What sort of winter for CHC is coming?

With the northern hemisphere estimated to generate around 90% of sales in the global CHC market, the impact of the coming cough & cold season is crucial to the market’s performance in Q4 2020. Recent indications from the southern hemisphere gave us some clues of what’s to come – according to a recent report by the CDC, from April to July (peak flu season in the southern hemisphere), there were only 51 positive flu tests out of more than 83,000 people tested in Australia, Chile and South Africa, for a positivity rate of 0.06%. In contrast, during April to July in the years 2017-19, nearly 14%, or 24,000 out of 178,000 people, tested positive for flu in those three countries.

Despite the expected low positivity rate of flu in the northern hemisphere in Q4 2020, as a result of improved hand hygiene and social distancing, the return to school in many countries is likely to lead to an uptick in cough & cold infections. According to Lucy Rigby, Senior Brand Manager of UK cough remedy Tixylix (in a quote to Wholesale Manager): “Going forward, we believe that parents will be much more conscious of their children’s health risks as schools and nurseries reopen, and are likely to stock up on OTC medicines prior to the peak winter months.” In addition, Paul Trethewy, Controller for Wholesale and Convenience at GSK, said: “With the NHS continuing to face overwhelming pressure and with GPs de-prescribing cold medication, we’re expecting the impulse channel to be an important provider of OTC cold & flu treatments.”

Source: Nicholas Hall’s upcoming Cough, Cold & Allergy Report

Whether any upcoming surge in demand for OTCs leads to the same constraints on supply seen in Q2 2020 remains an open question. Europe’s OTC industry body, AESGP, last week welcomed European Parliament plenary approval of the Report on shortages of medicines — how to address an emerging problem. AESGP agrees that shortages are of particular concern when they affect medicines for which no or limited alternatives are available, however in the case of OTC medicines, because substitution is possible and alternatives exist in most situations, it believes any shortage of a product will translate into little to no impact on the outcomes of self-care. Though the AESGP considers diversification of the supply chain to be a long-term strategic option, including greater independence brought by onshoring manufacturing and production of certain non-Rx medicines and APIs, it said this strategy was hardly actionable in the short-term.

One ingredient that remains under the spotlight is paracetamol (acetaminophen). India lifted restrictions on the export of APIs of paracetamol in late May 2020, but has continued to monitor usage of the ingredient in the domestic market. According to an article in Business Standard, OTC paracetamol sales have taken a hit in India over recent months owing to government legislation designed to monitor use of the ingredient, as well as CCA remedies, but these restrictions are now starting to ease and a spokesperson at GSK expects “sales to pick up in the coming months”. GSK’s Calpol and Crocin brands have been two of the products impacted by this extra vigilance over paracetamol use, but the short-term outlook for the ingredient and India’s OTC market is now improving.

With less than two weeks to go, register now for our new hot topics webinar! You will hear about key trends, including the impact of Covid-19, Distribution, e-Detailing and Sustainability. To find out more, or to register to join on 30 September, please contact elizabeth.bernos@NicholasHall.com.

Rx-to-OTC switch: Fortacin in EU, CBD in Australia

Rx-to-OTC switch activity has shown signs of revival so far in 2020, and two more positive news stories emerged last week. First, the European Commission has approved the Rx-to-OTC switch of Fortacin topical spray for premature release in adult men (owned by Plethora Solutions and marketed under licence by Recordati; lidocaine 150mg/ml + prilocaine 50mg/ml), following the July 2020 recommendation from the EMA’s Committee for Medicinal Products for Human Use. Recordati will reportedly begin the OTC launch of Fortacin in January 2021. This is the fifth brand to receive switch approval via the EU centralised procedure, and the first since 2015 when ellaOne (HRA Pharma) was given the rubber stamp.

