Zyrtec: Responding to Allegra

In April 2010, the ZYRTEC brand manager at Johnson & Johnson's McNeil Consumer Healthcare, learned that Sanofi's Allegra, the leading brand in the prescription antihistamine category, was anticipated to secure over-the-counter (OTC) approval by spring 2011. With the recent successful launch of ZYRTEC Liqui-Gels, ZYRTEC was poised to overtake Merck's Claritin, the leader in the OTC antihistamine category. The case asks students to recommend how a strong brand might respond to a new market entrant that threatens to disrupt the category. The case is used in Darden's Consumer Brands elective course and would fit in courses covering consumer marketing, brand marketing, or brand strategy as well as a first-year marketing management course. Although written for an MBA audience, the content and decision points are easily accessible to advanced undergraduate marketing students and an Executive Education audience. Excerpt UVA-M-0847 Rev. Dec. 2, 2014 ZYRTEC: Responding to Allegra In April 2010, Leigh Carron, the director of McNeil Consumer Healthcare's allergy franchise, stepped out of the weekly health-of-the-business review when late-breaking competitive news was announced—Sanofi's market-leading Allegra brand prescription (Rx) antihistamine was anticipated to secure over-the-counter (OTC) approval from the U.S. Food and Drug Administration (FDA) by spring 2011. The news caught Carron's attention. McNeil Consumer Healthcare (MCH) had anticipated Allegra's eventual switch, but now it was front and center. MCH had launched ZYRTEC Liquid Gels in the OTC allergy market earlier in the year and experienced great success. In fact, ZYRTEC was poised to overtake Claritin, the market leader. Would Allegra's imminent move into the OTC space dampen ZYRTEC's positive momentum? How would this new competitive entrant change the market dynamics? What kind of competitive strategy was in order? And what communications strategy would be needed to support the brand strategy? McNeil Consumer Healthcare Acquired by Johnson & Johnson in 1959, MCH was founded as McNeil Laboratories, marking the addition of OTC pharmaceuticals to the company's business. McNeil comprised a range of brands, many of which held leadership positions within three key OTC categories: Upper Respiratory, Pain, and Digestive Health (Table 1). Original MCH products included Tylenol acetaminophen products, the leading pain reliever brand in the adult and pediatric categories, and Imodium A-D antidiarrheal products. With the acquisition of Pfizer Consumer Healthcare in 2007, MCH's brand portfolio expanded to include such equities as Benadryl allergy medicines, Sudafed nasal decongestants, and Rolaids antacid products, as well as ZYRTEC allergy medicines, which would imminently switch from a prescription to an OTC drug. . . .