South Africa results: Adcock CHC sales power forward in H2

South Africa’s No.1 CHC marketer, Adcock Ingram, said that its OTC division “recovered in amazing fashion” in H2 2021, driven by “increased demand for cough, cold & flu products”. The company’s unaudited results showed that overall turnover rose by 16% to R4.3bn (US$282mn) in the six months ended 31st December 2021, driven by volume growth of 9% and a mix benefit of 6% from new products, increased marketing activity on behalf of multinational partners and brand innovation.

• OTC turnover grew by 26.4% to R993.9mn (US$65mn), arising from the relaxation in Covid-19 restrictions, which resulted in improved demand across the cough & cold portfolio vs the difficult comparative period. Citro-Soda, Allergex and Corenza-C all posted double-digit ex-factory growth

• Consumer was up 32.7% to R795mn (US$52mn) supported by the inclusion of Epi-max (+15.3%) from 1st January 2021, when it was transferred from the Prescription division. On a like-for-like basis, sales improved 13.6% with key brands posting healthy growth, most notably painkiller Panado, driven by a marketing campaign linked to Covid vaccinations

^{Source: Adcock Ingram}

Not all was rosy in the South African market, however. Following the disposal of its Animal Health and Respiratory Health Africa businesses, Ascendis Health’s remaining operations – Medical Devices, Pharma and Consumer Brands – reported an 18% decline in revenue to R1bn (US$65mn) in the six months to end-December 2021. Consumer Brands – R340mn / US$22mn, up by 1% – encountered headwinds in contract manufacturing plus the closing of and slower-than-expected re-opening of beauty salons. Port strikes and global supply chain challenges also impacted strategic procurement business Chempure. 

Following completion of a Recapitalisation Plan, which shareholders voted for in 2021, the Board will focus on rebuilding the company through a sustainable growth strategy. This includes optimising the Consumer Brands business, one of the largest VMS suppliers in S Africa, which presents a “compelling base for the group’s growth prospects”. The portfolio comprises seven key brands including Solal, Vitaforce, Menacal, Bettaway and Junglevite. Another pillar for growth is expansion via acquisitions. The Board is exploring opportunities to purchase “scalable, earnings-enhancing businesses in the broader consumer products sector”.

If you are looking to fill a gap in your business, Nicholas Hall’s executive recruitment service CHC TalentSelect may be able to help. With over 40 years’ experience in connecting people in the consumer healthcare industry, please get in touch with maricar.montero@NicholasHall.com to start your search.

Q1 2021 Results: CCA Round-up

Five of the Top 6 global CHC marketers have now reported their Q1 2021 results, and the clear common theme is a difficult start to the year as a result of the downturn in cough, cold & allergy sales. Global No.1 GSK reported that Consumer Healthcare sales were down 9% as a direct result of the year-on-year “pantry-loading” comparison, including accelerated purchases across all categories driven by the pandemic, combined with a historically weak cold & flu season. GSK’s Respiratory Health portfolio was down 42% in Q1, with Theraflu and Robitussin declining in double-digits, and Contac hit by a high single-digit fall, all adversely impacted by a lower cold & flu season.

Global No.2 J&J reported that Consumer Health worldwide operational sales were down 2.9%, primarily driven by negative prior-year comparisons related to Covid pantry loading in Q1 2020, mainly in OTC products, which declined by 14.8% in Q1 2021 as a result of lower cough, cold & flu incidences. This was partially offset by growth in Listerine mouthwash, Johnson’s baby care products, international skin health / beauty products and Nicorette sales outside the USA.

Sanofi’s Consumer Healthcare sales decreased by 7.3% in Q1 2021, primarily reflecting the weak cough / cold season, as well as a high base for comparison in Q1 2020 and divestments of non-core products. Allergy fell by 6.2%, while Cough & Cold sales were down 59.4% in Q1 2021. This heavy decline was offset by gains for Digestive Wellness (+14.6%), Physical Wellness and Mental Wellness (+18.8%) products. In USA and Rest of the World, growth of the Digestive and Mental Wellness categories partially offset lower Cough / Cold and Pain sales, but in Europe CHC sales fell by 19.3% in Q1.

Reckitt Q1 2021 net revenue was up 4.1% (like-for-like), and e-Commerce was +24%, accounting for 13% of total net revenue, driven by increased investment. Health fell 13.0%, reflecting a volume decline of 14.2% and price / mix improvements of 1.2%, as overall price growth was offset by relatively higher trade investment in North America. The OTC portfolio fell by just under 40%; in addition to challenging comparatives owing to significant pantry-loading in March 2020, this reflects an exceptionally weak cough, cold & flu season – estimated to be around 90% lower than the prior year – resulting in declines for Strepsils, Nurofen and Mucinex.

