CBD industry revving up again in 2021

2020 was a tough year for the CBD industry, with Covid causing disruptions to supply chains as well as lower footfall in bricks & mortar retailers, and these setbacks were reflected in greater hesitancy from CBD marketers in terms of NPD activity – according to our CHC New Products Tracker service – with launch activity in 2020 much lower compared to 2019. However, recent regulatory developments in Australia and Mexico, and the uptick in M&A activity in the CBD industry over recent weeks, suggest 2021 will see a revival in NPD activity and sales.

For example, Curaleaf, a leading US provider of consumer cannabis products, last week signed a definitive agreement to acquire EMMAC, the largest vertically-integrated independent cannabis company in Europe, for around US$286mn. Curaleaf Executive Chairman, Boris Jordan, commented: “[This acquisition] provides an advanced base to reach scale within the nascent European cannabis market and transform Curaleaf into a truly international cannabis consumer packaged goods company. The consumer and political liberalisation trends around cannabis that are sweeping USA are also increasingly taking hold in Europe … The European cannabis market has the potential to exceed the US cannabis market over the long-term and will help fuel our growth for years to come.”

In addition, a wholly-owned subsidiary of British American Tobacco last week subscribed for around 58.3mn common shares – a 19.9% equity interest – of Organigram, a leading licensed cannabis producer, for C$221mn (US$176mn). The companies have also entered into a Product Development Collaboration Agreement, under which a Centre of Excellence will be established to focus on developing the next generation of cannabis products, with an initial focus on CBD. “The cannabis industry is still in the nascent stages of product development. We believe that product innovation backed by core fundamental R&D is necessary to establish a long-term competitive advantage in the cannabis industry,” said Organigram Chief Strategic Officer Paolo De Luca.

Another M&A CBD development from last week was MediPharm, a research-driven global leader in cannabis extraction, entering into a GMP white-label supply and contract manufacturing agreement with Cannim. The company has also commenced registrations for the launch of next-generation OTC products in Australia in 2021. Under the 3-year agreement, with options to extend, MediPharm will supply a full range of specially-formulated CBD and THC cannabis oil products, sold initially under Cannim’s Lumir brand. MediPharm will also provide Cannim with contract manufacturing options.

Finally, a bill that would legalise the recreational use of cannabis was approved in Mexico’s lower house of Congress last week and will move to the Senate for final approval. The legislation would enable users aged 18+ years with a permit to carry up to 28g of cannabis and grow up to eight plants at home for personal use. President Andres Manuel Lopez has argued that the bill could help to curb Mexico’s violent and powerful drug cartels. John Walsh, Director of Drug Policy for the Washington Office on Latin America, a US advocacy group, said: “Mexico, given its size and its worldwide reputation for being damaged by the drug war, to take this step is enormously significant. North America is heading towards legalisation.” Canada and Uruguay are the only countries in the world to have legalised cannabis for recreational use. With its liberal switch environment, Mexico could be an early adopter of OTC cannabis, possibly the second or third market after Australia.

Discover who the main CBD players are, and how big the market could get in our recent report, CBD 2020: The 20 Most Important Questions about CBD in the Future of CHC. To find out more, or to order your copy, please contact melissa.lee@NicholasHall.com.

CBD: European market boosted by ECJ ruling

An important recent ruling by the European Court of Justice – that an EU member state may not prohibit the marketing of cannabidiol (CBD) lawfully produced in another member state – could mark a turning point for CBD in Europe. So far, sales and innovation in this high-potential category have been driven by the fast-growing US market, where CBD is available in an ever-growing array of delivery formats and formulations.

Innovation in Europe has, until now, been more cautious. According to our CHC New Products Tracker tool, NPD activity in the region has largely been driven by the UK, along with Germany and more recently Spain. While innovation in Europe has been mainly powered by CBD specialists such as Ignite and Vitality CBD, established CHC marketers are also playing an increasing role, with Nature’s Aid (Stada) launching a range of CBD sprays and gels in the UK in 2019, while Vemedia launched new cream and capsule CBD formats in Spain in mid-2020 under its Valdispro brand umbrella.

Nicholas Hall Writes: “CBD is one of my top picks for a new CHC mega-category. Consumer demand is strong, retailers are eager to stock, there is an abundant supply chain, and very importantly CBD is highly efficacious and seems to have few if any side-effects once “bad boy” THC is suppressed within the cannabis plant. So what is holding back the creation of what we estimate as a potential US$20bn market at retail prices? The answer is clear: regulation. Usually marketers want fewer regulations, not more; but in this instance it is vital that the health authorities determine the scope of the market, indications, dosage strengths, permitted claims and production standards, which will drive away the carpetbaggers.

