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Heartburn drug surges ahead of expectations

Published Aug. 27, 2005

Six months after it hit store shelves with a huge marketing blitz, Procter & Gamble Co.'s Prilosec over-the-counter heartburn medication is one of the company's star performers in sales.

Some think the purple-boxed product, displayed prominently in drugstores, supermarkets and mass-market retailers, could exceed P&G's first-year target of $200-million to $400-million in sales.

"I would be surprised if they do not," said William Steele, a Banc of America Securities analyst who follows P&G. "You can't go into a store in the United States without seeing a display of Prilosec. . . . It's certainly highlighted the strength of Procter's market capabilities."

"Prilosec OTC has had a remarkable first year on the marketplace," said Steven Heffner of Kalorama Information, a MarketResearch.com unit that tracks sales in the pharmaceuticals and medical devices markets.

P&G, in announcing a 2-for-1 stock split recently, highlighted Prilosec OTC as one of its top performers along with Crest Whitening Expressions toothpaste and Mr. Clean Magic Eraser cleaning product. The company, whose products also include Tide detergent, Folgers coffee and the Olay skin care line, has $43-billion in annual worldwide sales.

The company is sticking with its first-year sales estimate for Prilosec OTC, at least until next month when it expects to receive a report on the first six months of sales, P&G spokesman Kurt Weingand said Thursday.

Prilosec OTC is locked in a vigorous competition with the acid reducers Pepcid AC, Zantac and Tagamet in the larger, $1.8-billion market for antacids.

The Pepcid line of products _ from Johnson & Johnson-Merck Consumer Pharmaceuticals Co. _ leads the market with a 40 percent share, Heffner said. Prilosec OTC _ on the market since Sept. 15 _ is running about even with GlaxoSmithKline PLC's Zantac medication and ahead of products such as Tagamet, which have been on the market longer, he said.

Days before Prilosec OTC hit the market, Johnson & Johnson-Merck sued P&G, claiming its ads falsely suggested that Prilosec OTC cures heartburn in a day. A federal judge rejected P&G's arguments that the advertisement was true because the relief lasts for 24 hours once it begins. The court fight has continued.

At P&G's annual meeting of shareholders last October, chief executive A.G. Lafley wore a purple shirt and tie to reflect Prilosec OTC's packaging color.

The market for these products is extensive. An estimated 60-million Americans suffer from heartburn or indigestion every month, with 25-million more experiencing daily symptoms. Gastrointestinal distress _ ranging from acid reflux to diarrhea to nausea _ can affect a person's ability to socialize or hold a job.

Prilosec OTC is the over-the-counter version of AstraZeneca LP's prescription Prilosec, which had been a market leader. Sales slipped last year after a generic prescription version began selling for a little less than the cost of prescription Prilosec.