P&G’s Health Care organic sales were up 3% in Q1 2021, while Personal Health Care organic sales fell by mid-single digits, primarily owing to pandemic-related increases in consumer and retailer inventories in the base period and a weaker than average cough, cold & flu season. Representing 14% of global sales, e-Commerce sales increased by around 50% fiscal year-to-date, with no noticeable change in shopping trends in the quarter. CFO Andre Schulten said in an earnings call that a portion of the impact of commodity cost challenges in the next fiscal year would be offset with price increases in the baby care, feminine care and adult incontinence businesses, which will go into effect in mid-September 2021.

Celine Waller VP, DB6 comments: The poor CHC results reported were set against a robust performance in Q1 2020 when consumers were stockpiling ahead of lockdown restrictions (J&J’s OTC business increased operationally by 25.8% in Q1 2020!) and we expect that they will improve as the year goes on. However, 2021 is expected to be affected by a very weak cough / cold season as lockdowns (still in effect in many markets), social distancing, hygiene measures and mask-wearing continue to suppress incidence of respiratory illnesses, while there are some doubts about whether the high consumption levels of disinfectants and immune-boosting supplements can be sustained. As such, we have lowered our expectations of CHC growth in 2021 to 2.3% in the retail market. However, as highlighted in the P&G results, the 2020 boom in e-Commerce sales is continuing into the current year and we forecast that combined CHC sales in all channels will come out at a respectable 4.0% in 2021.

We are pleased to announce that our annual bestselling report, Nicholas Hall’s CHC Yearbook 2021, is now published digitally! You can analyse key players’ performance, hot topics, global retailing, the Top 15 markets and much more! Print copies will follow soon. For more information, or to order your copy, please contact melissa.lee@NicholasHall.com.

Perrigo to revive flagging OTC allergy sales?

According to the latest MAT Q1 2018 data, global growth of OTC allergy remedies has slowed to just +0.2%, compared with a rate of +3.7% in the year-ago MAT Q1 2017 period, and +10.3% in the MAT Q1 2016 period. A drop-off in Rx-to-OTC switch activity has been a key factor, so last week’s news that Perrigo has signed an agreement with Merck & Co for exclusive rights to market, sell and distribute a non-prescription version of Nasonex (mometasone furoate monohydrate) in the US will be a welcome boost for the category.

Financial terms were not disclosed and the deal is subject to receipt of all necessary regulatory approvals. Nasonex is currently available on prescription only in USA, where it is marketed by Merck & Co. The corticosteroid anti-inflammatory nasal spray is indicated for the treatment of the symptoms of seasonal allergic or perennial allergic rhinitis in people aged 18+ years. In those markets where the product is available OTC, such as Australia, it is marketed by Bayer.

Perrigo has often been first to launch private label equivalents of recently switched OTC brands – generic versions of Flonase and Zegerid OTC were launched in 2016, while a copy of Nexium 24HR was launched by the company last summer – but this deal marks a new phase for Perrigo into switching brands.

As Perrigo Executive VP & President, Consumer Healthcare Americas, Jeff Needham, commented: “This product in-licence is the first of its kind for Perrigo. As other similar products that have previously switched from prescription to OTC status, we are working diligently to bring this important product to consumers and customers more quickly than the average 5-year OTC switch timeframe. This strategic investment into the OTC category creates an innovative product offering for Perrigo. We expect to execute the Rx-OTC-switch, fully penetrate this market with a branded offering and provide a future store brand alternative.” 

Comment from Ian Crook, Managing Editor, Nicholas Hall’s Reports: Nasonex enjoys dynamic growth in the handful of markets where it has been switched to OTC by Bayer and generated sales of US$23mn in 2017 (+28% CAGR 2013-17). In the brand’s largest market, Australia (where it switched in 2014), award-winning advertising helped it build a strong presence among consumers; it ranked 4th with sales of US$10mn (+5%) in 2017, comfortably the No.1 in the nasal sprays segment. How the brand will fare in the USA — if and when Perrigo successfully navigates the switch process — remains to be seen. Nasal steroid switches in the USA have historically driven high growth among allergy remedies, but later arrivals like Nasonex are unlikely to make as big a splash as previous INS switches.

Perrigo is one of the Top 20 OTC players profiled in the 2018 version of our bestselling OTC YearBook. This essential annual report also gives an extensive, up-to-date overview of the OTC industry across the globe, including reviews of M&A activity, Top 15 markets and major OTC categories, plus much more. For more information or to order your copy, please contact melissa.lee@NicholasHall.com.

 

Nielsen-CHPA Survey on OTC Allergy Trends

Coughing, sneezing, a runny nose and itchy eyes are just some of the symptoms of seasonal or chronic allergies, one of the most common ailments impacting the lives of Americans today, according to a new white paper on Rx-to-OTC allergy switches, produced by Nielsen and the US OTC industry association, Consumer Health Products Association (CHPA).

