NHC’s 40th Anniversary in 2018

New Year’s message from our Chairman & CEO Nicholas Hall:nh

The start of a new year, and already there is a big ripple of activity in the global CHC market. MM&M NewsBrief ran a story on Tuesday headlined: “CPG companies Nestle and Kellogg court OTC”. It is an interesting notion that Kellogg could buy into the mainstream CHC market as their previous forays have focused on functional foods. But it seems a stretch to me, although there would be a certain neatness if Steve Cahillane, the new CEO of Kellogg and formerly Nature’s Bounty President & CEO would bid for Pfizer Consumer, where Paul Sturman was President. And where is Paul now? — Steve’s replacement at Natures Bounty.

So, it’s possible but unlikely that Steve will become a New Friend (or more properly a Friend Reunited), but our New Friend at FDA, Scott Gottlieb, is making interesting noises that could potentially liberalise the rather static US market. Could this include a new 3rd Class, about which I have been a lone voice in the wilderness for almost all of my time in the CHC industry (more on that later)? CHPA and other stakeholders (apart from retail pharmacy) say “No” as this is illiberal. Mmm, I think the other way. Switching more Rx products under the personal supervision of a pharmacist is very liberal, and will certainly lower costs, which is empowering for consumers — a key test of liberalism. And rounding up the last of our New Friends in this New Year issue, let’s welcome Amazon as a CHC brand marketer, not just an online platform. Some would say, who needs friends like Amazon? Well, I would rather have Amazon as a Friend than an Enemy!

Two prominent association leaders are leaving the industry, the Departing Doctors Gerald Dziekan and Hubertus Cranz. They have done amazing work, as my Good Friend Birgit Schuhbauer relates below, and will be very much missed. I hope the NHC Group will have good or possibly even better relations with their successors. Another Departing Friend who will be particularly missed is Senator Orrin Hatch, who did so much to override FDA when we had no friends there at all. Former presidential candidate Mitt Romney will probably succeed to the Utah seat of Senator Hatch. I hope that the man who made millions at Bain will be as — or even more — sympathetic to CHC.

What about Remaining Friends? Well, that’s us. I almost can’t believe it, but we set up NHC in January 1978. Indeed, a few minutes ago one of my Very Best Friends sent congratulations on our 30th Anniversary. Obviously we were having too much fun to count! I still have clients and colleagues from that era, including the redoubtable Gilbert (Sans Frontieres) Mertens, who still comes to our conferences and last year was our guest in Singapore. 40 years is an amazing length of time, but we at NHC are all about the Future.

So after many years of some change and a lot that’s still the same, good or bad, it is with very great pleasure that all of us at NHC Group wish our contacts a Happy New Year for the 40th time. May it be one of good health, great happiness, peace, success and prosperity. We will be here for another 40 years (at least corporately) and we hope you will be too!!

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Future Trends: Healthcare Technology

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Here at OTC DASHBOARD, we aim to keep subscribers up to date with the latest on how the digital revolution is impacting consumer healthcare, and looking back at 2017 we’ve seen the world’s first digital pill, a new smartphone-controlled pain device and the FDA’s approval of the first medical mobile app, among other things. We also continue to report on the future disruptive impact of the Big Tech companies, and in this vein our blog this week highlights some of the major healthcare developments in 2017 from Amazon, Apple and Google.

Amazon & retail

Among the Big Tech titans, Amazon looks set to be the major healthcare disruptor. Not only will it win share from bricks & mortar retailers, following its move to acquire Whole Foods in summer 2017, but it will continue to expand its OTC e-commerce offering. In March 2017, it launched a (limited) VMS range under its Amazon Elements umbrella brand, while in late 2017 there were reports that Amazon was in exploratory talks with leading generic marketers Mylan and Sandoz. There will be major regulatory hurdles to overcome before Amazon can have its own OTC range, but not everyone sees Amazon’s push into the healthcare space as a threat; Perrigo CEO John Hendrickson has said that the company would welcome Amazon as a “natural player on the OTC side”.

In the meantime, Amazon has been expanding its retail footprint. In India, Amazon announced in September 2017 that it was partnering with Dabur to create an online marketplace for Ayurveda medicines. With this traditional system growing in popularity in India, the move will help improve the company’s connection with consumers, particularly Millennials. Dabur is responsible for developing content and will have prime visibility with branding and banners. In Europe, there were also rumours (later denied) that Amazon was in talks to acquire online pharmacy, Shop Apotheke.

