Latin America a ray of CHC light

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As reported in our MAT Q2 2019 update, the Emerging Markets have produced mixed performances in recent quarters, with consumer healthcare growth in both China and India impeded by a relatively low-key cough & cold season and weakening economies. Over the weekend, it was reported that India’s economic growth slowed further in the third quarter, highlighting the depth of the downturn afflicting a nation that was only recently revelling in its status as the world’s fastest-growing large economy. 

One region that continues to produce above-average consumer growth, however, is Latin America – CHC sales grew by 8.3% in the MAT Q2 2019 period – and Nicholas Hall recently returned to São Paulo for our 5th Latin American Consumer Healthcare Conference. Reflecting on his trip, which also included a workshop in Mexico City, Nicholas Hall said “the topics that aroused most curiosity at these meetings were e-commerce, cannabis, probiotics, industry consolidation and, inevitably, regulations, with Brazil travelling in one direction (liberalisation) and Mexico the other.

Strong growth in Brazil has been also been fuelled by higher levels of launch activity, with our OTC New Products Tracker service showing a strong spike in the number of innovations recorded in 2018, totalling just over 250.

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Below is a summary of some of the Key Learnings from our Latin American CHC Conferences:

• As we enter the 4th industrial revolution, it is important to question traditional business models & sales strategies

• Innovation is not limited to NPD (new product development); within an increasingly saturated market with tough regulatory obstacles, we should explore new business models & sales strategies

• Traditional market research methods are deeply flawed but the wealth of consumer data that advancing technologies (such as wearables) provide could be a goldmine of opportunities

• LatAm lags behind other global regions in eCommerce owing to regulatory hurdles, high levels of fraud & a lack of consumer trust in online platforms

• Precision marketing – using online influencers & product placement – can help connect with more clustered consumers

• While HCPs might be interested in features, consumers want benefits!

• Content marketing – particularly focusing on preventive healthcare – could be key to improving low levels of health literacy and the burden this places on national healthcare services

A detailed write-up of both our São Paulo & Mexico City conferences will be included in the next issue of Insight Latin America. To receive a copy of this article, contact Melissa

Time’s 100 Best Inventions of 2019

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Time magazine has just published its annual round-up of the 100 best innovations – based on key factors such as originality, creativity, influence, ambition and effectiveness – and healthcare was the best represented category with 10 innovations in 2019. Most have been designed for use in primary care settings, such as GE Healthcare’s new Senographe Pristina with Dueta mammogram, but there were several innovations designed for consumer use.

One of these is Tivic Health’s ClearUp, which was added to our OTC New Products Tracker database following its launch in September 2019. Positioned as a drug-free handheld device to treat sinus pain owing to allergic rhinitis, ClearUp delivers microcurrent waveforms to sinus nerves under the cheek, nose and brow bone. The medical device provides three intensity levels for personalised usage, and each treatment takes five minutes to perform and lasts for up to six hours.

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Tivic Health’s ClearUp for sinus pain

Also on the Time Best 100 Innovations of 2019 list were portable ultrasound device Butterfly iQ, Theranica’s drug-free migraine treatment Nerivio and handheld doctor examination kit TytoCare. The latter retails for US$299 and has been designed to eliminate the need for a doctor visit by examining the lungs, ears, skin and throat with special adapters and then video­conferencing a doctor to monitor the metrics in real time. According to TytoCare CEO Dedi Gilad: “It transforms primary care by putting health in the hands of consumers.”

As for Nerivio, it was described as the “first smartphone-controlled acute migraine-relief wearable device” when it gained de novo FDA approval in May 2019. The medical device, which is not suitable for people with chronic migraine, is placed on the upper arm and uses smartphone-controlled electronic pulses to create a Conditioned Pain Modulation (CPM) response. Alon Ironi, CEO and co-founder of Theranica, has said the product will be launched at an “affordable price” when it comes to market in 2020.

Don’t miss out on the chance to save 30% on a subscription to the ultimate tool for tracking consumer healthcare innovation, OTC New Products Tracker! We’ve recently hit over 20K entries and made some innovative improvements within the past year, including powerful new graphs, additional filter options, PowerPoint export, Save & Search options and monthly customised innovations reports. Until the end of 2019 we are offering an exclusive 30% discount off list price — please contact waisan.lee-gabell@nicholashall.com to find out more!

