What future for AI in healthcare?

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One of the chapters in Nicholas Hall’s recently published New Paradigms report, entitled The Digital Revolution, provides some compelling examples of consumer healthcare companies and OTC brands that are thriving in the digital era. While key marketers like GSK were slow to invest in digital, the tide is now turning – in its 2018 annual report, GSK said it had “significantly” increased its advertising spend in online media because it is delivering a “far higher return” than traditional TV – despite continuing reservations from some companies like P&G about the way digital budgets are deployed.

One emerging technology that has an uncertain future in healthcare is artificial intelligence. Back in March, a report published by MMC Ventures (in partnership with Barclays) predicted that AI can “unlock a paradigm shift in healthcare”, particularly in diagnosis, drug discovery and monitoring. According to MMC’s research, health & wellbeing is a “focal point” for AI entrepreneurship – 21% of start-ups serve the sector, more than any other sector – and, over the next decade, “developers will have a greater impact on the future of healthcare than doctors”.

An example of innovation here is L’Oreal’s augmented reality and artificial intelligence entity, ModiFace, which has led to the launch of a consumer digital skin ageing diagnostic tool. Targeting women, its first application is Vichy SkinConsultAI – based on ModiFace’s AI-powered algorithm – launched in Canada in January 2019 and rolling out across the brand’s websites globally over the course of this year.

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However, security concerns continue to be the main stumbling block for AI. According to research published in Digital Health last month, public concern about accuracy, cybersecurity and the inability of AI-led chatbots to sympathise may be standing in the way of artificial intelligence’s successful introduction into healthcare.

A University of Westminster-led team surveyed 216 participants on a range of demographic and attitudinal variables including questions about acceptability and perceived effectiveness of AI in healthcare. The results identified three broad themes: “understanding of chatbots”, “AI hesitancy” and “motivations for health chatbots”. The team suggests that designers of AI-led chatbots need to employ user-centred and theory-based approaches to address patient concerns and to optimise user experience in order to achieve the best uptake and utilisation.

Embracing Tech and Digital Health are two of the key themes at our OTC.NewDirections Executive Conference, taking place in London on 14 November 2019! Nicholas Hall will be joined by experts from companies including Bayer, Mundipharma and J&J to review these issues, as well as others impacting our industry, including the status of Medical Cannabis in Europe, Growing Brands through Innovation and the ultimate theme of ensuring that you are Keeping Consumers in the Spotlight. To find out more, or to reserve your place, please contact jennifer.odonnell@NicholasHall.com without delay!

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E-cigarettes under the spotlight in USA

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A few months ago, Nicholas Hall applauded the decision by US District Judge Paul Grimm (Maryland) to set a 10-month deadline (to 12th May 2020) for e-cigarette manufacturers to apply to the FDA and submit their products for public health review if they want to keep them on the market. The judge also imposed a one-year deadline for approval, as suggested by the FDA. Nicholas Hall said “there’s a chance that e-cigarettes will be regulated as drug products with all the opportunities and problems that brings” and predicted that “vaping could be a US$5bn OTC-registered industry by 2025, but at the moment that looks very unlikely.”

Since then, concerns in the USA about the safety of e-cigarettes have been growing. The Centers for Disease Control (CDC) recently indicated that, as of 6th September 2019, over 450 possible cases of lung illness associated with the use of e-cigarettes have been reported to CDC from 33 states and 1 US territory, while five deaths have been confirmed in California, Illinois, Indiana, Minnesota and Oregon.

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Map of reported US lung illness cases linked to e-cigarettes. Source: Office on Smoking & Health, National Center for Chronic Disease Prevention & Health Promotion

Meanwhile, the Federal Trade Commission is investigating Juul’s marketing practices and whether the company targeted minors, according to the WSJ. US House Energy & Commerce Chairman Frank Pallone recently wrote to Juul, which is 35% owned by tobacco group Altria, and the three other dominant players of the US e-cigarette market — Fontem Ventures, Japan Tobacco International and Reynolds American — requesting more information about their research into the public health impact of their products, their marketing practices and their role in e-cigarette use by adolescents. 

E-cigarettes are also under the regulatory spotlight at the US state level, with Michigan the first US state to ban flavoured nicotine vaping products. After Chief Medical Executive Dr Joneigh Khaldun found that youth vaping constitutes a public health emergency, Governor Gretchen Whitmer ordered the Michigan Department of Health & Human Services to issue emergency rules to ban the sale of flavoured nicotine vaping products in retail stores and online, and ban misleading marketing of vaping products, including use of terms like “clean”, “safe” and “healthy”. She also ordered the Michigan Department of Transportation to enforce an existing statute to prohibit advertising of vapour products on billboards.