Secondly, a delegate of the Secretary to Australia’s Department of Health has released an interim recommendation to switch plant-derived or synthetic CBD ≤60mg (up to 30 days’ supply, adults aged 18+ years) from Rx to Schedule 3 (Pharmacist-only), with a proposed implementation date of 1st June 2021. The ingredient will also be added to Appendix M of the Poisons Standard, with supply limited to medicines registered on the Australian Registry of Therapeutic Goods.

Source: CHC New Products Tracker

Comments are being sought until 13th October 2020 on this proposed CBD switch in Australia, as well as the following recommendations:

  • Switch migraine treatment eletriptan ≤40mg (up to two tablets) from Rx to S3 and include the ingredient in Appendix H to permit consumer A+P (1st February 2021)
  • Permit the S2 (Pharmacy-only) sale of immediate-release ibuprofen ≤400mg (up to 12 dosage units) when labelled not for children under 12 years (1st February 2021)
  • Do not switch sildenafil 50mg (up to four dosage units) from Rx to S3 and include the ingredient in Appendix H and Appendix M
  • Do not permit general sale of oxymetazoline ≤0.05% nasal sprays
  • Do not permit the S2 sale of clotrimazole ≤1% preparations for vaginal use

One of the key reasons behind the TGA’s establishing Appendix M in January 2018 was to facilitate future switch activity by helping ingredients meet the S3 Scheduling Policy Framework criteria through the provision of additional pharmacist controls or supply requirements. This channel has had some success, with CBD appearing to be the latest ingredient to benefit. Some stakeholders had also hoped that additional controls would finally sway opinion on the OTC availability of ED medicines but the scheduling delegate did not think the risk mitigation strategies outlined in the Appendix M entry assessed the risks associated with sildenafil use.

Nicholas Hall Writes: Last week I presented the key conclusions from last year’s New Paradigms report and my client asked, what will be the really high growth categories in the post-Covid CHC market? That is a really good question, and it seems to me that there are six emerging sectors each with sales potential of over US$10bn at MSP:

  1. CBD
  2. Sexual health
  3. Sleep, stress & mood
  4. Food allergy & intolerance
  5. Probiotics
  6. Immunity

Each of these presents opportunities, each of these presents formidable obstacles. In the case of CBD, the major hurdle is regulatory. So if this news from Australia is borne out, and CBD becomes a registered OTC category — the first in the world — we will have overcome the first barrier in the long journey to regulate and regularise this awesome opportunity, and I use the word awesome in its original sense, not as a teenage throwaway remark!

Don’t miss out on your chance to save up to GB£1,800 when you pre-order our upcoming report, Cough, Cold & Allergy before 30 September! For more information, or to pre-order your copy, please contact melissa.lee@NicholasHall.com.

US Herb Market Report shows dynamism of immunity supplements

In this week’s blog, we look in more detail at the American Botanical Council’s 2019 Herb Market Report, which is based on US retail sales data provided by SPINS and the Nutrition Business Journal. According to the report, US consumers spent an estimated US$9.6bn on herbal dietary supplements in 2019, an 8.6% increase vs 2018.

For the first time, CBD made the list of 40 top-selling ingredients in the mainstream channel, where it ranked 9th at just under US$36mn, up 872% vs 2018. For the second year, CBD was the top-selling botanical sold as a dietary supplement in natural retail outlets.

Sales of immune health-related ingredients also rose sharply. In H1 2020, elderberry had the second-highest increase in the mainstream channel (+241%), making it the third top-selling ingredient; it was up 126% in the natural channel. Echinacea grew by 50%+ in both channels.

Other herbal & natural ingredients that have performed well include oregano (up 75% in the natural channel and 91% in the mainstream channel in H1 2020), which is positioned for respiratory symptoms such as cough, as well as astragalus root and mushrooms / fungi-derived ingredients with an immunity positioning. According to SPINS, sales of mushrooms (other) advanced by 84% in the natural channel and an exceptional 495% in the mainstream channel.

