eCommerce expansion led by Amazon limits store-based growth

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Continuing our series of blogs on the 10 Infinity Zones for future CHC growth outlined by Nicholas Hall, in this edition we take a closer look at eCommerce, following the news that Amazon has become the world’s most valuable brand, according to the 2019 BrandZ Top 100 Most Valuable Global Brands ranking released by WPP and Kantar.

Commenting on the latest DB6 MAT Q1 2019 figures, which show that global bricks & mortar OTC growth decelerated to 3.7%, Nicholas Hall said that “Amazon goes from strength to strength, and takes a 75-90% share of all eCommerce sales of CHC products, depending on whom you listen to. These are the glory days for the so-called GAFAA companies (Google, Apple, Facebook, Amazon, Alibaba), but will it last?

Top 10 country MAT Q1 2019

The rise of eCommerce is one of the factors causing the slowdown in store-based OTC sales, which now total US$136.7bn. According to Celine Waller, VP, DB6, store-based sales account for 78% of the global OTC market, with direct sales generating 14%. Internet & mail order currently accounts for 9% of the “all channel” universe, with sales dominated heavily by VMS supplements in China and USA.

However, this channel has seen a CAGR of 20% since 2014 and will continue to increase dramatically in importance over the next decade. In China, Alibaba continues to prosper from the Chinese government’s attempts to promote eCommerce and regulate the so-called suitcase trade (daigou), while Amazon remains supreme in the US market.

To help keep our clients abreast of these changes, this year we have introduced an “all channels” version of the DB6 dataset, which reports on topline sales of direct sales (MLM), Internet & mail order plus key brands in selected leading markets. eCommerce will also be one of the key topics in our upcoming report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

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AESGP and CHPA looking for way forward on CBD

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One of the Infinity Zones presented by Nicholas Hall at the 30th European CHC Conference in Vienna, medical cannabis has arguably the most potential to transform the consumer healthcare market. However, as Nicholas conceded, the science still has a long way to go and the regulatory path forward remains uncertain.

Nicholas sees the medical cannabis category eventually subdividing into five key segments: 1. Rx (already in existence), 2. Rx-to-OTC switches (expected after 2023), 3. VMS & topicals (2019 is a pivotal year for CBD in the US with CVS and Walgreens putting these supplements on sale), 4. CBD for beauty & food, and 5. Lifestyle Marijuana. 

Reporting back from last week’s AESGP meeting in Geneva, our INSIGHT Europe Editor Sarah Carter said: “Touching on CBD, delegates were in agreement with the myriad benefits and the huge growth potential of the market, but less clear on where we stand in terms of regulations.” 

New Paradigms 2019

Nicholas Hall wrote: Reading Sarah’s notes, I was interested to hear that Scott Melville made the comment, “Our industry knows how to take products from Rx to OTC, but not how to take something from illegal to legal.” Scott is President & CEO of the Consumer Healthcare Products Association in USA, and this idea was first raised in a leadership panel Scott asked me to moderate at the CHPA meeting in March, but it took me some weeks to really understand what was being said. Yes, we know how to make switches; unfortunately, there aren’t any! 2018 was the first year in living memory when new switches added nothing significant to CHC revenues in USA, the home of Switch.

On the other hand, CBD is being legitimised all over the world, including in about half of US states, and all the major drugstore chains have started pilot programmes to sell hemp and other CBD products where it is already legal. Medical cannabis is an express train that is gathering speed every day, with US$11bn of annual sales likely to be added to the global CHC market in the next decade. And that was last month’s forecast – I’m sure we would increase that number if we started afresh. Our industry dare not be left behind.

Medical cannabis will be one of the key topics in our upcoming report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Big Data to democratise healthcare

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Another of the Infinity Zones that Nicholas Hall will be exploring in his upcoming New Paradigms report is Big Data. Healthcare is an increasing focus of the global Big 5 tech companies, namely Google, Apple, Facebook, Amazon and Alibaba (with the latter predicted to be the “biggest of all in future” by Nicholas). All of these companies own vast reservoirs of consumer information (“big data”) that can be leveraged to provide targeted advertising and services.

In an interview with CNBC in early 2019, Apple’s CEO Tim Cook said that health will be the company’s “greatest contribution to mankind” and indicated that various services would be rolled out later this year, building on the success of the new ECG-enabled Apple Watch. Over the weekend, it was revealed that Apple has acquired Tueo Health, a California startup developing a smartphone app that works with sensors to detect asthma-related issues in sleeping children and alert the parents or guardians.

