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Capsule Sales Could Suffer, But Makers Won’t, Analysts Say INSERTS one graf after graf 15,

February 14, 1986

Capsule Sales Could Suffer, But Makers Won’t, Analysts Say INSERTS one graf after graf 15, ″R.P.″ with J&J saying where it buys capsules

NEW YORK (AP) _ The poisoning of Tylenol capsules probably will boost sales of tablets at the expense of medicine in capsules, but the makers of the capsules probably will not suffer greatly, pharmaceutical analysts said Friday.

″I would presume that people would be very nervous about a capsule in the retail pharmacy″ following the latest Tylenol incident, said Ronald Stern, an analyst with the investment firm First Boston Corp.

However, Stern added that he did not believe it would have a financial impact on capsule makers. ″It’s not that much of a market that people would be concerned about it,″ he said.

Sales of capsules - $250 million worldwide - represent a small part of the two biggest makers’ operations, which each top $3 billion a year in sales, Stern said.

″I think the consumer taste for capsules will keep them there as an alternative but it will take some assurance of some form, some tamper-proof packaging that will reassure the consumer,″ said Michael Kaplan, an analyst with Standard & Poor’s Corp. ″If that assurance can’t be provided, then there could be a massive shift away from capsules.″

James E. Burke, chairman of Johnson & Johnson, said Friday he was not sure about the future of Tylenol capsules. ″It is a very fluid decision,″ he said.

The company stopped producing the capsules as soon as they heard about the cyanide death and has no plans to resume production, he said.

Asked whether the company would abandon capsules, he said: ″We don’t know how to improve the tamper-resistant package we have created.″

Marshall Molloy, a spokesman for Warner-Lambert Inc., one of the leading capsule makers, declined to speculate on how sales might be affected.

Most medicine that comes in capsule form could be reformulated into tablets, said William Higuchi, chairman of the pharmaceutics department at the University of Utah in Salt Lake City. However, a few medications will not compress into tablets, he said.

The bulk of capsules, most of which are made of types of gelatin, are used for prescriptions, Stern said.

He said consumers’ preference for capsules - many people believe they are easier to swallow - had prompted over-the-counter drug companies to produce more of them during the last four or five years.

The two largest capsule producers are Warner-Lambert, which is based in Morris Plains, N.J., and Eli Lilly & Co. of Indianapolis, said Stern, who estimated Warner Lambert sells $110 million worth of capsules a year and Lilly $50 million.

Capsule makers sell them to other pharmaceutical companies and also use them for their own products.

R.P. Scherer Corp. of Troy, Mich., which specializes in soft gelatin capsules that are liquid-filled, ranks third, Stern said. He did not have specific sales figures.

Capsules for Tylenol are purchased from Warner-Lambert and Scher, said Elsie Behmer, a spokeswoman from McNeil Consumer Products Co., a Fort Washington, Pa.-based unit of Johnson & Johnson.

Makers have attempted to make capsules tamper-proof. Some capsules are banded or snapped together so that, if opened, the damage would be visible.

Still, capsules are more vulnerable to tampering than tablets.

″It’s very hard to adulterate a tablet other than to put another tablet in there and copy the color and share of the tablet, it’s hard,″ Stern said.

Molloy, of Warner-Lambert, said his company’s capsules are made by its Capsugel unit of Basel, Switzerland. He declined to disclose sales figures, but he estimated 100 billion capsules a year are made worldwide.

A 1983 survey of 1,000 U.S. consumers, conducted after the Tylenol capsule poisonings in Chicago, confirmed the results of a 1976 study which found that consumers preferred capsules to tablets, even coated ones, Molloy said.

The 54 percent who said they preferred their medicine in capsule form cited no aftertaste, high quality and the choice of physicians, Molloy said.

Twenty-nine percent preferred coated tablets and 13 percent uncoated ones, Four percent had no preference.

Capsules generally dissolve faster and are more quickly absorbed than tablets, although dissolution times can vary greatly, capsules, said Glenn Sonnedecker, a professor of history of pharmacology at the University of Wisconisn at Madison.

Medicine capsules were invented in France in the 1840s and spread to this country in the second half of the 19th century, Sonnedecker said.

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