American Heart Association CEO, Nancy Brown, commented: “Governor Whitmer has taken bold and appropriate action in response to the epidemic of youth e-cigarette use. In the absence of robust regulation by the FDA, we know shockingly little about the health impact of e-cigarettes being widely marketed to youth and adults. The recent outbreak of respiratory illnesses associated with e-cigarette use has only added to the uncertainty and increased the need for immediate action … We urge the FDA to move urgently to protect public health and exercise strict oversight over all e-cigarette products.”

Only two months to go until our OTC.NewDirections Executive Conference, taking place in London on 14 November 2019! Nicholas Hall will be joined by experts from companies including Bayer, Mundipharma and J&J to review key issues impacting our industry, including the status of Medical Cannabis in Europe, Embracing Tech, Growing Brands through Innovation alongside exploring the ultimate theme of ensuring that you are Keeping Consumers in the Spotlight. Save GB£100 when you book your seat before 13 September! To find out more, or to reserve your place, please contact jennifer.odonnell@NicholasHall.com without delay!

Lifestyle OTCs still the best hope for OTC switch revival

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2019 has been a slow year for Rx-to-OTC switch news, with activity dropping off markedly in the key US market in recent years, and Asia-Pacific (especially China, Japan and Indonesia) and Europe (Poland especially) the main source of developments. In this context, it was welcome news last week that Norway will become the second European market for OTC Viagra, after the Norwegian Medicines Agency approved the OTC sale of Viagra Reseptfri (Pfizer, sildenafil 50mg) erectile dysfunction treatment to men aged 18+ years, with this to be accompanied by pharmacist advice.

Pfizer plans to launch Viagra Reseptfri in pharmacies in early 2020, while Rx Viagra will remain available. The medicines agency recommends that men have a check-up with their doctor within six months of purchase so that any potential underlying conditions can be investigated. Viagra Reseptfri will be the first medicine available in Norway under the country’s new category of non-prescription medicine with guidance, and the Rx-to-OTC switch follows similar measures elsewhere in Europe. In Poland, sildenafil 25mg is available OTC from a number of domestic players, with initial launch from Adamed in May 2016, while Viagra Connect was launched in the UK in March 2018.

Of the 20 key markets covered by OTC New Products Tracker every month since the start of 2013, Poland has been the most active in terms of Rx-to-OTC switch activity, with 54 products reclassified to non-prescription status. A liberal switch environment has helped bring about a raft of Rx-to-OTC switches since 2014, including Europe’s first OTC erectile dysfunction brand and Poland’s first OTC systemic cold sore treatment.

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Despite some notable failures (such as urinary product Flomax Relief), so-called “lifestyle” drugs remain the primary source of switch activity, helping to extend the reach of the OTC market into new categories such as contraception, erectile dysfunction and cardiovascular disease. A key switch development in 2019 was the downscheduling in Japan of Taisho’s hyperlipidaemia treatment Epadel T (ethyl eicosapentaenoate) to Class I OTC, where sales are permitted in pharmacies (and online) after professional consultation. Downscheduling may have come just in the nick of time – sales data suggest Epadel T had failed to make any noticeable impact on the OTC market in its almost six years as an Instruction-Required Drug.

There also remains hope that Sanofi may one day market Eli Lilly’s erectile dysfunction treatment Cialis as an OTC medicine (it owns the rights to market Cialis OTC in the USA, UK, Canada and Australia), but is switch application has been stuck at the FDA a full five years since its submission. In July 2019, Sanofi also signed a deal with Roche for the exclusive OTC rights to Tamiflu (oseltamivir 75mg capsules, Genentech / Roche Group) for flu prevention and treatment in the USA. Under the terms of the agreement, Sanofi will be responsible for leading negotiations with the US FDA for the OTC switch and subsequent exclusive marketing, scientific engagement and distribution of Tamiflu OTC in the USA. Let’s hope for the sake of OTC growth that its negotiations go smoothly.

Clear your diary for Nicholas Hall’s 31st European Conference, which will be held in Athens on 28-30 April 2020, on the theme of Advancing in CHC: The Must-Dos and  Reasons Behind Them. To register your interest in this event, or for more information on sponsorship opportunities, please contact jennifer.odonnell@NicholasHall.com.

Alibaba and Walmart report strong Q2

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Our blog this week rounds up the latest retail news, including recent Q2 results from Walmart and Alibaba, and a focus on M&A activity in Asia-Pacific. China’s Alibaba trumped analysts’ expectations with a 42% year-on-year jump in quarterly revenues to Rmb114.92bn (US$16.3bn), contrasting with its rival Tencent which one day earlier disappointed the market by falling short with a more modest quarterly growth (though Tencent did report a 26% year-on-year increase in profit).

