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Global Opportunities for Proton Pump Inhibitors

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As Pfizer pushes forth its rollout of the recently switched Nexium (esomeprazole 20 mg), the over-the-counter (OTC) world’s attention is focused on the proton pump inhibitor (PPI) category. While not as widely available as other indigestion and heartburn remedies, PPI’s were the fastest-growing digestive remedies category from 2008 to 2013. With Nexium’s predecessor Prilosec (omeprazole 20mg) having achieved blockbuster OTC status for competitor Procter & Gamble, Nexium has the potential to reshape the category and push PPI sales to new heights across the globe.

Strong Growth, Small Footprint

Posting a 5% CAGR, PPI’s were the fastest-growing category in digestive remedies globally from 2008 to 2013. The growth was driven primarily by new product launches, including Prevacid (Novartis AG) in 2009 and Zegerid (Merck & Co Inc) in 2010 in the US, which is the world’s largest PPI market by far. In 2013, the US accounted for more than three-quarters of all global sales. While growth in the US was steady through the 2000’s, as the new launches converted many previous consumers of the prescription versions, the surging popularity of private label  – which are priced at a significant discount in most retailers – has weighed on overall value sales growth since 2010. Though Procter & Gamble and Novartis continue to spend heavily on promoting their Prilosec and Prevacid brands, both are expected to lose further ground to private label and could be further cannibalized by consumers switching to Pfizer’s Nexium 24HR, which rolled out in the US on May 27, 2014.

US Proton Pump Inhibitors Market Retail Value Share Breakdown, 2008-2013

Source: Euromonitor International

However, the category fared much better outside the United States. In the five largest markets outside the US – Mexico, China, Sweden, Russia and Italy – combined sales grew 18% to US$174 million from 2008 and 2013. Though consumers – particularly in emerging regions – still tend to prefer basic remedies like antacids to deal with acid reflux issues, consumer education efforts concentrating on the dangers of GERD, gastro-oesophageal reflux disease, (including ulcers, oesophageal bleeding and increased risk of oesophageal cancer) and the safety and efficacy of more advanced solutions are making headways at a time when more and more countries are approving Rx-to-OTC switches of proton pump inhibitor active pharmaceutical ingredients (API’s).

In September 2013, Nexium Control became just the third product to pass the European Union’s centralised Rx-to-OTC switch process. In one fell swoop, the drug garnered OTC marketing authorisation in 28 EU markets throughout Western and Eastern Europe, as well as Iceland, Liechtenstein and Norway. When combined, Eastern and Western Europe represent the second-largest region for PPI’s, with sales having grown 8% to US$127 million in 2013. However, sales are largely restricted to a handful of countries, with Sweden, Italy, Finland, France, Russia and Serbia accounting for nearly three-quarters of regional sales. Across much of Europe, self-care for GERD is relatively uncommon, as consumers will often consult with physicians and attempt dietary changes before medicating. As is common throughout Europe, Nexium Control will also be subject to pack-size restrictions. The EU’s approval included only 7- and 14-pill packages, with instructions to contact a doctor if symptoms do not improve after taking the drug for 14 days in a row. In the US, Nexium 24HR is available in pack-sizes of up to 42 pills that represent three 14-day treatments.

Looking forward, the lack of access to OTC PPI’s in major Latin American and Asia Pacific markets will pose a major hurdle to future growth. While concerns over health literacy may hinder RX-to-OTC switches in these regions, growing concern over medical expenditure and the wide acceptance of the API’s safety across the world could prompt more conservative regulators to rethink their policies. While non-US sales of PPI’s are expected to grow by a healthy 16% through 2018, that figure could be significantly larger, if major markets like Japan, India, Brazil, Peru and Canada (which is moving to switch omeprazole) expand access.

PPI Sales (US$, RSP) in Major non-US Markets, 2013 vs 2018

Source: Euromonitor International

OTC Nexium Faces High Expectations and Stiff Competition

After acquiring the licence from AstraZeneca in 2012, Pfizer launched an OTC version of the blockbuster esomeprazole brand Nexium in late May 2014 under the name Nexium 24hr in the US. While OTC Nexium is expected to convert some prescription and OTC Prilosec users in the US, its long-term prospects at home will be limited by harsh competition. Unlike Procter & Gamble with Prilosec, Pfizer did not receive three years of OTC market exclusivity for Nexium’s API esomeprazole. As such, it is expected to face nearly immediate private label competition.  However, in markets like the EU and Australia, where Nexium has been endorsed for OTC but antacids remain the preferred treatment for indigestion, Nexium’s marketing push should raise consumer awareness of the category to its highest levels yet.

Based on recent prescription sales and previous category launches, OTC Nexium could be expected to generate retail value sales in the vicinity of US$175 million to US$250 million globally, most of which would be incremental to the PPI category, in its first full year on the market. However, its long-term success will be tied to factors beyond Pfizer’s control, including the willingness of insurers to continue subsidising prescription Nexium, Procter & Gamble’s willingness to offer discounts on Prilosec and European Union consumers’ readiness to treat with more expensive – if also more effective – digestive remedies.

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