In 2015, 27.8% of Americans suffered from allergies, which translates to approximately 69 million adults, and 89 million people overall. Since 2009, a number of ingredients, including antihistamines and intranasal steroids that were only available Rx, have now switched to OTC, giving consumers more options to treat their allergies.

While there is abundant data to show that allergy OTC sales have grown significantly owing to the increasing number of brands available, there haven’t been many studies conducted to understand how these Rx-to- OTC switches have benefitted allergy sufferers.

Nielsen’s latest report assesses the consumer benefits of allergy Rx-OTC switches to help gain an understanding of allergy-suffering consumers and how having access to more oral and nasal OTC medications has contributed to their financial and personal wellbeing.

The survey is made up of data based around allergy patient visits, the number of prescriptions written by month, the costs for each, and corresponding insurance-related costs. Nielsen also provided data on allergy sufferer penetration, their buying behaviour, and how each consumer treats their ailment. 
A survey was also fielded to 2,000 adult allergy sufferers to better understand their treatment routine and overall satisfaction with their medication options.

The report found that more and more Americans are suffering from allergies. Over the time period analysed, the number of individuals who stated that they suffer from allergies has increased. There are approximately 9.7mn more allergy sufferers today than there were
 in 2010.

There has also been a clear shift to OTCs. 
The number of allergy sufferers taking OTCs has increased, while 
at the same time the number of sufferers taking prescription medications has declined. Just as importantly, the report also found that allergy sufferers who take OTCs are highly satisfied with the medication options available to them.

The report is available to download here.

Vit D may prevent cold & flu

“The sunshine vitamin”, also known as vitamin D, is vital for healthy bones and a strong immune system, says an analysis published in the British Medical Journal. This study also suggests that foods should be fortified with the vitamin.

Public Health England (PHE), however, argues that the infections data is not conclusive, although it does recommend the supplements to improve bone and muscle health.

According to the research, the immune system uses vitamin D to make antimicrobial weapons that puncture holes in bacteria and viruses. As vitamin D is made in the skin while out in the sun, many people, particularly in the UK, have low levels during colder seasons.

Trials on using supplements to prevent infections have so far given varied results, so researchers pooled data on 11,321 people from 25 separate trials to try to gain a more conclusive result. The team at Queen Mary University of London looked at respiratory tract infections, which covers a wide range of illnesses from a runny nose to flu to pneumonia.

The study overall said one person would be spared infection for every 33 taking vitamin D supplements. That is more effective than a flu vaccination, which needs to treat 40 to prevent one case, although flu is far more serious than the common cold.

There were more beneficial results for those taking pills daily or weekly, rather than in monthly super-doses and in people who were lacking vitamin D in the first place. The main purpose of vitamin D supplements is to normalise the level of calcium and phosphate in the body, which are crucial for the growth and maintenance of healthy bones, teeth and muscles.

In extreme cases, low levels of vitamin D can cause rickets in children, where the bones become soft and weak and, in some cases, misshapen as they continue to grow. In adults, vitamin D deficiency can lead to osteomalacia, which leads to severe bone pain and muscle aches.

One of the researchers taking party in the study, Professor Adrian Martineau, commented: “Assuming a UK population of 65 million, and that 70% have at least one acute respiratory infection each year, then daily or weekly vitamin D supplements will mean 3.25 million fewer people would get at least one acute respiratory infection a year.”

For more vitamin D developments, please follow this link.

Q1 2016 Review

OTC DASHBOARD offers users four main ways of analysing the global OTC market; by geographical area (Market Overview), by marketer (Company Watch), by product category (Category Watch) and by product itself (Brand Watch). In this week’s blog, Managing Editor Dave Redford takes a closer look at the latest Q1 2016 data from two of these perspectives to highlight some fresh insights.

Regions & countries

Together, the world’s two largest OTC markets, USA and China, account for 44.6% (US$53.2bn) of the global OTC market (US$119.4bn) by value, and were responsible for a slightly higher proportion of global OTC growth (US$2.3bn out of US$5.1bn, or 46.6%) in the 12 months to end-March 2016. The huge importance of these two markets is out of step with their relative population size, with China (1,372mn people) and USA (321mn people) accounting for a combined share of just 23% of the global population (7,336mn people), according to mid-2015 Population Reference Bureau figures.

Despite concerns about China’s slowing economy, it was still the biggest contributor to global OTC growth in the Q1 2016 data, ahead of the USA, Brazil and India, while the other BRIC market (Russia) contributed little more than zero in the 12 months to end-March 2016. Growth was also slower in Europe and North America, owing to the drop-off in cough & cold remedies growth, while Japan showed renewed vitality.

