Assessing Covid-19’s impact on the VMS industry

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Despite various countries going into lockdown, governments are still allowing “essential” services and businesses to remain operational, putting the role of the dietary supplements industry in the spotlight. In some countries, like New Zealand, supplement marketers are allowed to maintain their operations as long as they are supplying “essential” businesses, such as pharmacies and supermarkets. However, according to the guidance provided by New Zealand Natural Health Products, health food stores do not fit the description of “essential” businesses.

The situation is similar but more complex in the USA, home to the world’s No.1 VMS market. While essential food and drug suppliers are open for business during Covid-19 restrictions, industry leaders are working to ensure that the same applies to speciality health food stores and cannabis dispensaries. No specific federal regulation is in place, but “essential business” status is being determined at state and local level. While California most decisively classified workers supporting cannabis and dietary supplement retail as essential workers, and Illinois added licensed medical cannabis dispensaries and cultivation centres to its essential healthcare operations list, not all states have set such guidelines.

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In a letter to state governors, industry associations including the Consumer Healthcare Products Association urge that supplement supply chains remain open in all states, arguing that now more than ever, consumers need essential nutrients to stay fit and healthy and proactively reduce their risk of chronic diseases without burdening an already overstretched healthcare system. They write: “As each of you plan your own approach to this challenging issue, we respectfully request you mirror White House / Centers for Disease Control & Prevention guidelines and make special accommodation for critical infrastructure industries that specifically include not only conventional foods but all subcategories of food, including dietary supplements, infant formulas, medical foods and spices & flavours.”

As for how the Covid-19 crisis will affect the VMS market, it’s clear that some categories stand to benefit more than others. Herbal & natural immune stimulants and vitamin C supplements are likely to see the biggest boost, as long as supply chains can be maintained. In certain markets, such as India and China, there is likely to be a rise in sales of country-specific natural remedies (Ayurvedic medicine and TCM) positioned for immunity support, though marketers will have to be wary of government clampdowns on products that are claimed to prevent or cure Covid-19.

For a full analysis of Covid-19’s impact on the global CHC market, pick up a copy of our all-new Hot Topic review Coronavirus 2020 and its potential impact on CHC from Nicholas Hall’s CIMA division. Buyers of this report will also receive a situation update in six months time. For more information, or to purchase your copy, please contact melissa.lee@NicholasHall.com.

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.

CHPA Report & Conference

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Last week, to tie in with its Annual Executive Conference (AEC), the Consumer Healthcare Products Association released a white paper that found, on average, every dollar spent on OTC medicines saves the US healthcare system around US$7.20, resulting in nearly US$146bn in savings annually. CHPA President & CEO Scott Melville commented that the “healthcare system undervalues the contribution of our industry’s products”, and explained that the research will support legislative initiatives promoting financial incentives for consumers to buy OTCs using health insurance flexible spending plans.

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Done in partnership with IRI, the study was conducted in part to raise the profile of OTC products in USA. It found that around 90% of people who buy an OTC product for a condition would seek medical care if the OTC product had not been available. The study analysed nine OTC categories to identify the primary contributors of cost savings to the healthcare system. The categories include allergy, analgesics, antifungals, cough / cold / flu, lower GI, medicated skin, upper GI, sleep and smoking control. The research showed that OTC medicines provide additional value through expanded access to more than 27mn consumers who would otherwise forgo treatment – more than 13mn Americans for allergies alone.

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Writing from Florida, Nicholas Hall said: “Trust was a major theme of CHPA’s Annual Executive Conference … Edelman presented data showing that consumer trust of healthcare is improving after plummeting last year. Speakers agreed that trust goes beyond building brands. In a session I moderated on Tuesday, Bayer CH President Heiko Schipper said that our industry needs to, “articulate better what we do. We are doing a lot of good things like being responsible for the environment and employee diversity”.

Taisho Executive VP Ken Uehara agreed: “Trust can’t be built instantly, certainly for our company, it’s our most important asset.” Alan Main, Executive VP, Sanofi, commented that in the past it was about building the brand: “I still think the brand comes first in people’s minds, but we have to look after the brands, not just for five years but for 30-40 years.” Katie Devine, who is moving into a new leadership role at J&J, said companies can choose not to reply to every tweet, but should maintain a fact-based conversation about being responsible in the treatment of employees, the population and planet.

