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Tylenol's side effect? A brand boycott

generic_drugs.top.jpgAs Tylenol continues to be buffeted by recalls and controversy, generic drugs are gaining in popularity. By Parija Kavilanz, senior writer


NEW YORK (CNNMoney.com) -- Tylenol, Motrin, Benadryl may come back to drugstores near you, but industry watchers say consumers could permanently banish them from their own medicine cabinets.

"I think those brands are in jeopardy," said branding expert Alan Siegel of branding firm Siegel & Gale.

"The definition of a 'brand' is consistency in quality, safety and efficacy," said Siegel. "Tylenol has been a household staple for years. For all these recalls to happen to a Johnson & Johnson brand is astonishing to me."

Johnson & Johnson's (JNJ, Fortune 500) drugmaking unit McNeil, which makes popular cold and pain drugs like Tylenol and Motrin, has recalled millions of children's and adult versions of those drugs over the past 10 months.

Those recalls and the closing of a McNeil factory have created a supply shortage for adult varieties of those medicines and a complete vacuum for children's over-the-counter (OTC) versions of the brands.

Siegel said Johnson & Johnson will have to try to shake off the stigma now attached to these brands. At the same time, others say the Tylenol mess has come at a very opportune time for generic rivals.

Exploiting Tylenol's vulnerability. Experts say smart retailers may have already sprung into action to capitalize quickly on a weak moment for Tylenol, Motrin and Benadryl to pump up sales of their own cheaper house brands.

"Over the last four months, there's been rather high demand from our retail clients to increase production," said Doug Boothe, CEO of Actavis Inc.(U.S.), a division of Iceland-based Actavis Group, the fourth-largest maker of private label prescription and generic drugs.

Boothe said the company has ramped up its private label drug manufacturing to five times the capacity versus earlier this year, for clients such as CVS, Walgreens and Wal-Mart (WMT, Fortune 500).

"If you walk in the analgesic aisle, one of the busiest in a drugstore, there are lots of gaps on shelves," Boothe said, referring to recalled drugs like Tylenol and Motrin. "This is not good for consumers or stores."

Those gaps are an opportunity for retailers to get their private label brands front and center with consumers and grab market share from Johnson & Johnson.

CVS spokesman Mike DeAngelis said the chain is still "experiencing shortages" of Tylenol and other branded drugs that were affected by the recalls. "We are meeting customer demand with CVS private label products," he said. "We want to encourage our customers to try our brand and stick with it."

Meanwhile, Walgreens' (WAG, Fortune 500) spokeswoman Tiffani Washington said the drugstore chain is "doing its best" to meet demand for cold and pain drugs with its private label brands.

A new Walgreens' radio ad that debuted last week pitches the seller's private label drug brands as brands " you can trust."

Washington denied that the ad is making any veiled reference to Johnson & Johnson's recalled drugs. "We are always trying to drive home this message about our brands," she said.

Still, branding experts say ads like this are not surprising.

"Retailers are capitalizing on the situation," said Robert Passikoff, branding expert with Brand Keys Consulting. "Strategically it makes good sense. When a truly competitive brand is vulnerable, it's an opportunity for rival brands to steal market share. That's what I would do."

Can Tylenol stage a comeback? Passikoff is optimistic. "Tylenol, Motrin and these other recalled drugs have a high degree of loyalty," he said. "It's six times more likely that consumers will give them benefit of doubt and buy them again."

Passikoff said he also highly doubts that retailers will completely walk away from these brands.

Others aren't so sure.

Prior to the recalls, stores' private label brands were already getting noticed and bought by more budget-conscious shoppers as the recession forced people to trade down from "branded" shampoos, detergents and other products to less-expensive store brands.

Private label over-the-counter drugs have also benefited from this trend, said Russ Meyer, chief strategy officer for Landor Associates, a brand strategy and forecasting firm.

Many consumers who already switched to a CVS or Walgreens'-branded pain or cold drug for cost reasons may now just stick with those brands, he said. "The Tylenol situation has opened the door to people asking,' Do I really need this brand?'"

Wal-Mart and McNeil declined to comment for this story. To top of page

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