Update on Walgreens Boots Alliance deal

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Since the global financial crisis, mega dealmaking has gone out of fashion but could now be making a comeback with Stefano Pessina’s planned leveraged buyout of Walgreens Boots Alliance, described as potentially the “largest private equity deal on record”, according to the UK Financial Times. Days after it emerged that Walgreens Boots Alliance had held preliminary talks with private equity groups regarding a potential US$70bn deal to go private, shares in the US-based company rose again on reports that KKR had made a formal approach.

Pessina has a 16% stake in the company and already teamed up with KKR to take Alliance Boots private in 2007, though this time there is a far more challenging amount of debt to be raised in the high-yield bond market, which will be a test of market appetite for a deal of this magnitude. Nicholas Hall commented: “Last week I wrote about the possibility of WBA’s delisting from the stock market and going private: “The general view is that this deal is just too big; and yet, and yet!” Seems I was right to be cautious about writing off what might be Stefano Pessina’s magnificent swansong and the world’s largest private equity deal.”

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Walgreens Boots Alliance is the global leader in the retail pharmacy sector, operating just under 20,000 stores in 11 countries and recording revenues of US$136.9bn in the year to end-August 2019. WBA’s US retail pharmacy business accounts for 76% of this total, but operating income has declined by 20.5% owing to drug reimbursement pressures and increased competition from Walmart and Amazon. In addition, WBA’s international retail pharmacy business reported weak growth owing to a “challenging UK market”. According to a report in Forbes, the advantage of going private would be a chance to arrest the decline in WBA’s share price, down nearly 10% this year, as the deal would take the company away from the public eye and could make it easier to focus more on pharmacy point-of-care services.

Separately, under an agreement with Mitra Adiperkasa (MAP), a leading lifestyle retailer in Indonesia, WBA is to create a Boots branded pharmacy-led, health & beauty retail business in one of the world’s most populous countries. The first stores are expected to open in H2 2020. “Boots is a great addition to our diversified brand portfolio, which will help MAP further unleash the power of its 360° retailing strategy,” said Group CEO, VP Sharma. “We are confident that the combination of Boots cutting-edge products together with MAP’s solid competitive advantages will elevate the unique Boots experience to a whole new level in Indonesia.”

Announcing Nicholas Hall’s Reports End of Year SaleUp to 25% off – valid until 31 December. We are pleased to announce a special End of Year offer for our CHC Reports! Until 31 December, we are offering a 15% discount on the 2019 Reports Catalogue, plus an additional 10% discount on orders for multiple reports. If you would like additional information on any of our publications, or would like to place an order, please contact Melissa.Lee@NicholasHall.com

Stada to rise up OTC rankings

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Two major M&A deals agreed in the past week look set to elevate Stada into the consumer healthcare global Top 20. In this week’s blog, we look closer at the details of each deal and, based on the calculations of our DB6 data division, where Stada may end up in the rankings once both deals are closed.

As part of Takeda’s goal to divest around US$10bn in non-core assets, the company has agreed to sell to Stada around 20 selected OTC and Rx products marketed in Russia, Georgia & CIS countries, for US$660mn. The portfolio comprises cardiovascular, diabetes, general medicine, respiratory and OTC supplement entries, and includes Russia’s leading systemic cardiovascular, Cardiomagnyl (aspirin + magnesium hydroxide).

Stada will acquire the rights, title and interest to the products in Russia, Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan and Uzbekistan, while under a manufacturing & supply agreement, Takeda will continue to manufacture the products on Stada’s behalf. The deal is expected to complete in Q1 2020 and, based on current assumptions, could elevate Stada into the No.7 position in Europe.

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Stada already takes the No.9 position among Europe’s Top 10 OTC marketers

Stada has also entered into an agreement to acquire Walmark from Mid Europa Partners for an undisclosed sum. Based in Czech Republic, Walmark is a leading consumer healthcare company in CEE with a direct presence in nine markets, while its products are available in 40+ markets globally. The company’s portfolio spans multiple categories, and key brands include Proenzi joint health range, Urinal urinary health brand, Biopron probiotics for gut health and Martians paediatric supplements. 

