Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Scott Henry from Roth Capital Partners.
Scott Henry - Roth Capital Partners LLC
Thanks and congratulations on exceeding estimates this year in a very challenging year for the cold/flu season.
First, when we look at your 2010 guidance of 5% how should we think about that relative to the categories? Should we expect the cough/flu products to be down again year-over-year and then steady growth in cold remedy and allergy/sinus? I am trying to get any color I can in how to think of the individual components of the business.
Bill Hemelt
What is going on in the category besides different product advertising and promotions, I mean you do have this incidence level which has now declined for three or four years, and no one seems to be able to get a good handle as to why. It may be that people are just washing their hands more frequently which cuts down on the illness level. That is obviously something that we factored into our thinking.
The other item that we factored into our thinking was the generic competition which we saw this past year and we expect it to expand significantly. Most of those products have been competing against our oral cold remedy line and that is why we will continue to innovate heavily in that category to try to keep them a little off balanced if you will.
Those were kind of the two big drivers that we wanted to factor into our thinking and make sure that we were confident that when we put out a number that we could meet and hopefully exceed it.
Scott Henry - Roth Capital Partners LLC
Just to kind of drill down on the generic store brand competition, I think in ’09 you had said that you had exposure to perhaps 20% of the business. Can you correct me if that is incorrect? Also, what kind of exposure would you expect to see in 2010?
Bill Hemelt
Well I think the 20% was relative to our products that had direct competitive threats. We saw those products in just a few major stores this year, CVS, Rite Aid, and Walgreens. Granted they are significant players. We anticipate that those competitive products will be introduced into some of the food stores and into some of the smaller, very small, drug store chains this year. It will be a more complete distribution, but our products at risk are still that 20%. It is really primarily directed at our RapidMelt Cherry product and then also our RapidMelt with Vitamin C. We have seen one product introduced against our Oral Mist in one store; we don’t anticipate that will expand beyond that one store.
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