Apple & devices

Though Apple is unlikely to disrupt healthcare in the same immediate way as Amazon, it did take a significant step forward in summer 2017 with the announcement that it would soon be offering users the chance to monitor their glucose levels. Apple has partnered with medical device maker Dexcom and linked the company’s glucose monitoring device with its own Apple Watch. Apple has also previously been reported to be hiring a small team of biomechanical engineers to develop sensors that monitor the body’s blood sugar levels. The team are said to be working on non-invasive sensors that do no require users to prick their skin for blood testing. This could extend the Apple Watch’s uses into new diagnostic areas, and give it a potential future role in major Rx-to-OTC switches. As our recent infographic showed, the wearables market is forecast to continue its growth.

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How smartphones and wearables can play a role in future OTC switch activity is likely to become clearer in 2018. Last week, FDA Commissioner Dr Scott Gottlieb identified some major policy goals for the FDA next year, writing: “We are considering innovative action in the nonprescription drug area to expand the scope of drug products that can be made available to consumers without a prescription. We will be proposing to allow certain innovative approaches for demonstrating that a drug product can be used safely and effectively in a nonprescription setting.” Specifically, he said: “Examples of such conditions could include use of self-selection questions on a mobile medical app prior to permitting access to the drug, or other innovative technologies to improve safety. Through use of these types of additional conditions, we hope to create a new paradigm of drug safety with greater flexibility that will benefit patients and public health.”  

Google & health information

Google also has its role to play in healthcare. It was reported in August 2017 that, six years after it last held the title, Google had overtaken Apple to become the world’s most valuable brand, worth US$109bn, according to Brand Finance’s Global 500 2017 report. Amazon’s 53% brand value growth nearly propelled it to the top spot in 2017, but the online retailer retained its No.3 ranking, with a brand value of US$106bn.

Perhaps Google’s major area of innovation in the healthcare space has been in providing new digital tools to access health information. In February 2017, we reported on Google’s launch of Health Cards in Australia, after working on the project with doctors and medical agencies, including the Mayo Clinic. Google then announced in August 2017 that it was partnering with Walmart to offer personalised voice shopping, and the platform went live in October 2017 with the launch of Google Home. Until January 2018, customers who buy a Google Home or Google Home Mini from Walmart will receive up to US$25 off a Walmart order when they link their Walmart account to Google Express. They will then receive recommendations based on previous Walmart purchases.

As a result, Google is now in an AI battle with Amazon (Alexa) and Apple (Siri), which will have deep implications for healthcare. Voice-activated technology will not only affect the way we shop for medicines, but it will also change how we search for health information. How this new technology will affect social media and advertising remains unclear though. As Nicholas Hall said: “I believe that all social media companies will be forced by governments to police content, cut back on access and pay significantly higher taxes. We have absolutely no way to measure the impact of social media and the internet on our business (apart from largely unaudited e-pharmacy sales), and I’m astonished at predictions that the internet will consume 80% of all media spend in the next few years. I don’t understand it and I don’t believe it.”

Q3 2017: Global OTC growth stays at 4.7%

According to the latest figures published by Nicholas Hall’s global OTC sales database DB6, the OTC market maintained 4.6% growth in MAT Q3 2017. Commenting on the results, DB6 VP Celine Waller said: “Russia remained the fastest-growing leading market, though its growth slowed slightly compared to MAT Q2 2017 (+17.3%). Brazil and Turkey (+13.1%) also both achieved double-digit growth. Growth in the US increased marginally, with an improved performance in cough & cold offset by continued weakness in gastrointestinals and dermatologicals. France and Australia (-0.7%) remained in decline – France owing to the poor performance of the large OTx sector and reverse switch of some cough ingredients, and Australia driven by a slowdown in demand from Chinese consumers buying VMS products for resale in China (daigou or ‘suitcase entrepreneurs’).”

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Though OTC growth remains high in many of the Emerging Markets, the established markets of North America, Japan (+0.6%) and western Europe – notably Germany (+1.8%), France (-1.2%), Italy (+2.0) and UK (+1.7%) – remain relatively flat. Innovative Rx-to-OTC switches, such as the UK MHRA’s recent approval of the POM-to-P reclassification of Viagra Connect, or the emergence of new OTC categories, such as e-cigarettes or medical cannabis, offer the most promising route back to growth for many of these established OTC markets.

Nicholas Hall said: “Q3 data confirms 4.6% as the baseline for CHC growth, and frankly it’s not good enough!! Only the sleepiest or most risk-averse companies will accept competing in a market where growth is only modestly ahead of inflation + higher population. That is why the first serious step by Pfizer to switch Viagra is so important. Since we made our first detailed review of the ED category for a Big Pharma client exactly 5 years ago, we have been convinced that Viagra is potentially the world’s largest consumer health brand. Some might say that it already is, although that would be true only for the use of the Viagra brand name on the internet as most of the blue pills sold in that channel are not from Pfizer. As a legitimate CHC category, and with recreational use included — which Big Pharma companies dislike as they see ED brands as treatments — the overall CHC reproductive health category, including ED brands, condoms, oral contraceptives, EHC and conception products and diagnostics, could easily reach sales of US$20bn at MSP in all channels of distribution.”