Stada’s Head of European Markets, Steffen Wagner, commented: “We are significantly strengthening our presence in Central Europe — especially in Czech Republic, Slovakia, Romania, Bulgaria and Hungary — as a result of this acquisition. We are also looking at ways in which we can market the Walmark brands outside of the current core geographies.” Again, the deal is expected to complete in Q1 2020, and the combined impact of these two acquisitions may raise Stada up as high as the No.14 position in the global OTC rankings.

You can now take a first look at the speaker line-up of industry experts who will be joining Nicholas Hall in Athens next year for our 31st European CHC Conference, taking place from 28th to 30th April! To reserve your seat at the early-bird discounted rate, or to find out more, including information on sponsorship opportunities, please contact Jennifer.ODonnell@NicholasHall.com or Lianne.Hill@NicholasHall.com

Fish oils again under the spotlight

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As reported in our newly published Q2 2019 update, herbal & natural supplements are performing well, up 4.4% globally, thanks to a revival in sales in North America that is partly powered by a return to growth for fish oils & omega-3. This well-developed OTC subcategory generates close to US$2bn in global sales, and after two years of decline in 2015 and 2016, turnover has been rising slowly but surely in recent years. An article that appeared in the New York Times over the weekend, however, entitled Should I Take Fish Oil?, has the potential to halt these gains.

Describing the results of omega-3 studies so far as “inconclusive and inconsistent”, the article calls for further large-scale scientific trials, such as the recent VITAL study, which found that omega-3 supplements didn’t reduce the risk of major cardiac events in a usual-risk population, but did reduce the risk in a subset of people with low fish intake by 19%. The article also pointed to environmental concerns about the fish reduction industry, advocating for vegan and algae-based omega-3 supplements instead.

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The Council for Responsible Nutrition (CRN) and other industry bodies, like the Global Organization for EPA and DHA Omega-3 (GOED), are obviously concerned about this article and its ramifications for the fish oils market. One thing worth emphasising about the article is that it doesn’t discount the importance of omega-3 fatty acids as essential nutrients and it doesn’t change the current recommendations by authoritative sources who support intake of omega-3 fatty acids for maintaining overall health.

According to the 2015–2020 Dietary Guidelines for Americans, people should aim to consume eight or more ounces of seafood per week, especially fatty fish, however the reality is that the majority of people don’t manage to achieve this through their diet. For many consumers, especially those with a low fish intake, taking omega-3 fatty acid supplements remains the most prudent choice to ensure the adequate levels needed for good health.

Only two weeks to go until Nicholas Hall’s OTC.NewDirections Executive Conferencetaking place in London on 14 November 2019! Nicholas will be joined by experts from companies including Bayer, Mundipharma and J&J to review key issues impacting our industry and ensure that you are Keeping Consumers in the Spotlight. Unable to join us? Watch Nicholas’ opening address live on the day here at 09:05 on 14 November. To experience the event in full, you can book your place or find out more by contacting jennifer.odonnell@NicholasHall.com without delay.

Focus on China: Trade agreement with USA imminent?

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Some welcome news for the global economy which broke over the weekend, as announced by the US trade representative, is that the US and China are “close to finalising some sections” of an interim agreement to ease trade tensions between the two countries. This is also a welcome development for OTC marketers, including RB, whose newly-appointed CEO Laxman Narasimhan recently stated that the company’s disappointing Q3 performance was primarily due to issues in USA and China.

Growth in China’s OTC market slowed to 5.3% in the MAT Q2 2019 period, owing to a low key cough & cold season and a weakening economy. Nicholas Hall was a speaker at the Global Self-Care Federation (GCSF) conference – a joint meeting of the Chinese, Asian and global CHC associations, held in Beijing last week – and wrote: “It is always valuable to come to the second-largest CHC market, which in just a few years will be the world’s biggest economy. There are major opportunities here, but increasing challenges too as the Government takes a tougher line on pricing and distribution, without easing the regulatory barriers.”