The report indicates that while dietary supplements with immunity positioning were the primary growth driver in the US market in the first half of 2020, other VMS ingredients also performed well, particularly those with a stress or sleep positioning. As of mid-June 2020, supplement sales appear to have levelled off; but if H1 2020 is any indication, the US VMS industry is on track for another record-breaking year.

For the full report, go the American Botanical Council’s website and download the PDF link.

Also, ensure that you have registered to join Nicholas online on 30 September for an all-new hot topics webinarYou will hear about key trends, including the impact of Covid-19, Distribution, e-Detailing and Sustainability. To find out more or register to join, please contact elizabeth.bernos@NicholasHall.com.

Focus on Japan: Q2 results point to further CHC decline

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According to government data released today, GDP in Japan fell 7.8% quarter on quarter in Q2 2020 (April to June), with Covid-19 having an impact both on domestic consumer spending and exports. Japan’s economy is heavily dependent on exports, especially to China, and demand there has remained subdued during Q2. This downturn does not bode well for the world’s No.3 CHC market, which had already failed to match the boost in OTC spending seen in Europe and North America in Q1, with Japan recording flat sales in MAT Q1 2020 owing to the loss of in-bound tourists from China and Taiwan.

Japan’s OTC market has not outperformed the wider economy, as has been the case in other regions during Covid-19, with several key local marketers reporting Q2 declines in line or in excess of Japan’s 7.8% GDP fall. Daiichi Sankyo saw OTC revenues decrease by 7.3% in fiscal Q1 2020 (Apr-Jun 2020), owing to the impact of Covid-19, while Taisho reported an even more dramatic fall in its Q2 domestic Self-Medication sales, with its OTC portfolio in Japan down 16.4% in fiscal Q1 2020 (Apr-Jun 2020). Tonic drink Lipovitan and CCA range Pabron both led the decline, impacted by Covid-19.

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Takeda outlined size of OTC divestitures still to come

While Takeda no longer reports on the performance of its Self-Medication business in its quarterly results, it did reveal in its Q2 results presentation the value of the various regional portfolios of non-core and OTC products that it plans to divest in the near future. In late 2019, Takeda sold a portfolio of non-core OTC and Rx products to Swiss-based Acino, covering what the describes as its North Europe, Middle East & Africa (NEMEA) region, as well as a larger portfolio to Stada, covering Russia / CIS. Takeda now intends to complete even larger divestments in Latin America and Europe.

In late July, it was announced that Taisho is reportedly in advanced talks to acquire Takeda’s Consumer Healthcare unit in Japan, according to people familiar with the matter. Blackstone, Bain Capital and CVC Capital Partners were also understood to be among the final bidders. If Taisho does secure the deal for Takeda’s CHC portolio in Japan – which DB6 valued at US$571mn in the MAT Q1 2020 period – it will extend its domestic dominance as Japan’s No.1 CHC marketer but still remain the global No.7 behind P&G. Either way, Taisho will be looking to move beyond the business uncertainty caused by Covid-19 and M&A, with a view to reviving growth in Japan’s CHC market in H2 2020.

If you are interested in making an acquisition, or need licensing or business development support, Nicholas Hall’s Consultancy team is available to give confidential advice. We work with a number of strategic and financial partners to evaluate potential opportunities for buyers and sellers in the M&A, licensing and fundraising space. To find out more contact kayleigh.griffinhooper@NicholasHall.com

Top 2 brands powering global CHC growth

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Our blog this week looks at the performance of the Top 10 global consumer healthcare brands, in the context of the 5.6% upturn for the global CHC market in the year to end-March 2020. Inevitably, analgesics and cough, cold & allergy brands have enjoyed the highest rates of growth thanks to Covid-driven demand, with the Top 2 global brands, Vicks (+15.4%) and Tylenol (+18.3%), performing particularly well.

P&G’s CCA range Vicks now generates global sales of nearly US$1.5bn, and its double-digit growth in the MAT Q1 2020 period was powered by dynamic performances in Latin America and North America. In fact, high growth in the US market was behind the double-digit global upturns for both Vicks and J&J’s Tylenol, the latter generating sales of close to US$1bn in its home market.

