Return of venerable McNeil, Novartis brands will make Q4 highly promotional
NEW BRUNSWICK, N.J. — Johnson & Johnson will be making a strong comeback across its portfolio of McNeil Consumer Healthcare recalled OTC products in the fourth quarter of this year. And with a J&J pledge to partner with key retail partners "on strategic relationships that are rebuilding our relationships and supporting their health and wellness strategies," this fourth quarter will likely be more promotional all around.
"By year end, our plan is to deliver reliable and consistent supply of three quarters of the product brands," Sandra Peterson, group worldwide chairman, told analysts during a quarterly conference call Tuesday. "In the first half of 2013, we achieved the U.S. OTC operational growth of 19.7%, which includes 26% growth in revenues in over-the-counter medicines, and we are winning the hearts of consumers as these products return to the shelves in all four segments: cough, cold and flu; allergy; pain; and digestive health," she said.
But even with that immediate success behind them, J&J will be investing heavily going forward. "In addition to all of the remediation efforts, we also are going to ensure that we are investing sufficiently to bring these brands back and bring them back fully to consumers and retailers," Peterson said. "Our current estimation is that we will probably be spending at a higher rate than our historical averages as we are bringing all of these brands back," she said. "Clearly, our intent and our desire is to get back to the share numbers that we had before we went in to the [Consent Decree] process and that’s what we are really focused on doing."
As J&J ramps up marketing and merchandising commitments for the fourth quarter, competitors are expected to follow suit. Especially Novartis, which, like J&J is bringing several venerable OTC brands back into the fold following a recall. "The combination of J&J and Novartis coming back at the same time, you'll have those companies … doing more merchandising, advertising and promotion," commented Laura Mahecha, industry manager at Kline's Healthcare practice. "The competitive set will match them [so as to] not get lost in [the] noise," she said. For an upcoming cough/cold season that will be compared against an extremely strong season a year ago, that suggests there will be a significant amount of spending in this category this fall irrelevant of sickness trends.
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