MAT Q1 2018: Global OTC growth steady at 4.1%

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According to Nicholas Hall’s global OTC database, DB6, the OTC market maintained 4.1% growth in the 12 months to end-March 2018. This steady but slower rate of global OTC growth compares to a faster pace during the first three quarters of 2017, when growth peaked at 4.6%.

The key factor in the persistent slowdown in Q1 2018 was lower OTC growth in the USA (+2.5% vs +2.8% for calendar 2017), with faster development held back by a weak allergy season. As highlighted in our OTC DASHBOARD market summary for North America, the impact of recent Rx-to-OTC switch activity in the US market has also been minimal.

Some positives emerged in the MAT Q1 2018 data. OTC growth in Western Europe improved to 1.8%, boosted by a high incidence of cough & cold in the first quarter of this year, while Latin America’s OTC market continued to increase strongly (+11.8%), with leading country Brazil up by 9.8%.

The OTC performance in Asia-Pacific (+4.7%) was mixed, with China (+6.3%) and India (+7.9%) improving upon their 2017 growth, however Japan and Australia remained flat in Q1 2018. Growth in the Middle East & Africa remained stable at 6.7%, while Central & Eastern Europe decelerated further to 5.5%, with weakening growth in both Russia (+3.5%) and Poland (+3.3%).

If you are not a subscriber and would like to find out more about what DB6 covers, please contact kayleigh.griffinhooper@NicholasHall.com for a free demo.

 

ROW growth accelerates to 6.7% in 2017

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One of the core benefits of your OTC DASHBOARD subscription is unrivalled coverage of the OTC market in the Middle East & Africa. Sales in this region now total US$8.8bn, following an impressive 6.7% upturn in 2017, and below we highlight some of the key recent trends & developments in this dynamic region.

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Two of the region’s Top 5 markets, Turkey and South Africa, feature in the global Top 20 and both outpaced the regional trend in 2017. Turkey’s OTC market was particularly dynamic, partly driven by price inflation but also rising volume sales, thanks to growth in consumer spending and also strong investment from multinational OTC marketers, who compete with well-established local companies like Abdi Ibrahim and Santa Farma.

As well as double-digit growth in Turkey, where Bayer is the No.1 marketer, there were also strong performances from Algeria (+10.0%), Egypt (+16.4%) and Nigeria (+8.2%). GSK occupies a strong position in Egypt and Nigeria, thanks largely to the popularity of painkillers such as Panadol, and is committed to expanding its OTC portfolio and widening distribution.

Sanofi is the leading OTC marketer in Algeria, again thanks to a well-established analgesics portfolio (Doliprane and Aspegic), in addition to a fast-growing CCA range. Overall, GSK, Sanofi and Bayer are the standout OTC marketers in the region, joined by South Africa’s No.1 Adcock Ingram and RB.

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For a deep dive into our Q4 2017 data and trend reporting on all Middle East & Africa markets, be sure to log on to the OTC DASHBOARD website or app (which can be downloaded on Apple or Android smartphones).

Asia OTC investment in Middle East & Africa

In last week’s blog, we looked at rising Chinese investment in Africa, specifically in the area of pharmaceuticals, and this week our focus is on Indian & SE Asian OTC marketers expanding their operations across the Middle East & Africa. Here we summarise some of the key developments that form this growing trend over the past 6-9 months.

In July 2017, it was reported that a number of Indian pharma companies, including Dr Reddy’s and Lupin, were planing to expand operations in Africa. While Lupin is focused on opportunities in South Africa, following the establishment of a new regulatory authority (SAPHRA) in the country in mid-2017, Dr Reddy’s is targeting an expanded presence in French-speaking countries in Africa, which are markets where Indian generic companies have traditionally been underrepresented.

OTC development by Indian marketers in Africa will not be limited to generics, however. In summer 2017, Emami announced that it is evaluating setting up manufacturing units in international markets to meet growing demand for its brands. The marketer also revealed that it is expanding into Nigeria and Ghana via product launches.

More recently, in January 2018, Strides Arcolab agreed – via its wholly-owned subsidiary Strides Shasun – to acquire a 55% stake in South African-based Trinity Pharma for R55mn (US$4.5mn). Strides Shasun MD, Shashank Sinha, said: “This … provides further impetus to our ‘In Africa for Africa’ strategy as it fast tracks Strides’ presence in the lucrative and high entry barrier market of South Africa. With this acquisition, we are now present in East, West and South Africa, covering all the key markets in Sub-Saharan Africa.”

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Strides Arcolab’s wide presence in Africa

As for Southeast Asian marketers, Indonesian OTC company Dexa Medica launched a brand called Stimuno in Nigeria in November 2017. Formulated with Phyllanthus niruri extract 50mg, Stimuno is a herbal & natural immune stimulant available in packs of 10 capsules. Dexa Medica is already one of Nigeria’s Top 5 OTC marketers, thanks to the success of its systemic analgesic brand Boska, and the company decided to leverage this brand equity by launching Stimuno at an event in Lagos called Pain-Free Day. Boska Brand Executive, Tunde Ojedokun, said that Stimuno is recommended for everyone, both healthy and unhealthy, for the total maintenance of the body system.

