Protection from Competition

The management of Matrixx Initiatives is aware of the current competition for Zicam and the possibility of future competition. The main competition at this point is from zinc lozenges. There are several brands of zinc lozenges currently on the market, as well as a growing number of private-label brands. Matrixxs competitive strategy against these zinc lozenges is to promote the greater benefits of Zicam relative to those of the lozenges. The company has clinical proof of the effectiveness of nasal applications of zinc, and it believes that this is much more effective than oral application with a lozenge.

The company is also aware of the possibility that the competition will develop a competitive nasal application of zinc. Matrixx has a patent on the Zicam gel matrix that is good until 2018. Management believes that this patent will protect the company from the competitive development of another product that is as effective as Zicam. There may be other traditional sprays developed that use zinc in the formulation. However, the company believes that traditional sprays will not be effective because they will not stay in the nose for a sufficient time period. The competitive strategy to combat another zinc spray will be created once management sees the nature of the competitive product.