Other questions I addressed to the Leadership Panel concerned the lack of Rx-to-OTC switch (Alan Main said switch has an important role to play in the future of self-care); CBD (all panellists believe it will develop well beyond the current US$500mn quoted by IRI, although Katie’s point, “I know how to switch from Rx to OTC, but not from illegal to legal”, was well taken); and the number one item on their wish list — speed to market and improved innovation were favourites … I liked the concentrated format of this year’s AEC, with two half-day sessions, which allowed time for networking, and was proud to have been one of three Preferred Sponsors of the meeting, in the good company of Google and the Emerson Group.”

Nicholas Hall will discuss the latest Market Trends and Innovation impacting the CHC market at our annual North American CHC Conference (26-27 June) in collaboration with our partners EverythingHealth. As well as the chance to network with other industry players, you can hear from Google, Jefferson Health, Persuadable Research and other industry experts. Don’t hesitate — book before 31 March to save with our generous early-bird booking discount! To find out more about this event, please contact elizabeth.bernos@NicholasHall.com.

NHC’s 40th Anniversary in 2018

New Year’s message from our Chairman & CEO Nicholas Hall:nh

The start of a new year, and already there is a big ripple of activity in the global CHC market. MM&M NewsBrief ran a story on Tuesday headlined: “CPG companies Nestle and Kellogg court OTC”. It is an interesting notion that Kellogg could buy into the mainstream CHC market as their previous forays have focused on functional foods. But it seems a stretch to me, although there would be a certain neatness if Steve Cahillane, the new CEO of Kellogg and formerly Nature’s Bounty President & CEO would bid for Pfizer Consumer, where Paul Sturman was President. And where is Paul now? — Steve’s replacement at Natures Bounty.

So, it’s possible but unlikely that Steve will become a New Friend (or more properly a Friend Reunited), but our New Friend at FDA, Scott Gottlieb, is making interesting noises that could potentially liberalise the rather static US market. Could this include a new 3rd Class, about which I have been a lone voice in the wilderness for almost all of my time in the CHC industry (more on that later)? CHPA and other stakeholders (apart from retail pharmacy) say “No” as this is illiberal. Mmm, I think the other way. Switching more Rx products under the personal supervision of a pharmacist is very liberal, and will certainly lower costs, which is empowering for consumers — a key test of liberalism. And rounding up the last of our New Friends in this New Year issue, let’s welcome Amazon as a CHC brand marketer, not just an online platform. Some would say, who needs friends like Amazon? Well, I would rather have Amazon as a Friend than an Enemy!

Two prominent association leaders are leaving the industry, the Departing Doctors Gerald Dziekan and Hubertus Cranz. They have done amazing work, as my Good Friend Birgit Schuhbauer relates below, and will be very much missed. I hope the NHC Group will have good or possibly even better relations with their successors. Another Departing Friend who will be particularly missed is Senator Orrin Hatch, who did so much to override FDA when we had no friends there at all. Former presidential candidate Mitt Romney will probably succeed to the Utah seat of Senator Hatch. I hope that the man who made millions at Bain will be as — or even more — sympathetic to CHC.

What about Remaining Friends? Well, that’s us. I almost can’t believe it, but we set up NHC in January 1978. Indeed, a few minutes ago one of my Very Best Friends sent congratulations on our 30th Anniversary. Obviously we were having too much fun to count! I still have clients and colleagues from that era, including the redoubtable Gilbert (Sans Frontieres) Mertens, who still comes to our conferences and last year was our guest in Singapore. 40 years is an amazing length of time, but we at NHC are all about the Future.

So after many years of some change and a lot that’s still the same, good or bad, it is with very great pleasure that all of us at NHC Group wish our contacts a Happy New Year for the 40th time. May it be one of good health, great happiness, peace, success and prosperity. We will be here for another 40 years (at least corporately) and we hope you will be too!!