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Judy Stenmark kicked off proceedings at the GSCF 2019 conference

Nicholas Hall also wrote that: “Among the many presentations during the 2 days, some of which lasted for as little as 15 minutes – this was truly a conveyor belt conference, with only one panel discussion and no questions from the floor – a presentation that stood out for me was from Conba, a company about which I knew very little. Hu Jiqiang, Chairman of Conba Group, made the startling claim that Conba will become the biggest producer of medical cannabis in China and possibly the world … And, of course, the presentation by Alibaba Health was one to sit up and listen to at the end of an exhausting two days. This really is a game-changing company as I discuss in my New Paradigms report.

The rise of Chinese marketers within the global OTC rankings has been a notable trend in 2019. Our latest MAT Q2 2019 data shows that China Resources 999 now takes 9th position globally, and grew by 7.3% in the year to end-June 2019. Additionally, as explored in one of our recent blog posts, By-Health has broken into the global Top 20 and now claims 15th spot. This company has bucked the trend of decelerating growth in China, with sales growing by 31% in MAT Q2 2019. China accounts for over 90% of By-Health’s OTC portfolio turnover, with Australia accounting for the remainder.

Some of the latest innovations and technologies impacting CHC will be at the forefront of the agenda at next month’s OTC.NewDirections Executive Conference, which will take place in London on 14 November, with speakers from key players including Mundipharma, J&J and Bayer. Please contact jennifer.odonnell@NicholasHall.com to book your place or find out more. If you are unable to join us, you can always view Nicholas’ opening address live at 09:05 GMT here

Highlights from OTC DASHBOARD’s Q2 update

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The latest quarterly report on the global OTC market is now available on the OTC DASHBOARD website, including data & trends on the market’s performance at a global, regional and Top 20 country level in the year to end-June 2019. Here we highlight some of the key topline trends from this Q2 update, selecting one major global development from each of our company, category and brand watch sections.

Company Watch

M&A activity completed in 2019 has seen a reshuffle in the rankings of the top global OTC marketers; most notably, GSK is now by far the No.1 consumer healthcare marketer globally, following the closure of its OTC merger with Pfizer in August 2019, giving it a 6.8% share. This consolidation has led to the emergence of new competitors, most notably By-Health, which has broken into the global Top 20 and now claims 15th spot.

While decelerating growth in Emerging Markets, especially China, has been a key macroeconomic trend affecting the wider economy and the consumer healthcare industry, one company that has bucked the trend with accelerating growth (+31%) is By-Health. China accounts for over 90% of By-Health’s OTC portfolio turnover, with Australia accounting for the remainder. In China, the company fields brands including dynamic longline range By-Health and glucosamine supplement Keylid, backed by an intensive A+P strategy.

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Category Watch

Analysing the performance of the major OTC categories at a global level, gastrointestinals enjoyed the fastest growth in the MAT Q2 2019 period, with sales up 4.9%. Antinauseants (+15.9%) performed especially well, recorded a strong performance in Asia-Pacific, the largest regional market for GIs, owing to increasing levels of travel and changing diets.

Antidiarrhoeals, antispasmodics & IBS remedies and liver & bile remedies were the other best-performing categories, powered by new product innovation, as explored more fully in our Q2 update. One cloud on the horizon for GIs are the global concerns and recalls affecting antacids containing ranitidine, after some medicines were recently found to contain a nitrosamine impurity called N-nitrosodimethylamine (NDMA) at low levels — see our previous blog for more details.

Brand Watch

Two OTC brands have global sales of over US$1bn — Vicks (P&G) and Tylenol (J&J) — and both continue to outperform the global OTC market. No.1 Vicks produced above-average growth of 5.7%, despite difficult conditions in the global cough, cold & allergy market.

A strong return to growth in North America for Vicks was at the heart of this upturn, allied with continued strong growth in Latin America, helping to offset the moderate continued decline in Europe. A major factor driving faster growth in North America for Vicks is the sedative & sleep aid range Vicks ZzzQuil, which was boosted by the US launch of a new Pure Zzzs line in 2018. This range has been extended further with Pure Zzzs Kidz in Q3 2018 and several beauty and de-stress gummy supplements in 2019.

Whether you are in the office or on the go, you can access reliable CHC data and trends from OTC DASHBOARD, accessible on tablet, smartphone and desktop, and covering 63 markets across the world. Contact Hannah.Burke@NicholasHall.com to find out how you can benefit from OTC DASHBOARD by setting up a free trial today!