Human Capital Index: APAC countries lead the way

In 2017, the World Bank announced the Human Capital Project, involving an index that would track the knowledge, skills and health that people accumulate throughout their lives, to enable comparison of this data across countries. The main idea behind the project is to end extreme poverty and prompt investment in people through nutrition, healthcare, quality education, jobs and skills. Last week, the World Bank published its latest report, involving Human Capital Index (HCI) data for 157 countries.

In terms of methodology, the HCI measures three components:

1. Child mortality (probability of survival to age 5)

2. Schooling, i.e. both quality of education (harmonised test scores) and quantity (expected years of school)

3. Health, via two proxies (healthy growth among children under 5, and adult survival rate)

Each of these measures is then tallied up, with a final index score of between 0 and 1 assigned to each country. Leading the way in 2018 are four Asia-Pacific countries with scores of 0.88 (Singapore), 0.84 (South Korea and Japan) and 0.82 (Hong Kong). Below we’ve created a graph of the Top 10 countries globally.

HCI 2018.jpg

Various smaller European countries, plus Australia and Canada, make up the rest of the Top 10. Germany (0.79) is just outside the Top 10, with the UK (0.78), Italy (0.77) and France (0.76) not far behind. Various major economies, including the USA (0.76), Russia (0.73), China (0.67), Brazil (0.56) and India (0.44), all rank outside the global Top 20.

For access to the full report and dataset, follow these links: PDF / website.

Less than a week to go until Nicholas Hall’s 5th Asia-Pacific Consumer Healthcare Conference, which will take place in Singapore! You can join Google, McCann Health and GSK, plus many more major players to discuss key issues surrounding the complex APAC landscape. You can view Nicholas’ opening session 09:00-10:00 Wednesday 17th October HERE. The Panel Discussion, “Is the Avalanche of Personal Data Helping or Hindering the Health of our Consumer?”, with Kantar Health, McCann Health, DevHub Startup & Incubation Centre, and BiblioSexual, will take place at 16:30-17:30 on Wednesday 17th HERE. For details of the full agenda, or to reserve your space and join us on 17-18 October, please contact elizabeth.bernos@NicholasHall.com without hesitation.

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NRF forecasts strong US holiday season sales

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According to a report this week by the National Retail Federation, US holiday retail sales (in November and December, and excluding automobiles, fuel and restaurants) are forecast to increase 4.3-4.8% this year vs the same period in 2017, to total US$717-721bn. This upturn compares to an average annual increase of 3.9% over the past five years.

In 2017, health and personal care store sales accounted for 17.8% of this total (US$59.3bn), a growing share compared to the year before (17.4% share in 2016, or US$56.9bn). If this trend of growing US retail sales in the holiday period – plus a growing share for healthcare sales – continues as forecast in 2018 then OTC marketers active in the US market can expect a strong finish to the year.

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According to NRF Chief Economist Jack Kleinhenz: “Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected. With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”

NRF’s holiday forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales. The number includes online and other non-store sales.

Explore growth opportunities in the CHC industry with Nicholas Hall’s specialist M&A boutique, which works with a number of strategic and financial partners to assess potential opportunities — for buyers and sellers — and is well placed to discuss the current business climate and possible synergies. To find out more, please contact ammar.basit@NicholasHall.com

50% of global population now middle class or rich

According to research by the World Data Lab – a social enterprise based in Vienna and funded by the German government, the European Space Agency and UNICEF – 50% of the global population is now living in households considered to be middle class or rich. This widely accepted definition is based on spending power, using a “middle class” benchmark of US$11-110 spent per person per day (in 2011 purchasing power parity).

This is equivalent to 3.8bn people who are living in households with enough discretionary expenditure to be considered “middle class” or “rich”, a development that The Brookings Institution last week called a “global tipping point“. As the chart below shows, the current split between poor / vulnerable and middle class / rich households is now around 50:50 at a global level, but is projected to be a 33:67 split by 2030. Poor households are defined as those spending below US$1.90 per person per day.

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What’s largely driving this trend is the rise of Asia, with nearly nine in 10 of the next billion middle-class consumers forecast to be Asian, focused on China, India and South East Asia. World Data Lab projections state that, by 2030, the spending power of the US middle class will remain dominant globally – at about US$16tn – but that China (US$14tn) and India (US$12tn) will not be too far behind.

Kristofer Hamel and Homi Kharas, who compiled the data and research, explained the significance of their findings as follows: “Why does it matter that a middle-class tipping point has been reached and that the middle class is the most rapidly growing segment of the global income distribution? Because the middle class drive demand in the global economy and because the middle class are far more demanding of their governments.”

