vitamins and food supplements up 43 percent and digestive remedies up by 42 percent. Growth has been slowest in the wounds treatments market, growing by just 22 percent over the past five years.

Vitamins and food supplements have benefited from increasing consumer awareness of health and diet issues, as well as the trend towards more preventative medicine. In addition, the media, GPs and certain research establishments have begun to publish evidence that certain supplements can have specific benefits. For example, folic acid supplementation has been promoted to women planning pregnancy, by the Department of Health as helping to prevent spina bifida in unborn babies.

The digestive remedies market has been one of the main beneficiaries of the switching of products from POM to P status. This has led to the launch of a number of products designed to cope with more severe forms of digestive problems. This sector has also benefited from an increasingly unhealthy lifestyle, with regular mealtimes becoming a rarity and the increasing consumption of fast and snack foods on the move. In addition, the greater number of consumers venturing abroad, particularly to long haul destinations has also helped to stimulate this market.

The cough and cold remedies market is dependent upon the incidence of colds and flu. In 1995-96 there was an epidemic. This may be because consumers have more vulnerability to these viruses as general lifestyles often lead to many people becoming run down and unable to fight off infection. In addition, increased foreign travel can also bring in new varieties of viruses that consumers have no immunity to.

This generally more stressful lifestyle led by consumers today has also had a positive impact on the analgesics market, as people suffer with more headaches and migraines. The wound treatments market is dependent upon the incidence of accidents, mainly in the home and stressed consumers can be more prone to accidents. Despite a growing awareness of preventative measures, encouraged by television programmes such as 999, there are still 2 million people every year who end up in casualty as a result of accidents in the home.

Over the next five years, the OTC medicines market is forecast to grow by 37 percent to reach sales of £1,596 million in 2002. Future growth will be stimulated by further switching of products from POM to P status and consumer interest in preventative medicine and general health issues. Moreover, the cost of prescription charges will also help OTC medicines to be seen as good value for money. It is expected that sales of vitamins and food supplements will show the highest growth levels (+55 percent) to become the market leader with a 32 percent share.