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GSK markets four of the other Top 10 brands, including its powerful triumvirate of painkillers – Advil, Voltaren and Panadol. Growth for Advil and Panadol improved markedly in Q1, thanks to accelerated purchases as a result of Covid-19, while Voltaren experienced flat sales in the quarter. That said, the recent US Rx-to-OTC switch of Voltaren Arthritis Pain is expected to provide a significant boost to brand sales in Q2.

Halls also saw growth accelerate in Q1, although not to the same extent as other CCA brands like Mucinex, which rediscovered growth during the first quarter of 2020 to leap ahead of J&J’s Nicorette to reclaim the global No.9 spot. VMS brands Centrum and Nature Made missed out on the overall surge in demand for CHC products in Q1 – in general, growth in the VMS market has been focused primarily on immune supplements and vitamin C products.

Pre-order our upcoming Analgesics 2020: Assessing the Current & Future Self-Care Market for Pain Relief report before 31 July to save up to GB£1,800! Please contact melissa.lee@NicholasHall.com to order or to find out about special discounts available on purchases of more than one report title!

Immunity sales & NPD activity on the rise

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One of the newer CHC subcategories that appeared in the Top 10 biggest contributors to global consumer healthcare growth in the MAT Q1 2010 period was immune supplements, with the subcategory producing a 28.5% global upturn in the year to end-March 2020. Along with vitamin C products, probiotics and multivitamins, immune supplements were among several major VMS contributors to growth in the first quarter.

For 2019, our CHC New Products Tracker service recorded 95 new product developments in the herbal & natural immune stimulants subcategory, making it the 14th most active subcategory overall in the consumer healthcare market. So far in 2020, immune supplements are already in the Top 10 most active subcategories – a sign of the rapid increase in new product development in response to the Covid-19 pandemic – and we fully expect this growth in NPD activity to accelerate over the remainder of the year.

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There has been a wide array of immunity NPD activity across all regions, notably Europe, North America and Asia-Pacific. In certain markets, such as India and China, there is also likely to be a rise in sales of country-specific natural remedies (Ayurvedic medicine and TCM) positioned for immunity support, though marketers will have to be wary of government clampdowns on products that are claimed to prevent or cure Covid-19.

Notable immunity supplement launches in the USA so far in 2020 include GSK’s Emergen-C Turmeric & Ginger and Emergen-C Elderberry, available in fizzy drink mixes, and RB’s Airborne Immune + Natural Energy Ready To Drink Shot. In Europe, Neuraxpharm unveiled Preventan Clasic in Spain and Italy, while Sambcol Immuno Forte and Sambucol Kids + Vitamin C were rolled out in Germany. As for Asia-Pacific, Grandma’s Kadha effervescent tablets were launched in India and Sanofi’s Cenovis line was relaunched in Australia.

Thousands of innovations are launched every year in the global consumer healthcare market, but relatively few offer notable new benefits for consumers in terms of delivery format or formulation. Which new products are breaking through and offering a unique proposition? Where will new product development take the CHC market in future? Contact Melissa Lee (melissa.lee@nicholashall.com) today to pick up your copy of the Innovation in CHC report.

e-Commerce CHC growth accelerating

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All the signs point to accelerated growth for the internet & mail order channel of the global CHC market in the first quarter of 2020. In 2019, the overall global retail CHC market recorded growth of 3.9%, while internet & mail order sales achieved much faster growth of 12.4% that same year, and the channel is forecast to rise by 22.5% in 2020.

Several leading CHC companies reported dynamic e-Commerce growth in their latest quarterly results, with RB reporting a strong e-Commerce upturn across all major platforms and market places, particularly in Greater China, led by Dettol and Infant & Child Nutrition (IFCN), and North America, with Mucinex and VMS in particular making good progress. Likewise, P&G reported 35% growth for e-Commerce channels in its fiscal third quarter (calendar Q1 2020), translating into around 10% of company business. CFO Jon Moeller acknowledged social distancing orders were a key driving factor, but still expects a permanent shift in the portion of business conducted online post-pandemic.