In many countries, CBD is marketed in the form of hemp. To quote the President of the European Industrial Hemp Association, Daniel Kruse: ‘This ruling is the beginning of the end of the arbitrary stigmatisation of CBD. In future, both European and national courts, politicians and authorities will have to orient themselves on the Court’s reasoning. If the hemp industry keeps being proactive and comes up with safety assessments and standards, achieved by the EIHA Novel Food Joint Application, then the products will be legally marketable all over Europe, latest in three years. The market growth will be extremely significant.‘”

CBD 2020 is one of several Nicholas Hall reports that are being heavily discounted as part of our final Q4 promotional event, which runs from tomorrow until end-December. There are also discounts to be had on our Innovation in CHC, Coronavirus 2020 and New Paradigms reports, as well as several more. For more information please contact Melissa.Lee@NicholasHall.com

US Herb Market Report shows dynamism of immunity supplements

In this week’s blog, we look in more detail at the American Botanical Council’s 2019 Herb Market Report, which is based on US retail sales data provided by SPINS and the Nutrition Business Journal. According to the report, US consumers spent an estimated US$9.6bn on herbal dietary supplements in 2019, an 8.6% increase vs 2018.

For the first time, CBD made the list of 40 top-selling ingredients in the mainstream channel, where it ranked 9th at just under US$36mn, up 872% vs 2018. For the second year, CBD was the top-selling botanical sold as a dietary supplement in natural retail outlets.

Sales of immune health-related ingredients also rose sharply. In H1 2020, elderberry had the second-highest increase in the mainstream channel (+241%), making it the third top-selling ingredient; it was up 126% in the natural channel. Echinacea grew by 50%+ in both channels.

Other herbal & natural ingredients that have performed well include oregano (up 75% in the natural channel and 91% in the mainstream channel in H1 2020), which is positioned for respiratory symptoms such as cough, as well as astragalus root and mushrooms / fungi-derived ingredients with an immunity positioning. According to SPINS, sales of mushrooms (other) advanced by 84% in the natural channel and an exceptional 495% in the mainstream channel.

The report indicates that while dietary supplements with immunity positioning were the primary growth driver in the US market in the first half of 2020, other VMS ingredients also performed well, particularly those with a stress or sleep positioning. As of mid-June 2020, supplement sales appear to have levelled off; but if H1 2020 is any indication, the US VMS industry is on track for another record-breaking year.

For the full report, go the American Botanical Council’s website and download the PDF link.

Also, ensure that you have registered to join Nicholas online on 30 September for an all-new hot topics webinarYou will hear about key trends, including the impact of Covid-19, Distribution, e-Detailing and Sustainability. To find out more or register to join, please contact elizabeth.bernos@NicholasHall.com.

Does CBG offer hope against antimicrobial resistance?

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According to a recent WHO press release, a lack of innovation in the development of new antibiotics, allied with declining private investment, is undermining efforts to combat drug-resistant infections. The breaking news from China of a sharp rise in diagnoses of an emergent strain of coronavirus, and new reported cases in Japan and Thailand, has raised fears of another outbreak similar to SARS in 2003, which infected more than 8,000 people and killed more than 700.

WHO has raised concerns about a weak pipeline for antibiotic agents, with 60 products in development (50 antibiotics and 10 biologics) that it deems bring little benefit over existing treatments and very few that target the most critical resistant bacteria (Gram-negative bacteria). However, some positive news came from an unlikely quarter over the weekend – an as yet unpublished study that found that CBG (cannabigerol) cured mice of MRSA infections as effectively as vancomycin, a drug widely considered to be the last line of defence against drug-resistant microbes.

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One of our recent blogs looked at the potential of a new emerging class of cannabinoids beyond CBD – including CBG, CBN (cannabinol) and CBC (cannabichromene) – and this new study boosts the attractiveness of the cannabinoid industry even further. Eric Brown, the microbiologist who led the research at McMaster University said cannabinoids were “clearly great drug-like compounds”, but noted it was early days in assessing the compounds for use in the clinic.

Brown found that CBG and other cannabinoids did not work well against gram negative multi-drug resistant bugs. However, the study shows that when CBG is used along with small quantities of polymyxin B, an existing antibiotic that targets “the cytoplasmic membrane of Gram-positive bacteria”, the cannabis compound wiped out the drug-resistant pathogens. “We are now pursuing the required paperwork to work with a wide variety of cannabinoids,” Brown said.

What is the current regulatory status of CBD in global markets? Find out in Nicholas Hall’s upcoming report, CBD 2020: The 20 Most Important Questions about CBD in the Future of CHC! You can also read about the main challenges faced by CBD players, the current and forecast size of the market, and much more! Pre-order your copy before 30 January to save with the pre-publication discounted rate! To find out more, or purchase your copy, please contact melissa.lee@NicholasHall.com.

CHC trends in 2020

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In Nicholas Hall’s recent signature New Paradigms report, there were 15 Infinity Zones identified as offering substantial growth opportunities for the consumer healthcare market over the next decade, against a backdrop of uncertainty in the industry caused by the recent wave of mega-mergers. These include the development of new CHC products for diabetes and food intolerance, as well as a further uptick in activity for probiotics, MedTech and e-Commerce. In this week’s blog, we look at three trends that may boost the consumer healthcare market in 2020.