Canada’s NNHPD has ambitious OTC plans

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The next six months for Canada’s Natural & Nonprescription Health Products Directorate (NNHPD) will be extremely busy according to its recently announced plans. With more than a dozen priorities on its list, it remains to be seen if all these activities will be completed before the end of March 2018. However, slippage is not uncommon with government agendas and only time will tell.

Topping the list is the ongoing Self-Care Framework consultation. While the original proposals from four years ago were intended to determine how OTC medication regulations could be updated to distinguish them from prescription drug requirements, the government shifted gears over the past year to include other products in the review (Natural Health Products, cosmetics and fragrances). The consultations have resulted in some of the most commented-upon proposals in Health Canada’s history and NNHPD says that they will be focused upon examining the inputs and preparing for next steps through the winter months.

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Green tea among the planned monographs

Other issues that the NNHPD is examining include Plain Language Labelling (PLL) for OTC products, dosage forms for children and updating the OTC monograph system. Monographs that can be used to gain early access to the market continue to be a tool that government wishes to improve upon. The following monographs are scheduled to be posted between November and March 2018:

  • Green tea extracts
  • Multivitamin / mineral supplements
  • Selenium
  • Chlorella
  • Kelp products
  • Bromelain, stem & fruit
  • Joint health products, multiple ingredient
  • Serrapeptase

In addition, activities planned by the NNHPD include developing distinct regulations for disinfectants, updating the online databases, increasing their compliance programme for Natural Health Products, revisions to the product application process and management policy (by April 2018), renewing the website and publishing adverse event signal assessments (most recently done for green tea extract and liver injury).

For a more in-depth analysis of Canada’s upcoming OTC regulatory changes, be sure to subscribe to OTC INSIGHT North America. Enquire today by emailing owen.hartnett@nicholashall.com

World first digital pill gets FDA green light

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Otsuka (in association with Proteus Digital Health) has been granted approval by the US FDA for Abilify MyCite, the world’s first digital pill, which contains a sensor that tracks when the medicine has been ingested by the patient. Though Abilify is an Rx medicine for schizophrenia and bipolar disorder, its approval has far-reaching implications for both prescription drugs and consumer healthcare.

How it works: Containing a sensor the size of a grain of sand, Abilify MyCite emits an electrical signal when it comes into contact with stomach acid, and this signal is received by a patch on the patient’s rib cage. In turn, this patch communicates with a smartphone app via Bluetooth, providing data such as time of ingestion and dosage. As well as the doctor and patient, up to 4 other people (including family members) can have access to the app’s data – though, importantly, the patient has control and can revoke access.

 

Mitchell Mathis, Director of the Division of Psychiatry Products at the FDA’s Center for Drug Evaluation & Research, said: “The FDA supports the development and use of new technology in prescription drugs and is committed to working with companies to understand how technology might benefit patients and prescribers.” Inevitably, during the initial phase, the digital pill will be incorporated solely into Rx medicines – to allow the FDA to monitor its impact on safety and adherence – however, at a later date, there is nothing to stop this new technology being part of innovative Rx-to-OTC switches.

Patients, doctors and insurers are increasingly coming to appreciate the ability to access objective data about the whole range of our medical consumption – from Rx drugs to OTCs and supplements. Once the price of these new sensors is reduced to a certain level of affordability, we could see a much wider rollout of the technology.

That said, a major stumbling block could be the issue of privacy. Some are concerned that patients who fail to take their medicines on a regular basis may be punished by their health insurers, while others have worries that the technology could be used as a coercive tool against certain types of patients. However, those concerns aside, the future for healthcare looks increasingly digital and the FDA is already hiring more staff in anticipation of a raft of new applications for digital pills.

Striving for Success in Latin America

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Though it still only accounts for a small share (just under 6%) of the global OTC market, Latin America remains by far the most dynamic region, with growth of 12% in the MAT Q2 2017 period. As the second-largest market in the region after Brazil, Mexico has seen its OTC growth accelerate in recent quarters thanks to rising consumer confidence throughout 2017, and its vibrant capital – Mexico City – was the venue for our 3rd Latin American Conference held last week.

Focusing on the theme, “Striving for Success in Latin America”, the conference was opened by Nicholas Hall and his annual keynote speech, highlighting key trends across the region – such as an increasing consumer preference for prevention, the widespread use of social media and a lack of regulatory improvement – and the impact these will have on the future of the industry.