Alibaba’s CEO, Daniel Zhang, said the company “had a great quarter, expanding our user base to 674mn annual active consumers, and demonstrating our superior user experience. We will continue to expand our customer base, increase operating efficiency and deliver robust growth. With strong cashflow from our core e-commerce business, we will continue to invest in technology and bring digital transformation to millions of businesses globally.” 

Alibaba is also reportedly looking to acquire Kaola’s cross-border online shopping platform from rival NetEase, according to two people familiar with the matter, as China’s highly competitive US$2tn e-commerce market takes early steps towards consolidation.  

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Meanwhile, Walmart has raised its outlook for the USA and said US consumers were in “solid” financial health as it shrugged off the Trump administration’s trade war with Beijing and turmoil elsewhere in bricks-and-mortar retail. Walmart revenues rose by 1.8% in fiscal Q2 2020 to US$130bn (+2.9% on a constant currency basis). USA sales were US$85.2bn (+2.9%) and the retailer noted that it is gaining market share in key categories, including health & wellness; e-commerce sales grew by 37%. International sales fell by 1.1% to US$29.1bn (+3.3% excluding currency impacts). Strength in Mexican subsidiary Walmex and China were offset by softness in UK and Canada. 

In Brazil, No.1 drugstore chain RaiaDrogasil (RD) reported better than expected results, seeing its national share rise to 13% in Q2 2019 (up 1.6% vs Q2 2018). Another drugstore chain quickly gaining share in Brazil is Farmarcas, which looks set to become the No.4 ranked chain by end-2019 after reporting even stronger results than RD, putting pressure on established players Drogaria DPSP and Pague Menos.

As for M&A activity:

• In Japan, drugstore operator Cocokara Fine is pursuing a merger with rival Matsumotokiyoshi in a deal that could create a market leader with sales of around ¥1tn (US$9.4bn)

• Amazon, which is looking to boost its bricks & mortar presence in the fast-growing Indian market, is reportedly in advanced talks to acquire up to 10% of Future Retail, the country’s No.2 retailer

• AS Watson (an affiliate of CK Hutchison Holdings) is in talks with potential partners in UAE with a view to introducing its health & beauty stores there

Take a look at the evolution of Pharmacy and Pharmacy Point-of-Care in the Distribution chapter in our new report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Other chapters will include Healthcare Trends, Regulation, Digital engagement amongst many others. Nicholas will also unveil the 15 “Infinity Zones” he has identified as being crucial to the future growth of the industry. 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 pre-order your copy, please contact melissa.lee@NicholasHall.com.

Gottlieb calls for action on “CBD craze”

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In an opinion piece for the Washington Post entitled, “The CBD craze is getting out of hand. The FDA needs to act“, former FDA commissioner Scott Gottlieb described many of cannabidiol’s purported benefits, from cancer to depression treatment, as “fanciful” and said the FDA must act now to ensure “commercial interests don’t strip away any legitimate value the compound might have.”

Pointing to the potential risks of CBD use (i.e. damage to the liver at high doses), and the misperception that the 2018 US farm bill “legalised” CBD, Gottlieb suggests the best way forward is a legal pathway based on an “efficient regulatory process and sound science”. Recently, the FDA sent a warning letter to Curaleaf about “unsubstantiated” claims on its website and social media accounts linking CBD with cancer, Alzheimer’s, etc.

In response to Gottlieb’s opinion piece, Steve Mister, President & CEO of the Council for Responsible Nutrition (CRN), said his organisation aligned with the FDA on the need to establish a “clear and legal pathway forward”, but said that CBD’s status as a dietary supplement does not necessitate legislation, nor a “multiyear process requiring FDA to gather safety data on CBD”.

In an article for Whole Foods Magazine, Mister is quoted as saying that the “FDA has the authority to make cannabidiol a supplement under DSHEA [The Dietary Supplement Health and Education Act of 1994], even though it’s already been studied as a drug.” Mister envisages a future in which CBD can be sold as both a drug and a supplement, and that is certainly how Nicholas Hall also sees the market evolving in his newly published New Paradigms report.

CBD is one of the topics in our new report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, personally written by Nicholas himself! Focusing on a wide range of major issues surrounding the CHC Market, including Innovation, Distribution, Digital Engagement, Competition and much more, this is an essential read for all players striving to compete in this evolving marketplace. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Pfizer-GSK j-v approved, Pfizer-Mylan to close mid-2020

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At the end of last week, it was announced that GSK and Pfizer have closed their j-v, combining the groups’ respective consumer healthcare businesses to create the world’s largest CHC company. According to the latest MAT Q1 2019 data (see table below), this new entity – which will operate globally as GSK Consumer Healthcare – will become the standout No.1, increasing its global share from around 4% to roughly 7%, though of course divestitures will be necessary. Those already identified include ThermaCare (by the EU authorities) and Pfizer’s antacid tablet business (by the Brazil authorities), while some OTC brands (like Viagra Connect) will stay with Pfizer.