Tueo Health

How the Tueo Health app works

In recent years, Apple has also acquired Gliimpse, a startup developing technology to aggregate medical records, and Beddit, a sleep sensor company. Apple sees its mission as “democratising” healthcare by putting its big data in the hands of consumers and empowering individuals to manage their own health via apps and dashboards. Apple’s vast user base gives it an advantage over its tech rivals, and the expected launch of its own medical devices (i.e. hearing aids) and services (i.e. blood glucose monitoring) will expand its healthcare appeal further.

As Nicholas points out, however, privacy concerns continue to plague big data initiatives and European authorities in particular have issued various fines to tech companies for breaching strict new data privacy laws (GDPR). The need for tech companies to process our personal information with ever more sensitivity will become even greater once they have access to healthcare metrics such as our blood pressure, sleep patterns, etc.

Big Data will be one of the key topics in our upcoming report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Natural & Organic a focus for M&A and innovation

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Continuing our series of blogs on the 10 Infinity Zones for future CHC growth recently outlined by Nicholas Hall, in this edition we take a closer look at natural & organic products. This is by no means a new trend, but it’s certainly one increasingly on the radar of multinationals, as exemplified by J&J’s recent purchase of Zarbee’s Naturals.

Among herbal & natural cough remedies, Zarbee’s has been gaining share on rivals such as Little Remedies, Hyland’s and Chestal, while also growing faster than most medicated OTC cough remedies. Another growth driver in the US market is Maty’s all-natural and organic range, including honey-based cough remedies, while Unilever recently bought Olly Nutrition, another range of VMS products with a strong emphasis on natural ingredients, such as the 10 phytonutrients in its Super Foods Multi line.

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A+P for most herbal & natural products often emphasises the importance of quality standards and – increasingly – organic and responsibly-­sourced ingredients. In China, the No.1 probiotic brand Biostime (Health & Happiness for Institut Rosell) is promoted on the basis of the organic sourcing of its ingredients, while marketing involving brand ambassador Juliette Binoche also emphasises the natural heritage of the brand.

According to OTC New Products Tracker, the number of launches that include the word “organic” either in their branding or list of ingredients is growing fast, with 246 innovations in 2018 vs 168 in 2017 and just 81 in 2016. Over half of these products are unsurprisingly classified as vitamins, minerals & supplements, however there is also a growing number of “organic” Lifestyle OTCs, especially among medical cannabis products, sedatives & sleep aids and stimulants.

Last chance to pre-order Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Prevention better (and growing faster) than cure

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For many years now, Nicholas Hall has been highlighting how OTC subcategories focused on prevention are growing faster than those directed towards treatment or intervention. This long-term trend in the CHC industry continues to take root, thanks to the growing power of categories like probiotics (another Infinity Zone, covered in last week’s blog).

At this year’s Vienna conference, Nicholas Hall presented a slide of the fastest-growing OTC subcategories by CAGR (2014-18), comparing those focused on prevention with those centred around treatment, and this showed that seven of the Top 10 most dynamic subcategories in recent years had a preventive focus. Sexual health is a relatively new driver of this trend, with two subcategories in the Top 5 – erectile dysfunction and emergency hormonal contraception.

Top 10 prevention

Vitamins, minerals & supplements have long been the main driver of this prevention trend, with probiotics and vitamin D the two key subcategories. Innovation and niche product positioning (i.e. to prevent allergies, candidiasis, age-related illnesses, etc) have helped fuel probiotics growth, while the dynamism of vitamin D sales has been driven by rising awareness of the high levels of deficiency in many markets and the benefits  of supplementation.

Herbal memory & brain health is an increasingly attractive subcategory, as exemplified by RB’s recent launch of Neuriva, a new product designed to support “brain fitness” and prevent cognitive decline. Royal jelly is taken widely in Europe and Asia-Pacific as a way to prevent fatigue, while just outside the Top 10 in CAGR terms are magnesium, zinc, pregnancy vitamins and hair & beauty supplements. According to OTC New Products Tracker, the latter was the fifth most active OTC subcategory in 2018 in terms of launch activity, with 150 innovations.

