Sanofi-Aventis is betting its $1.9-billion purchase of US-based consumer products firm Chattem can give it a domestic marketing platform for future Rx-to-OTC switch brands.
In a statement, CEO Christopher Viehbacher said the acquisition of Chattem, set to close early next year, enhances its ability to manage such conversions in the US, starting with antihistamine brand Allegra (fexofenadine). That could prove an important strategy, as its prescription drugs come off patent.
In converting Allegra, which has already gone generic, the Paris-based firm hopes to duplicate the success of previous Rx-to-OTC switches, such as Claritin, by Schering-Plough, and Prilosec, by Procter & Gamble.
“The [Chattem] deal seems to make strategic sense” for a possible Allegra switch, wrote Jefferies analyst Doug Lane in a research note. Chattem’s OTC infrastructure is “among the largest outside of the OTC divisions of other big pharma companies.”
Upon Allegra’s conversion, Chattem will assume responsibility for the brand. The consumer products firm has a good track record as a niche brand marketer, especially in coming up with “innovative, value-added line extensions,” Lane told MM&M.
In 2003 it launched a $12-million ad campaign for the Icy Hot Back Patch, signing NBA star Shaquille O’Neal as a spokesperson for the Icy Hot line of topical analgesics. The patch was an off-shoot of Chattem’s topical pain-care segment, which has grown into a $95-millon business (in wholesale dollars). With its multiple line extensions, Icy Hot represents almost half that total, Lane said.
A Chattem official said O’Neal is still under contract as a pitchman for the Icy Hot line.
In addition, Sanofi will leverage Chattem’s US sales, marketing and distribution network to market its OTC line—which includes Doliprane (acetaminophen), Maalox for heartburn and feminine product Lactacyd.
And Chattem’s products, such as Gold Bond and Cortizone-10, will be sold overseas under the Chattem name through Sanofi-Aventis’ international marketing and distribution channels.
Chattem has “never been successful taking products overseas in a major way,” Lane said. “It’s been a real headache for them.” For fiscal year 2009, Lane forecasted $462 million in sales, with only $25 million coming from outside the US.