As previously announced, under the deal Pfizer owns a 32% equity stake in the j-v and GSK owns 68%. The combined company, which will be led by CEO Brian McNamara, will take leadership positions in pain relief, respiratory, VMS and therapeutic oral health. The new business will also hold the No.1 CHC spot in the USA and the No.2 position in China. As part of the agreement, Pfizer has appointed three of the nine members of the j-v’s board. GSK intends to separate the j-v as an independent company via a demerger of its equity interest to its shareholders and will list it on the UK equity market.

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In the same week, Pfizer announced plans to enter into a definitive agreement to combine Upjohn, its off-patented branded and generics business, with Mylan. The new company, which will be renamed and rebranded when the transaction closes (expected mid-2020), will expand the capabilities of both Mylan and Pfizer across 165+ markets. Mylan brings a diverse portfolio across many geographies and key therapeutic areas, while Upjohn brings iconic brands such as Lipitor, Celebrex and Viagra and leadership positions in China and other emerging markets.

The combination will drive a diverse portfolio of Rx medicines, complex generics, OTCs and biosimilars. It will be based in the USA and led by Mylan’s current Chairman Robert Coury, who will serve as Executive Chairman. Pfizer shareholders will own 57% of the new company and Mylan shareholders will own 43%. The new company is expected to have pro forma 2020 revenues of US$19bn-20bn.  

Commenting on the deal, Nicholas Hall said: “The new company will be a top CHC player, owing to Mylan’s 17th ranking, plus the Viagra Connect business and sundry other Pfizer CHC brands that didn’t go into the GSK j-v. That could well move NewCo into the Top 10. The questions in my mind are: will NewCo keep these assets or sell them on; and (more importantly) will it license out the rights to what is one of the best switch portfolios in the industry or manage the switches themselves.”

The evolving OTC market will be under the spotlight in our forthcoming report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Other chapters will include Healthcare Trends, Regulation, Digital engagement amongst many others. Nicholas will also unveil the 15 “Infinity Zones” he has identified as being crucial to the future growth of the industry. 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 pre-order your copy, please contact melissa.lee@NicholasHall.com.

Tamiflu to switch to OTC in USA?

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With 2018 a barren year for Rx-to-OTC switch, it is welcome news that Sanofi has signed a strategic deal with Roche for the exclusive OTC rights to Tamiflu (oseltamivir 75mg capsules, Genentech / Roche Group) for flu prevention and treatment in the USA. Under the terms of the agreement, Sanofi will be responsible for leading negotiations with the US FDA for the OTC switch and subsequent exclusive marketing, scientific engagement and distribution of Tamiflu OTC in the USA. Roche will continue to market Tamiflu in the rest of the world and Sanofi will retain the rights to first negotiations for switch rights in other selected markets. Sanofi’s Executive VP for Consumer Health, Alan Main, noted that: “A successful switch of Tamiflu to OTC would support our global cough and cold strategy by expanding into flu with a sustainable point of difference in the market.”

As Nina Stimson, OTC.NewDirections Consulting Editor, commented: “To some extent this was an unexpected development, but welcome insofar as (if approved), OTC Tamiflu will help expand the boundaries of consumer healthcare. Of course, in certain conditions (such as the swine flu pandemic in 2009-10) Tamiflu has sometimes been available from pharmacists without a prescription; New Zealand was one such country to permit OTC supply on a temporary basis.” 

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Tamiflu’s patent in the USA and some other markets expired in 2016 and, as the chart above indicates, this has led to a steady decline in sales over recent years, with US Tamiflu sales falling by 29% in 2018 to total CHF168mn (US$170mn). Generic competition intensified in the USA in 2017 and continues to grow, while Tamiflu brand sales are now also in decline in Japan and internationally. Roche is now focusing its efforts on Tamiflu’s successor, Xofluza, which was approved by the FDA in late 2018.

If Tamiflu can switch to OTC successfully in the USA, then similar reclassifications will likely follow elsewhere. In 2009, in the midst of the global swine flu pandemic, Australia’s State of Victoria issued a public health emergency order allowing pharmacists to supply Tamiflu (oseltamivir) without a prescription. There has also long been talk of Tamiflu switching to OTC in Europe – in 2008, at the AESGP meeting in Sweden, the EMA’s Executive Director Thomas Lonngren cited Tamiflu as a possible candidate for the EU’s then newly created centralised procedure for Rx-to-OTC switch.

Explore the latest CHC Innovations and Technologies at our OTC.NewDirections Executive Conferencetaking place in London on 14 November 2019. Nicholas Hall and Nina Stimson 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. Book your place before 13 September to take advantage of our early bird booking discount and save GB£100! To find out more, or to reserve your place, please contact Elizabeth.Bernos@NicholasHall.com.