There’s still time to join us in Sao Paulo on 28 November at the early bird discounted rate if you book today! Focusing on the central themes of Disruption, Impact and Success, Nicholas will be joined by speakers from GSK, Herbalife Nutrition, Pfizer and many more to review what’s happening in consumer healthcare across Latin America and to take a look at how players can stay ahead of the competition to create maximum impact and sustainable success. For more details, or to take advantage on this last day of the early bird offer, contact elizabeth.bernos@NicholasHall.com today.

 

 

MAT Q2 2018 update: Slight pick-up in global growth

After growth of just 4.1% in MAT Q4 2017 and MAT Q1 2018, there were signs of slight improvement for global OTC sales in the MAT Q2 2018 period, with turnover rising 4.2% to US$139.4bn, according to figures just released by Nicholas Hall’s global OTC sales database DB6

The gap between the world’s two largest OTC markets, USA and China, continues to close. Growth in the USA – the world’s No.1 market – remained steady at 2.5%, held back by a late-starting allergy season, while growth in China accelerated to 6.6%, vs 6.3% in the MAT Q1 2018 period, powered by an upsurge in CCA growth.

As Nicholas Hall commented: “At current rates of growth, China will overtake the USA in absolute values by 2025 and has already done so in Parity Purchasing Power. But that is at current growth rates. Despite the high incidence of e-Commerce sales in China, which will dwarf the USA, we expect the retail sector to grow by double digits, reflecting a speeding up of registration times and more switches being approved, so that China may become the new number one in even fewer than 7 years. And for that I do not believe our industry is fully prepared.”

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Overall, Asia-Pacific posted 4.9% growth in the MAT June 2018 period, with China and India both steadily improving over the previous period. Meanwhile, Japan and Australia produced the poorest performances of the leading markets with growth of less than 1% each. LatAm (+12.1%) continued to exhibit high inflation-driven growth, with leading market Brazil up by double digits.

Growth in the Middle East & Africa was relatively stable at 6.6%, underpinned by the continued strong growth of Turkey (+13.3%), while the performance in Europe was consistent, with improvements in Western Europe (+2.5%) offsetting a slowdown in Central & Eastern markets. In particular, France returned to growth (+2.5%), while Russia and Poland continued to decelerate. 

Nicholas Hall Writes: “We wouldn’t presume to tell our clients how to manage their brands, they are experts; but what we believe is lacking is an appreciation of the adjacent categories and alternative distribution channels, which is where the real growth will come from in future. The US population is growing at 0.7% a year and inflation is 1.9%, so the current 2.5% value growth in the US retail CHC market is very disappointing, but not surprising as we’ve seen relatively little switch activity in the past two years. Flonase Sensimist is the most successful recent switch, but Galderma’s Differin produced only $21mn of sales in the 12 months to June 2018. Maybe that is one of the reasons why Nestle has decided to exit the skin health business.”

Join Nicholas Hall and The CHC Training Academy in Israel at a key two-day workshop in Tel Aviv on 4-5 March 2019! The first day will focus on Trends in the Industry, showing you how to shape new Business Strategies to reflect the weakening economy. The second day will follow the theme of Winning in Consumer Healthcare, helping you to develop sales opportunities and solutions in a consistent approach, to add the best competitive advantage for your brand! Book your place now to take advantage of our generous early bird discounts! To find out more, please contact elizabeth.bernos@NicholasHall.com.

Apple Watch Series 4 “first ECG product offered OTC”

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At its autumn keynote event last week, Apple announced upgrades to several of its products, including the Apple Watch Series 4. The smartwatch’s potential as an essential healthcare device is now being more fully realised, with Apple receiving Class II “de novo” FDA clearance for the Apple Watch’s innovative ECG and atrial fibrillation (AFib) features. COO Jeff Williams called Apple Watch Series 4 “the first ECG product offered over-the-counter directly to consumers”, though AliveCor has contested this claim.

One of the announcements that drew the greatest applause at the event was the unveiling of the new ECG app, which can take a reading and provide results in around 30 seconds. Results are derived not just from the second-generation electrical heart sensor in the back crystal of the watch, but also electrodes in the Digital Crown, which must be pressed down by fingertip during the reading. Users are then given a heart rhythm classification, with a normal rhythm classified as “Sinus Rhythm”.