Categories

As mentioned, cough & cold remedies growth in Europe and North America went from dynamic in early 2015 to flat in Q1 2016. This weakness was mainly linked to the drop-off in flu infection rates in early 2016 (there are indications that the flu season in some countries may have started a little later, in Q2 2016), but also the inherently cyclical nature of cough & cold sales, which have alternated between high growth and consolidation over recent flu seasons. Systemic cold & flu growth was flat or low in Europe (+0.1%), North America (+0.8%) and Asia-Pacific (+2.4%) in Q1 2016, while the more underdeveloped regions of Latin America (+6.7%) and Rest of World (+5.6%) performed better.

Unlike systemic cold & flu, allergy remedies (up 10.3% globally) have broken free from any seasonal dependency in recent years thanks to the power of Rx-to-OTC switch, with GSK’s Flonase the latest brand to drive self-medication growth. Despite growing competition for Flonase in the US market from brands (for example, Bayer’s new fluticasone-based ClariSpray) and generics, the outlook for US allergy remedies still looks strong, thanks to new switches like McNeil / J&J’s Rhinocort Allergy Spray (budesonide) and patented indications, such as the three-year exclusivity that GSK has secured for Flonase with its “itchy, watery eye relief” claim. See this month’s OTC INSIGHT North America for a full case study on Flonase.

Overall, out of the global OTC market’s six major categories, only one (Lifestyle OTCs) showed improved growth in Q1 2016, while the other five (analgesics, CCA, gastrointestinals, dermatologicals and VMS) all decelerated. Some of the main factors in faster Lifestyle OTCs growth were higher levels of innovation and switch activity, as well as the resumption of supply for brands in key subcategories, like smoking control and obesity treatments. Growth for Lifestyle OTCs is likely to accelerate further in Q2 2016.

GSK helps Indian runners breathe better

Mist machines touting the logo of nasal decongestant, Otrivin, cleared the air of pollution for athletes in India this spring when GSK sponsored the Amity Gurgaon Half Marathon. The full length of the marathon track was sprayed by Otrivin cannons before the event and then, as testing indicated poor air quality during the race, the cannons were moved to those locations where the mist cleared the air of floating particles of pollution.

“Otrivin has always helped people to Breathe Better,” commented Saurabh Nandi, GSK Marketing Lead, Pain and Respiratory. “A marathon is extremely relevant for us to partner with, as runners need clean air to breathe as they run, and more so in a city like Gurgaon. This association is more than just a classical sponsorship; we want to help people enjoy their run more by providing cleaner air.”

“Our insight was simple; when we go for a run after heavy rain, the air feels so much cleaner. The question was – can we make it rain artificially in a specific location, during a time-restricted event? ” added Jan Teulingkx, Global Creative Director, Saatchi & Saatchi, Switzerland, which developed the campaign. 

To learn about other ways OTCs are helping fight the effects of air pollution and other respiratory conditions in Asia, click below to read the latest issue of Nicholas Hall’s OTC INSIGHT Asia-Pacific:

Nicholas Hall’s OTC INSIGHT Asia-Pacific

Editor’s Introduction to Cough, Cold & Allergy

Sneak peek at some highlights from Global OTC Cough, Cold & Allergy

With so much going on in the US allergy remedies category ­– from Allegra’s swift dash up the rankings to the switch of intranasal corticosteroid Nasacort, from new A+P campaigns to allergy extensions of blockbuster cough & cold brands Mucinex and Vicks – it is small wonder that it was the source of double-digit growth (+11%) in 2014. Not to mention 2015 developments like the February debut of Flonase and the planned launch of Rhinocort. Yet this was just one of a handful of strong performances around the globe in the past year, with the global CCA market responding positively to a spike in flu infections across several regions, switch activity, format innovation and other new launches.

A handful of highlights from around the globe include:

• In Brazil the move to Rx status of vasoconstrictor-based nasal decongestants led to a significant downturn, but innovative launches subsequently revived topical decongestants sales

• China’s cough and sore throat remedies benefited from A+P targeting smokers, both for treatment of respiratory conditions caused by smoking and for freshening breath

• In France dereimbursement is gradually transforming CCA into a pure OTC market, with increasing numbers of semi-ethicals losing reimbursement and becoming pure OTCs – and so able to be advertised

• CCA is Russia’s largest OTC category by a considerable margin, with over $400mn separating it from VMS (second largest category); CCA options are prominent on a proposed mass market list

• In Turkey marketers are increasingly launching products classified as food supplements (particularly throat lozenges) and medical devices (notably saline topical decongestants) as these are less tightly controlled than registered medicines

For a comprehensive view of the Global OTC Cough, Cold & Allergy market, including in-depth coverage of the 15 leading CCA markets, check out our just-published report. For more information, download the brochure or contact Nino Hunter.