Last chance to pre-order Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Probiotics the main CHC growth driver in Europe

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As part of our series of blogs on the 10 Infinity Zones for future CHC growth outlined by Nicholas Hall, this week we take a closer look at the fast-growing probiotics category. As Nicholas mentioned in his keynote speech at this year’s Vienna conference, probiotics is a category that has moved from adjacency to mainstream, producing more value growth in Europe in the past 5 years (additional US$364mn in sales) than any other OTC category.

In 2018, global sales of probiotics totalled US$4.2bn, representing 10.8% growth. This was a slightly better performance than the previous year (sales of probiotics were up 10.4% in 2017) but still marks a deceleration compared to the recent peak in 2016 of 13.6% growth. Looking at global product innovation trends, thanks to our OTC New Products Tracker tool covering 20 key markets, there are also indications that probiotics expansion may have hit a temporary plateau, with roughly the same number of innovations in this category in 2017 (277) and 2018 (270).

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However, the appearance of new probiotics niches looks set to energise further growth and innovation going forward. As highlighted in our recently published Lower GIs report, the development of probiotics with novel positioning (IBS, hangover, etc) and for specific life stages (infancy, pregnancy, etc) are expanding the category’s appeal even further. Recent examples of new probiotics for kids include Zarbee’s Naturals Baby Daily Probiotic Drops (J&J) and Biocodex’s launch of Florastor Baby.

Personalisation will also be an important future growth driver for probiotics. Despite the increasing number of proprietary bacterial strains, the probiotics category is still largely characterised by a one-size-fits-all approach. As scientific understanding of the microbiome advances, however, we may soon reach a stage where tailored probiotic strains are recommended for people with specific host microbiomes or diets. This sort of precision therapy could also eventually see a growing number of probiotics regulated as medicines rather than dietary supplements.

How is regulation of consumer healthcare products set to evolve in future? Find out in the chapter dedicated to regulation in Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself. Other chapters will look at issues surrounding the CHC market including digital engagement, M&A, healthcare trends and much more! You also have the option to upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Emerging Markets drive OTC growth in 2018

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Emerging Markets constitute one of the 10 Infinity Zones for future CHC growth that we highlighted in our recent blog previewing Nicholas Hall’s upcoming New Paradigms report. Recent figures from the IMF’s World Economic Outlook forecast that developing economies will continue to outpace advanced economies and, according to the latest data from DB6, Rest of World (Middle East & Africa + Kazakhstan) and Latin America (including Puerto Rico) growth – 7.2% and 9.5% respectively – fast outpaced that of the the global OTC market (+4.0%) in 2018.

Middle East & Africa and Latin America still account for a relatively small share of global OTC sales – 7% and 5% respectively – but both are rising in power every year. Brazil (+10.1%) is the No.9 OTC market globally, while Mexico (+6.9%) ranks 16th globally in terms of OTC market size. As for the Middle East & Africa, there are now three countries clustered close together in the global OTC rankings – South Africa (+8.7%), Turkey (+15.8%) and Saudi Arabia (+6.7%) – claiming the 19th, 20th and 21st positions.

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As well as double-digit growth in Turkey, there were also strong OTC performances from Algeria (+8.6%), Egypt (+15.2%), Nigeria (+7.9%) and UAE (+7.8%) in 2018. High consumer demand for preventive medicines is a key driver of CCA and VMS growth in key markets such as Egypt. According to a DSM survey of almost 7,000 people in EMEA (Europe, Middle East & Africa), some of the top health concerns for the young include immunity and resistance to disease and colds.

Multinationals have already established a strong foothold across the Middle East & Africa, but in some countries like Egypt and Iran local marketers still remain dominant. GSK, Sanofi and Bayer are the Top 3 OTC marketers in the region, followed by South Africa’s No.1 OTC marketer Adcock Ingram and RB. GSK’s OTC portfolio is highly focused on analgesics, especially Panadol, while Sanofi and Bayer have extensive VMS portfolios across the region.

Available on tablet, smartphone and desktop, OTC DASHBOARD covers 63 markets across the world, allowing you a bird’s eye view of the CHC market! We’ve now published our latest Q4 update, giving you the most up-to-date trend reports on Middle East & Africa markets such as South Africa, Turkey and Saudi Arabia. Contact hannah.burke@nicholashall.com to find out how you can benefit from OTC DASHBOARD by setting up a free trial today!