Apple Watch ECG

A new operating system (watchOS 5) also ensures that the new electrical heart sensor intermittently works in the background, notifying users if their heart rate appears to be too high or low, or if there are signs of an irregular heart rhythm, such as those suggestive of AFib. If detected, the new Apple Watch prompts users to “talk to your doctor”, while also ensuring that all recordings, along with associated classifications and any noted symptoms, are stored in the Health app in a PDF that can be shared with health professionals.

Another innovative healthcare feature is Apple Watch Series 4’s ability to detect falls, thanks to it new gyroscope and accelerometer. This hardware allows for analysis of wrist trajectory and impact acceleration – after a fall, an alert is sent to the user, which can be dismissed or used to initiate a call to emergency services. If no movement is sensed for 60 seconds after the alert, the new Apple Watch will automatically call emergency services and send a message along with location to emergency contacts. Such features are likely to broaden the appeal of the Apple Watch among an older demographic, and more importantly have the potential to save lives.

Nicholas Hall will visit the stunning city of Vienna on 2-4 April 2019 to lead our 30th European CHC Conference & Action Workshop! Focusing on the central theme of Keeping Up with the Digital Consumer, this meeting will also feature a workshop from The CHC Training Academy, enabling you to Embrace Digital Transformation. To find out more about this pivotal meeting, early bird booking rates, and sponsorship opportunities, please contact Elizabeth.Bernos@nicholashall.com

 

Bangladesh: Amazon eyeing 2020 entry

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As today’s OTC DASHBOARD hot topic report shows, the e-commerce market in Asia-Pacific is undergoing rapid change, with China passing new e-commerce laws that will take effect in January 2019, while India has also just released draft rules for the online sale of medicines. Amazon also last week unveiled a new Hindi version of its website.

Yet all this upheaval is not isolated to the major markets of India and China. Amazon announced over the weekend that it is planning to begin operations in Bangladesh within the next couple of years, to compete with its arch e-commerce rival Alibaba, which is already present in the country via Daraz. With a population of just over 166mn, Bangladesh is an attractive and fast-developing market.

Amazon

According to local reports, however, resistance from local e-commerce players in Bangladesh is likely to be strong. Many are opposed to the government’s new Digital Commerce Policy, which allows foreign companies to have 100% shares in local e-commerce ventures (previously it was capped at 49%).

Key areas of sensitivity will be pricing and investment in the local economy. The e-Commerce Association of Bangladesh (e-Cab) is in favour of protection for local e-commerce companies and is reportedly working on a list of policy recommendations, including foreign firms having to host their websites locally, as well as ensuring 90% of staff are locals and that companies have a logistical presence in the country.

Explore the digital landscape at Nicholas Hall’s upcoming OTC.NewDirections Executive Conference. Other topics on the agenda include Medical Device Regulations, Medical Cannabis, Switch and Smart Probiotics. This will be an inspiring day on 12 September in London, focusing on Where Innovation Meets Regulation. For details of the full agenda or to reserve your place contact elizabeth.bernos@NicholasHall.com

Alibaba buys in to “digital silk road” vision

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According to a report in the FT over the weekend, Chinese e-commerce retailer Alibaba is close to agreeing a deal with Russian internet company, Mail.ru, and sovereign wealth fund, Russian Direct Investment Fund, to form a joint-venture e-commerce company.

As highlighted in our earlier blog on Chinese investment in Africa, there is a clear vision from China and Chinese companies to invest in the physical infrastructure for a new silk road (Beijing’s Belt & Road Initiative) connecting Asia, the Middle East and Europe, and this latest news on a China-Russia e-commerce tie-up underlines the appetite for a digital silk road too.

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In October 2017, the Russian Government approved a Ministry of Health bill to allow the online purchase and home delivery of OTCs, which came into force in January 2018. As a result, Mail.ru announced the launch of its online pharmacy in April 2018. At present, established western e-commerce giants like Amazon are largely absent from Russia, giving Alibaba the freedom to chart new territory in a market of 147mn consumers at an opportune time.

As the FT article points out, Alibaba is also fighting back against Amazon in certain markets, like Indonesia, where the US retail giant has stolen a march. For example, Alibaba has invested heavily in two e-commerce companies, Tokopedia and Lazada, both of which market goods, including healthcare products, across southeast Asia.

Explore the digital landscape at Nicholas Hall’s upcoming OTC.NewDirections Executive Conference. Other topics on the agenda include Medical Device Regulations, Medical Cannabis, Switch and Smart Probiotics. This will be an inspiring day on 12 September in London, focusing on Where Innovation Meets Regulation. For details of the full agenda or to reserve your place contact elizabeth.bernos@NicholasHall.com