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Kline Study Shows Mass Merchandisers are Consumers’ Choice for OTC Drug Purchases

-- Consumers Say Price is Biggest Factor in Determining Where to Purchase OTC Drugs --

LITTLE FALLS, NJ, June 12, 2007 –

Consumers vote with their wallets and most frequently pick mass merchandisers over other outlets when it comes to purchasing over-the-counter drugs, according to a newly published study by global management consulting and market research firm Kline & Company.

It may be simple rational consumer behavior, but it has broad implications for marketers of OTC drugs. Data from U.S. Consumers’ Perceptions of OTC Drugs 2007 shows that mass merchandisers like Wal-Mart and Target are supplanting supermarkets and drugstores as the preferred venue for consumers of OTCs. In a survey of nearly 1,000 consumers, Kline’s study shows this trend across all categories and all types of OTCs.

“Mass merchandisers have been stealing share from these other retail channels, and our research shows this is mostly due to the premium pricing of these products,” says Laura Mahecha, industry manager of the healthcare practice for Kline’s market research division. “When we asked consumers what they were unhappy with or what they would want to change with OTCs, almost all of them said, ‘Prices are too high.’ ”

Club stores, dollar stores, and Internet stores are also making inroads into consumer preferences, further fueling the decline in market share of food stores and drugstores.

Also noteworthy in the study is evidence that premium pricing may be driving consumers away from some OTC drugs altogether.

“While OTCs are convenient and generally cost less than their prescription counterparts, the high cost of some of these products may make it worth the trip to the doctor to get a prescription for some consumers,” says Mahecha.

U.S. Consumers’ Perceptions of OTC Drugs 2007 provides a detailed analysis of consumers’ usage, perceptions, unmet needs, and purchase decision making processes for OTCs in many product classes. The research also provides insights on how consumers perceive, use, and purchase Rx-to-OTC-switch brands and which Rx drugs they would like to see available as OTCs. Other important topics include usage of nonprescription medications that are sold from behind the counter, preferred retail outlets, brand loyalty, and use of flexible spending accounts to pay for OTCs.

Drawing on Kline's expertise in the OTC marketplace, the study also provides subscribers with detailed recommendations on how to capitalize on future opportunities.

For more information about this research, go to www.klinegroup.com/reports/y631.asp or contact Laura Mahecha at +1-973-435-3446.

About Kline & Company Established in 1959, Kline & Company, Inc. is a global management consulting and market research firm serving the consumer products, life sciences, chemicals & materials, and energy industries. Kline provides clients with practical business solutions derived from a distinctive combination of industry expertise, global reach, strategic consulting, and market research capabilities. Additional information is available at www.klinegroup.com.

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