CBD and beyond

2019 was the year of CBD, as evidenced by our CHC New Products Tracker service, which logged over 300 new CBD products in the US market alone last year. A recent article in US pharmacy trade publication, Drug Store News, suggests that CBD is just the tip of the cannabinoid iceberg, with various other cannabinoids set to take off over the coming year. These include cannabigerol (CBG), which is said to produce a stimulant effect, cannabinol (CBN), claimed to show benefits as a sleep aid, and cannabichromene (CBC), claimed to be an effective pain reliever.

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Veganism on the rise

A UK-based campaign that has received a lot of celebrity endorsements, Veganuary, is encouraging people to try veganism in the month of January. One of the benefits of the rise in veganism for VMS marketers is increased awareness of the nutrients we require, many of which can be lacking in a vegan diet. For instance, several leading proponents of veganism like The Vegan Society recommend taking vitamin B12 supplements while adopting a vegan diet. Our CHC New Products Tracker service has also recorded a strong rise in vegan-friendly supplements in the past two years, a trend that looks set to accelerate in 2020.

Uptick in switch activity?

One of the trends responsible for the slowdown in global CHC market growth these past 3-4 years is the drop-off in Rx-to-OTC switch activity, especially in the world’s No.1 market, USA. There are signs this is about to change – for example, Viagra is due to lose its final patents in the USA in 2020. In Japan, the world’s No.3 CHC market, there has been a similar falling off in switch activity, with just two ingredients approved for reclassification in 2018 and 2019. However, 2019 saw the first ingredient to be switched under a new system set up by Japan’s drugs agency, MHLW, which has nominated over 30 ingredients as eligible for switch. With the Tokyo Olympics also on the horizon in summer 2020, this year could see a revival in Japan’s sluggish CHC market.

With options available for complete access to all 20 markets covered by CHC New Products Tracker, or a subscription for selected categories or countries, contact waisan.lee-gabell@NicholasHall.com today to find out more or set up a free trial!

CHC Adjacencies Fuelling Digital Marketing Innovation

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A new report from Nicholas Hall examines effective digital marketing strategies for consumer health players and the fast-growing online channel for OTCs. In this week’s blog, we examine which consumer healthcare categories, brands and companies most fully embraced social media marketing in 2019, and summarise the report’s findings.

Given the tight regulations surrounding the promotion of registered OTC medicines on social media, it’s no surprise that the subcategories where we’ve recorded the most digital marketing activity in 2019 – using our OTC New Products Tracker tool – were adjacent categories in Lifestyle OTCs, VMS and dermatologicals. Cannabis / CBD recorded the highest number of innovations backed by social media promotion in 2019, followed by lip care and probiotics.

Of the Top 20 brands that recorded the highest number of innovations in 2019 backed by social media promotion, lip care products Eos (Eos) and ChapStick (formerly Pfizer, now GSK) were at the top of the tree. For example, Eos Vampire Kiss was supported by an Instagram campaign in the run-up to Halloween. CBD companies such as Hilo, CBDfx and Ignite – the latter backed by professional poker player and social media celebrity Dan Bilzerian – have also used digital marketing in 2019 to support their new products. Among VMS brands, Irwin Naturals, Zarbee’s Naturals (J&J) and Olly (Unilever) were all well-supported on social media, especially Facebook.

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Below are some of the findings from the new Nicholas Hall report:

  • It is vital that approaches to digital marketing are differentiated across digital and social media channels
  • Most consumers trust social media for healthcare advice, making an engaging social media strategy critical
  • Rapid adoption of digital technologies and evolving shopping behaviours are transforming e-Commerce into a key channel in consumer healthcare
  • Consumers will generally shop where it is most convenient, so understanding where they are shopping online is vital
  • Mobile is consumers’ constant companion so all content should be accessible on mobile devices
  • Since the virtual shelf is infinite, standing out from competitors online requires orchestrated brand communication

Comment from Ian Crook, Managing Editor, Nicholas Hall’s Reports: When considering how to target consumers via digital channels, marketers must note that different demographic groups use different social media platforms, and in diverse ways. Content consumption is diversifying just as audiences are broadening; the modern consumer leads a very busy life and can be easily distracted, posing challenges to effective engagement. Fostering consumer connections is vital, and whichever means of communication is used – live streaming, chatbots, social media messaging, etc – interacting with consumers is essential. Marketers cannot win everywhere or invest in all platforms, so choosing the appropriate medium is an important step in planning an effective digital campaign.

The new report features many more findings, backed by relevant case studies, including a look at consumer influencers, the benefits of a direct-to-consumer strategy, the digital strategies of the OTC Top 10, as well as the differing regulatory situation for online sale of medicines across markets, plus much more. To purchase your copy of Digital Marketing & e-Commerce, or for more details, 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.