GSK is another company that has been boosted by increased online demand for its analgesics, CCA and VMS products. The company reported that the impact of Covid-19 varied across regions in Q1 2020, as a result of differing government actions and consumer behaviour. USA, UK, Australia and several other markets benefited from increased demand and shopper activity in both traditional retail and e-Commerce channels, which resulted in accelerated purchases across all categories, while some markets, including India and China, were negatively impacted by mandated retailer shutdowns.

Likewise, the benefits of increasing trade channel liberalisation will not be shared equally among all CHC marketers. While many leading companies are well prepared for this increasing consumer appetite for internet & mail order purchases, some marketers with a more limited e-Commerce profile may find it hard to adapt to this shift in demand, especially if they’re highly leveraged in brick & mortar retail outlets, as is the case – for example – with Prestige Brands and the convenience store channel in the USA.

Coming this month — with two timing options on 22 and 23 July — is an all-new Hot Topic webinar focusing on COVID-19: The Impact on the Global and Regional CHC Markets. To find out more or register to join your preferred session, contact elizabeth.bernos@NicholasHall.com.

NPD activity in CHC in Q1 2020

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At the same time as our DB6 division publishes data on the sales performance of the global CHC market in the first quarter of 2020, it’s also a good time to reflect on headline new product development trends in the period from January to March 2020, using our CHC New Products Tracker tool which covers 20 key markets. The major development that stands out this year is the dramatic fall in the volume of new product development (NPD) in March 2020, compared to the same month in the three previous years.

March is traditionally the month we see a sharp rise in NPD activity after the quieter month of February, but this year Covid-19 halted that trend. So far for March 2020, we only have 271 entries – including launches, Rx-to-OTC switches, line extensions, rollouts and relaunches – recorded in our Tracker archive, compared to much higher totals in March 2019 (464 entries), March 2018 (434) and March 2017 (397).

This sharp fall in global NPD activity in March 2020 is likely the result of CHC marketers shelving plans to launch new products in response to the uncertainty caused by the Covid-19 pandemic. The question is whether these plans have been postponed or abandoned altogether? We know that several CHC companies have streamlined their portfolios during the pandemic to ensure continued production of core SKUs, so it’s possible portfolio innovation has fallen down the priority list. Alternatively, we may see a surge in NPD activity in the remainder of 2020. Only time will tell.

What will also be interesting to see play out is how NPD activity in 2020 differs in terms of its focus on fast-growing subcategories, fuelled by the Covid-driven spike in demand. For example, we saw an increasing number of antiseptics & disinfectants launched in March 2020, compared to the same month in previous years. This trend will likely be replicated in other subcategories, such as herbal & natural immune stimulants, when we come to analyse NPD activity in Q2 2020 and later quarters.

Thousands of innovations are launched every year in the global consumer healthcare market, but relatively few offer notable new benefits for consumers in terms of delivery format or formulation. Which new products are breaking through and offering a unique proposition? Contact melissa.lee@nicholashall.com to secure your copy of Innovation in CHC, a report showcasing many of the “wow brands” launched in 2019 and highlighting ingredient and delivery format trends that continue to characterise the market in 2020.

 

Health Report 2020: How Europe moves towards the future

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Stada last week published its Health Report 2020: How Europe Moves Towards the Future, conducted by Kantar Health and involving more than 24,000 participants in 12 European countries. The report contained a “corona special feature” involving 6,000+ respondents from six countries, which found that 61% rate medical care during the crisis as positive / very positive. The highest approval rates were in Spain (75%) and UK (74%), which both dealt with particularly high mortality rates, while the assessment was significantly more negative in Russia (31%). Some 44% declared a newfound respect for the work of medical staff and one in four have a better understanding of the importance of good medication.

