Doubts are emerging over the worth of Europe's self-medicationpharmaceuticals sector, which is currently valued by health policy experts as a source of economies but is also seen in parts of the industry as a relatively low-volume addition to sales and profits.
Burghardt Bruhn, head of European consumer care at Bayer AG, says that over-the-counter drugs account for only 16.7% of Europe's 120 billion Deutschemark ($71.64 billion) drug market, and that the sector is not yet producing the growth which is often claimed, though its significance in cost-cutting has increased. He sees competition in the sector intensifying and becoming more strongly international, coming to resemble business in patented prescription drugs.
A timely launch in a new therapeutic class is becoming much more important for OTCs, which also require high marketing spending; it costs 25 million marks to get an OTC going in Europe, and at least 6 million marks in a national market. Advertising takes 12%-50% of sales, and these costs have risen in western Germany, to 14.5% of gross sales in 1995 compared with 8.9% in 1988. This marketing intensiveness is something of a burden to drugmakers because with the cost of regulatory approval procedures, break-even can be delayed for six years. Mr Bruhn calculates that the return on OTCs is between 5% (comparable with generics) and 30%-40% (comparable with ethical drug specialties).
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