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On August 27th Hisamitsu (Japan) announced the closing of its $428MM all-cash deal to acquire Noven Pharmaceuticals of Miami, FL.  Noven will remain a wholly owned, independent subsidiary of Hisamitsu.  This continues Hisamitsu's quiet but steady consolidation of its Salonpas [www.salonpas.us]topical analgesic business in the US at a time when conventional players like Ben Gay (JNJ), Wellpatch (Mentholatum), and Icy Hot (CHTT) remain vulnerable to legal, technology, and regulatory challenge in the parity market defined by the FDA monographs...

Hisamitsu is the first manufacture to gain FDA review and approval of an OTC pain patch. Approved in early 2008  Salonpas' unique topical analgesic patches contain 3% menthol [common in competitive patches] & 10% methylsalicylate, an aspirin-like NSAID [http://www.newsalonpas.com/index.php].   This approval grants them a period of 3 years of market exclusivity (2/20/11) and possibly further legal exclusivity if the technology supports patent prosecution.  Backed by actual clinical trials within its New Drug Application Salonpas claims 8-12hrs of relief opening other advertisers to possible ad support challenge.  Effectiveness trials in under-18 yr olds are also underway further upping the ante for future "proprietary" claims positioning.  Hisamitsu has a clear tactical advantage until Feb 2011 while other brands are at risk. 

Noven, entirely focused on Rx transdermal patch products, manufactures and distributes four CNS, two menopausal, and one dental patch product into the US prescription market.  In addition to providing a portal for Hisamitsu's global Rx patch products in the US Noven brings its own patch products as well as upstream R&D and manufacturing know-how including its DOT Matrix platform.  Expect Hisamitsu to further develop its ketoprofen NSAID analgesic patch for the US Rx market competing with Flector [www.flectorpatch.com] (King). 

Given the pending closure of the FDA monograph regulating topical patches Hisamitsu has firm immunity from product withdrawal.   If all patches are excluded from the FDA monograph current OTC manufacturers will need to gain similar NDA approval of currently sold product forms .  Furthermore, Salonpas patches lie outside of the ongoing patent infringement suit by Lec Tec against current manufacturers of OTC patches J&J [www.bengay.com], Chattem [www.icyhot.com], Tiger Balm [www.tigerbalm.com] making Hisamitsu doubly immune.

Market dislocation is increasingly likely as these events play out.  Salonpas has turned up television advertising on its new flexible patches with claims of "First FDA Approved Patch" [view commercial: http://www.youtube.com/watch?v=LcTSn-_-Egk&feature=related].

Much depends on timing.  Presumably an unfavorable outcome of the infringement action would result in competitors making a one-time payment of retrospective royalties to LecTec on top of going royalties which erode margins.  An unfavorable regulatory ruling would result in a marketing grace period and asynchronous approval (or resubmissions) of individual NDA's.  It is possible these events will refocus the category on the core back patch business if the FDA requires investment in individual NDA's for each individual product form or formula.  Products with differing formulae and/or form are likely to incur additive filing costs.  The continuity of shelf presence over time is uncertain as retailer destocking pressure will scavenge stragglers.

Lastly, the future of expanded NSAID patch sales in the prescription market, the growing use/cost of NDA's, and the emergence of dual channel players like Hisamitsu/Noven all foretell an eventual switch to OTC sale of an Rx NSAID patch.  Hisamitsu deserves credit for its grasp of the importance of technology access and regulatory barriers to (re)entry.  However, building brand awareness will be its real challenge.  Hisamitsu needs to find an OTC marketing partner or boost their ad spend to out-muscle entrenched competition.

[Dr. Riker is a member of the Licensing Executives Society, the Amercian Society of Pharmacology of Clinical Therapeutics, and the Drug Information Association]

see previous stories:

http://www.otcproductnews.com/otc-product-news/warning-perfect-storm-forecast-for-the-otc-topical-patch-category-chtt-ose-jnj-endp-.html

http://www.otcproductnews.com/otc-product-news/topical-patch-update-2-change-remains-on-the-horizon-jnj-chtt-endp.html

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