In February 2018, Indonesian drugmaker Kalbe Farma announced it is eyeing expansion across the Middle East, as well as Sri Lanka. Following a positive response to test-marketing of its packaged coconut water in the Middle East, Kalbe is now considering launching a range of nutritional products across the region. With local sales still sluggish, Kalbe’s new President Director Vidjongtius is focusing on new markets to broaden the company’s reach beyond Southeast Asia. 

OTC DASHBOARD remains your best port of call for the latest consumer healthcare trends in the Middle East & Africa. In the coming months, we will be updating our reports on 11 countries across the region, including Nigeria and South Africa. 

Chinese investment in Africa

One business book from my Christmas list that I’ve just finished reading is The Next Factory of the World: How Chinese Investment Is Reshaping Africa, by McKinsey consultant Irene Yuan Sun. This book highlights in great detail a trend that is noticeable across several industries, including pharmaceuticals – fast-growing investment in Africa by Asia-Pacific marketers. China is leading the way, especially in terms of expanding Africa’s manufacturing base, but there is a wider trend (encompassing OTCs) of companies across Asia-Pacific looking for growth opportunities in Africa.

Irene Yuan Sun’s book highlights two important economic fundamentals:

1) Over the past quarter century, China has gone from generating 2% of global GDP output to 25%
2) Over the next decade, 8 out of the 10 fastest-growing economies are projected to be on the African continent

The author makes the case that, from the start of the Industrial Revolution in Britain in the 18th century, economic prosperity has always followed where new factories are built. Citing the theory of the flying geese paradigm (see video below), the book examines how manufacturing shifts across countries and continents, as labour costs rise and competitiveness falls. Today, it is China that has reached this inflection point and it is Chinese entrepreneurs that are driving business investment in Africa.

Focusing on four countries (Nigeria, Lesotho, Kenya and Ethiopia), the book is structured in two main parts: the first about the reality of these factories being built, and the second about the economic, political and social possibilities. The author points to the irony that, despite high demand across the continent for certain drugs, notably antiretrovirals, Africa’s pharmaceutical firms are small and in some cases on the verge of collapse.

In Ethiopia (population: 100mn), there are just 9 pharmaceutical manufacturers, while Germany (population: 81mn) has nearly a 1,000 pharma manufacturers. With the exception of South Africa, Kenya and Nigeria, most African countries have no more than a handful of manufacturers. Kenya is the standard bearer in East Africa (40 factories, but generally of low quality), while Nigeria has about 40 too, the leading number in West Africa, but again few meet GMP standards.

There are reasons to be positive, however. South Africa, Kenya (national plan to encourage domestic production) and Ethiopia (similar plan) are all taking steps to revive pharma manufacturing in their countries. A few years ago, GSK showed showed interest in building a local manufacturing plant in Ethiopia, but after two years of deliberation the company decided not to go ahead. This is leaving a space that Chinese pharma companies appear more willing to fill. For example, in 2016 Humanwell decided to invest US$80mn in a manufacturing facility near Ethiopia’s capital, Addis Ababa.

Having seen rapid economic transformation in their own country with their own eyes, Chinese entrepreneurs are perhaps better placed to recognise the potential for similar change in Africa.

Next week on the blog, we’ll take a closer look at how several Asia-Pacific OTC marketers are looking to expand their operations across the African continent.

OTC DASHBOARD remains your best port of call for the latest consumer healthcare trends in the Middle East & Africa. In the coming months, we will be updating our reports on 11 countries across the region, including Nigeria and South Africa. 

J&J Focuses On Consumer Innovation In Africa

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As part of its ongoing commitment to Africa, J&J has announced the launch of the Africa Innovation Challenge. The project will support Africa’s growing ecosystem and help develop consumer health solutions for local towns.

Earlier this year, J&J announced its global public health strategy in Cape Town, South Africa. The operations expand upon the company’s presence in Africa, which began in 1936.

“Our goal is to improve the health and wellbeing of families and communities around the world,” said Josh Ghaim, J&J’s Chief Technology Officer, Consumer R&D. “With its focus on consumer healthcare, the Africa Innovation Challenge will help to surface important issues impacting local communities. We look forward to engaging with the continent’s top entrepreneurs and scientists, and through collaboration, helping advance their ideas and bringing meaningful solutions across three very important healthcare areas.”

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The Africa Innovation Challenge seeks ideas focused on three critical health areas, promoting early child development and maternal health; empowering young women; and improving family wellbeing.

Challenge participants with successful solutions will receive up to US$100,000 in funding and mentorship from scientists, engineers and researchers in the J&J Consumer Research & Development organisation.

The news of J&J’s latest innovative challenge comes alongside the recent decision to drop ‘McNeil’ from their OTC business name, opting for J&J Consumer instead.

To apply to the challenge and review the applicable terms and conditions, please visit the Africa Innovation Challenge website. The deadline to submit applications is 17th January 2017.

OTC DASHBOARD is your sole Nicholas Hall & Company source of regular updates on the OTC market in Africa and the Middle East. Explore our Rest of World section for the latest content.