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Supermarkets, convenience stores, and gas stations are preparing to market over-the-counter (OTC) drugs, starting in December or January.

The pharmacy chains are expected to lose 15-30 percent of their market share. Supermarket chain executives expect prices to drop some 5 percent in the coming year, and as much as 20 percent within three years. Most experts expect that competition will help the overall market grow anywhere from 10 to 50 percent down the line.

The Knesset's Labor, Social Affairs and Health Committee decided this week to deregulate the market. The panel approved a list of 108 medications, but the list could rise to 400, sources estimate. OTC medicines account for 40 percent of the drug market. Retailers expect most sales in the first stage to remain within the pharmacy chains, local pharmacies, and health maintenance organizations (HMOs). In the long term, the new players are expected to gain a 30 percent market share. The OTC market is likely to grow as consumers enjoy the time-saving convenience of purchasing medication without needing to visit specific pharmacies, according to Clubmarket CEO Yacov Ginzburg. He predicts the pharmacy chains will lose 30 percent of their long-term market share.

Currently, the HMOs control 30 percent of the market, followed by Super-Pharm with 25 percent, and New-Pharm Drugstores with 10 percent, according to Gadi Klarsfeld, pharmaceutical consultant for GK Consultants. "The OTC market share of supermarkets, convenience stores, and the private markets will reach 30 percent."

Shlomo Gindi, deputy CEO of marketing for Super-Sol, is more pessimistic. "Market share for the new players will not top 15 percent collectively," he says, adding that rising awareness of preventive medicine is driving the market rise. He believes the pharmacy chains will lead the way in dropping prices in an effort to attract customers.

Yaron Dor, CEO of New-Pharm Drugstores, expects prices to drop anywhere from 15 to 20 percent due to the competition for customers. Dor does not think the price drop will be dramatic at first, perhaps 5 percent. He expects the pharmacy chains will continue to dominate because people will patronize them out of habit. He added that the first places to get into the market will likely be the major chains like Mega, Cosmos, and Jumbo, some of whom already have integrated pharmacies into their store space.

Dudi Weisman, controlling owner of New Blue Square Israel and the Dor-Alon gas company, expects the market will grow because consumers will increase their personal medicine collections. Dor-Alon operates convenience stores in the United States and Weisman said that collective experience points to the fact that the more shelf space that is dedicated to OTC drugs, the more consumers buy.

Ironically, Weisman sees the neighborhood markets grabbing a larger market share of OTC medicines because they are products people look for close to home and want readily available. Soon the food stores will be able to benefit from the entry of additional customers that in the past would have visited the pharmacy chains.