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Odd Alliance Introduces Arthritis Pain Reliever

October 03, 1994|From Associated Press

ATLANTA — In an unusual alliance between a drug company and a nonprofit health organization, the makers of Tylenol and the Arthritis Foundation have launched a line of pain relievers aimed at the 40 million people who suffer from the crippling disease.

The agreement gives the foundation $1 million a year for research, and gives Johnson & Johnson a firmer foothold in the $2.5-billion analgesic market. Tylenol, its only product in the category, is the top seller, with a market share of 33%.

Nonprofit health groups traditionally have shunned such reimbursement arrangements because of the potential for conflict of interest.

Under a royalty agreement, Johnson & Johnson's McNeil Consumer Products Co. will guarantee about $1 million a year to the arthritis group from sales of the Arthritis Foundation Pain Relievers. The foundation will use the money to bolster its $13-million annual research budget.

The Arthritis Foundation last year received $5 million from pharmaceutical firms, but almost half of its money comes from individuals and membership fees of $20 a year.

Johnson & Johnson's domination in the analgesic market is being threatened by Aleve, a new over-the-counter painkiller from Procter & Gamble Co., and the return of Bayer aspirin to Bayer, the German pharmaceutical company, as part of its agreement to buy the North American over-the-counter business of Sterling Winthrop Inc.

A new venture with the Arthritis Foundation could solidify the drug company's position, industry analysts said.

"It's an interesting development in this hotbed of the (non-prescription) painkiller market," said Neil Sweig of Landenburg, Thalmann & Co. in New York. "Any way to gain market share is all fair in this type of war."

Johnson & Johnson may also benefit if consumers use the analgesic to relieve pains such as headaches, said analyst Hemant K. Shah of HKS & Co., in Warren, N.J.

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