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Summarising his speech in 9 key points, Nicholas Hall said: “We must manage our brands in a more effective way if we are to sustain the current rate of growth, bearing in mind that Latina will probably be a late adopter of many features of the New Paradigm, including digital marketing for CHC products:

  1. With the flood of new products each year, it is essential that our brands stand out in a sea of mediocrity, by clear positioning that demonstrates both new functional benefits and emotional benefits
  2. Most successful brands in Latina and globally are old brands — the CHC market is unique in rejecting new brands in favour of those that are tried and tested; we should search for hidden gems that can be dusted off and given a new lease of life
  3. There is a constant reference from all quarters to the need for more innovation and I agree!! The best strategy is to bolt on a new ingredient, with an improved positioning, to a famous and trusted brand name
  4. There are many opportunities in LatAm: we have conducted Gap Analyses in many countries, including Brazil and Mexico. We found lots of open gaps with unmet or only partially met demand, many in adjacent categories, as most launches are in the mainstream categories rather than emerging niches — please contact my colleague Ekaterina Panteleeva (ekaterina.panteleeva@NicholasHall.com) for more information on the way we conduct Gap Analysis
  5. TV is still the main medium, but not without problems of loss of viewers, so we should test-market more for optimum spend
  6. The retail sector is consolidating fast, yet we don’t engage with the big chains through modern Key Account Management programmes, and the concept of Category Captaincy is hardly known; not least we must work with the big chains to manage the inevitable growth of private label
  7. There has been much talk of liberalisation, but the regulations are still quite drastic and are preventing more Rx-to-OTC switches, especially in Brazil
  8. Overall, the region is growing well at 10% (constant currency) in the past 5 years and is forecast to grow by 8% in the next 5 years
  9. So let’s work hard to maintain double-digit growth. To misquote President Trump, “Let’s make CHC great again!”

Monica Feldman also provided an insightful regional overview, reminding us of the major differences between certain markets (such as mass market vs pharmacy sales) and the growing prevalence of digital health. Hector Bolanos and Juan Knobloch both emphasised the importance of lobbying government for an improved regulatory framework in Mexico, while Henry Adler discussed diversification strategies as a means of avoiding regulatory delays in Brazil.

Rodrigo Arcila drew attention to Colombia’s dynamic Rx-to-OTC switch environment and rapidly-advancing national health system, while the day’s final speaker, Anne Engerant, focused on how OTC companies can help combat wider public health issues, such as antibiotic resistance, and promote responsible self-medication. Day 1 closed with a panel discussion moderated by Monica Feldman: Roy Bateman and Maria Barros y Muradas debated the mid-term future of the industry, including digitalisation and the evolution of POS, before the floor was opened to questions.

This week, Nicholas is back in India for the 2017 Annual Conference in association with CubeX. As consumers exist in a volatile, uncertain, complex and ambiguous marketplace, we can say that today’s self-care landscape is a VUCA world, which is why this year’s theme is Consumer Healthcare in VUCA World. With seats still available, you can secure your place now by emailing conference@cubex.co.in

Pfizer OTC up for sale: How the OTC industry could be transformed

Near the end of last week, a Reuters news story broke indicating that Pfizer would be opening an auction process for its OTC business as early as this November, and that preliminary discussions had already taken place. GSK and RB have been tipped as frontrunners in securing a deal, though P&G, Sanofi, J&J and Nestlé have also been cited as possible bidders.

In Friday’s OTC.Newsflash bulletin, Nicholas Hall stated that there could possibly be 3-4 strategic buyers in the final bidding, and that the eventual selling price of Pfizer’s OTC unit could rise above US$20bn.

During GSK’s Q3 2017 results presentation, CEO Emma Walmsley confirmed that the company is interested in bidding for Pfizer’s OTC division and “building up our Consumer business”. However, there was a note of caution when the GSK CEO stated that “our first focus in capital allocation was clearly around our biggest business in Pharma, and R&D within that”. 

Using the latest DB6 figures for the MAT Q2 2017 period, now available on the OTC DASHBOARD website, we have created a graph below showing how the global Top 5 in the OTC industry would be transformed if GSK was to snap us Pfizer’s OTC business (assuming, of course, that there wouldn’t be any divestments):

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As you can see, the deal would put GSK far ahead of its rivals, and make it the standout OTC marketer in what it is currently a very tight and competitive Top 4. Likewise, we also analysed the data to see the impact of RB acquiring Pfizer’s OTC unit on the global Top 5 and again the result would likely be a clear new global No.1:

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As ever, it’s hard to be sure how the situation will unfold, and it’s possible that Pfizer may even decide to hold on to its OTC business, but whatever happens we’ll be sure to keep you updated with the latest news and analysis here at OTC DASHBOARD.