Everyday illnesses was among the many other topics covered in the report, and this section revealed that – despite the increasing prevalence of sleep problems among Europeans – only one in three are willing to take sleeping pills. Across Europe, 26% of people reported being afraid of developing an addiction to sleeping pills, while awareness of possible causes of sleep disorders was low. Other key findings of note for CHC marketers are that a high proportion (over 80%) of European employees state they will still go to work even if they have a cold, while only 61% of respondents say that they read the instruction leaflet when taking medication. As for other topics, the willingness to receive a remote diagnosis via webcam has notably increased compared to 2019 (70% vs 54%), while 82% of Europeans support the idea of compulsory vaccinations.

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Nicholas Hall commented: How Europe – indeed, the whole world – moves towards the future is a vital topic in these difficult times. Stada’s findings on remote diagnosis bring up the whole question of Telehealth. Earlier this week, we conducted regional trend (d)e-briefings, with delegates from North and Latin America in attendance. One of the questions related to the importance of new technology, and my answer was that a year ago the answer would have focused on medical devices, but now the issue is whether we remain “wired” after Covid-19 recedes.

So, will healthcare be delivered virtually in the future? Will e-detailing and e-selling replace medical and pharmacy reps? Will digital solutions increase the chances of more prescription ingredients going over the counter? This is a big topic, much more than I can go into here, but worthy of its own (d)e-briefing, which we are planning for September. Other webinars will cover the impact of Covid on consumer purchasing and usage – no surprises there – together with CBD and sustainability, two themes echoed in some of our lead stories this week.

Take your final chance to register for the Asia-Pacific CHC Trends webinar, taking place tomorrow (Tuesday 23rd June). You will hear about successful brands from the past 3 years, hot topics, the impact of the Covid-19 situation on the market in 2020 and much more! Please contact elizabeth.bernos@NicholasHall.com to find out more or register without delay.

Scoping out skin care growth opportunities

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While Nicholas Hall’s strategic database DB6 forecasts that some consumer healthcare categories will perform very well in 2020 – notably analgesics and cough, cold & allergy remedies – growth for dermatologicals (with the notable exception of antiseptics & disinfectants) is expected to be low, in the range of 0-1%. In this week’s blog, we take a closer look at OTC skin care products, notably cosmeceuticals and innovative delivery formats, to see which categories and innovations might perform well in 2020 despite the lack of a Covid-19 boost in demand.

Cosmeceutical subcategories like hair & beauty supplements are likely to perform better than average owing to high levels of new product development. In 2019, our CHC New Products Tracker tool recorded 185 new hair & beauty supplement product entries to the database in 2019 (a total that includes launches, line extensions and relaunches), making it the No.5 most active subcategory in the entire consumer healthcare market, behind cannabis / CBD, probiotics & prebiotics, acne remedies and multivitamins.

Top 5 Tracker subcats 2019

Source: CHC New Products Tracker

As outlined in our recent Innovation in CHC report, popular delivery formats like gummies and drinks – for example, Dong-e E-Jiao’s late 2019 launch of an oligopeptide essence drink in China and Health Lab’s Collagen Beauty Ball in the US market in April 2019 – are primary drivers of growth for hair & beauty supplements. In fact, collagen has become one of the hottest ingredients in consumer healthcare, featuring in a vast array of new CHC products in 2019.

Innovative delivery methods are also likely to boost other Derma categories over the coming years, with clothing one particular area of interest. In late 2018, French marketer Expanscience launched Mustela Stelatopia Sous-Pyjama Apaisant, a highly innovative anti-itch pyjama product for children, and the product has been subsequently rolled out in other key markets such as the USA and Brazil. Other marketers are also exploring ways to deliver relief via clothing, including the use of gloves and pillows.

Scoping the Cosmeceuticals field in 10 key markets, the new Cosmeceuticals 2020 report reviews NPD and marketing activity, with a look at likely opportunities for the market. For more information, or to place your order, please contact Melissa.Lee@NicholasHall.com