Latin America a ray of CHC light

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As reported in our MAT Q2 2019 update, the Emerging Markets have produced mixed performances in recent quarters, with consumer healthcare growth in both China and India impeded by a relatively low-key cough & cold season and weakening economies. Over the weekend, it was reported that India’s economic growth slowed further in the third quarter, highlighting the depth of the downturn afflicting a nation that was only recently revelling in its status as the world’s fastest-growing large economy. 

One region that continues to produce above-average consumer growth, however, is Latin America – CHC sales grew by 8.3% in the MAT Q2 2019 period – and Nicholas Hall recently returned to São Paulo for our 5th Latin American Consumer Healthcare Conference. Reflecting on his trip, which also included a workshop in Mexico City, Nicholas Hall said “the topics that aroused most curiosity at these meetings were e-commerce, cannabis, probiotics, industry consolidation and, inevitably, regulations, with Brazil travelling in one direction (liberalisation) and Mexico the other.

Strong growth in Brazil has been also been fuelled by higher levels of launch activity, with our OTC New Products Tracker service showing a strong spike in the number of innovations recorded in 2018, totalling just over 250.

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Below is a summary of some of the Key Learnings from our Latin American CHC Conferences:

• As we enter the 4th industrial revolution, it is important to question traditional business models & sales strategies

• Innovation is not limited to NPD (new product development); within an increasingly saturated market with tough regulatory obstacles, we should explore new business models & sales strategies

• Traditional market research methods are deeply flawed but the wealth of consumer data that advancing technologies (such as wearables) provide could be a goldmine of opportunities

• LatAm lags behind other global regions in eCommerce owing to regulatory hurdles, high levels of fraud & a lack of consumer trust in online platforms

• Precision marketing – using online influencers & product placement – can help connect with more clustered consumers

• While HCPs might be interested in features, consumers want benefits!

• Content marketing – particularly focusing on preventive healthcare – could be key to improving low levels of health literacy and the burden this places on national healthcare services

A detailed write-up of both our São Paulo & Mexico City conferences will be included in the next issue of Insight Latin America. To receive a copy of this article, contact Melissa

10 Infinity Zones for future CHC growth

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Nicholas Hall’s New Paradigms for CHC report, due to be published later this year, outlines 10 Infinity Zones for future consumer healthcare growth, which were shared as an exclusive preview with delegates at our recent Vienna conference. Below we outline these Infinity Zones to OTC DASHBOARD subscribers, with a short description of each.

1. Prevention: A long-term theme in the CHC industry which is now taking root. Nicholas Hall presented a slide of the fastest-growing OTC subcategories by CAGR (2014-18), comparing those focused on prevention with those centred around treatment, and this showed that seven of the Top 10 most dynamic subcategories had a preventative focus.

2. Probiotics: One of these Top 10 fastest-growing subcategories was probiotics, an area of the global consumer healthcare market that has moved from adjacency into the mainstream. In the 2014-18 period, probiotics delivered more value growth (in €mn terms) than established subcategories like systemic analgesics and sore throat remedies.

3. Food Intolerance: Changing diets across the globe are causing a huge increase in food intolerance issues. Nicholas Hall is planning to provide an estimate of the size of this emerging category in his New Paradigms report, but for now he emphasised to delegates the opportunities that OTC marketers have here, notably in terms of cross-branding.

4. Natural & Organic: Like prevention, this is not a new trend in consumer healthcare, but instead one that is increasingly on the radar of major multinationals. A recent example here is J&J’s acquisition of the Zarbee’s Naturals line of OTC products.

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5. Cannabis: Nicholas Hall outlined the huge investment already being seen in this fast-growing market, especially in key countries like Australia, and outlined how the future CBD market could be split into five categories, including Rx, OTC medical cannabis via Rx-to-OTC switch, VMS & topicals, beauty & food and lifestyle marijuana.

6. Sexual Health: Nicholas Hall said that, while Bayer has made it clear that erectile dysfunction treatment Levitra will not switch, we’ve already seen the Rx-to-OTC reclassification of Viagra Connect in the UK market and it’s possible that Sanofi’s Cialis could soon follow once the company has navigated the necessary regulatory hurdles.

7. E-commerce: This year DB6 has introduced an “all channels” version of the dataset, showing that total OTC sales through all channels were worth US$174bn in 2018, of which store-based sales account for 78%, with direct sales (MLM) generating 14%. Internet & mail order currently accounts for 9% of the “all channel” universe, with sales dominated heavily by VMS supplements in China and USA. However, this channel has seen a CAGR of 20% since 2014 and will continue to increase dramatically in importance.

8. Pharmacy: Nicholas Hall also emphasised the continuing importance of bricks & mortar retailers to consumer healthcare, with Pharmacy Point-of-Care still the driving force behind recommendations and purchases of key OTC brands.

9. Big Data: The Big 5 tech companies are now dominating healthcare information, and while there are concerns about privacy, Apple CEO Tim Cook has stated that his company’s “greatest contribution to mankind” will be within the sphere of healthcare.

10. Emerging Markets: Nicholas Hall said that Emerging Markets now account for a 55% share of global OTC sales (in the retail channel). Recent figures from the IMF’s World Economic Outlook forecast that developing economies will continue to outpace advanced economies.

Take a look at what the future holds for the CHC industry in our upcoming Signature report, Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself. The report will take a look at major issues including innovation, future competition, emerging categories and markets and M&A. You also have the option to 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.

MAT Q3 2017: Trends to look out for in 2018

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Intense work is underway to complete the Q3 2017 update early next week, which will provide OTC DASHBOARD subscribers with the latest trend info and analysis on the performance of the global OTC market. In the meantime, taking a closer look at the latest news and data does reveal a few trends that are likely to characterise the OTC space in 2018, not least:

The growing power of the Emerging Markets

A coming shake-up of the global Top 10 OTC marketers

As this week’s infographic demonstrates, Turkey was one of the leading contributors to OTC growth in the MAT Q3 2017 period. Over recent years, both Turkey and South Africa have emerged as global Top 20 OTC markets, powered by high growth (though the trend in South Africa did show signs of slowing in Q3 2017). In No.21 spot, Algeria looks poised to enter the Top 20 in the very near future, thanks to continued high growth (+10% MAT Q3 2017). To keep up with the latest trends in the Middle East & Africa, OTC DASHBOARD remains your best port of call.

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Top 3 Middle East & Africa markets, according to MAT Q2 2017 data

As for the leading OTC marketers, the big news in 2017 was Pfizer’s October announcement that it would be starting a bidding war for its consumer healthcare division, with RB, J&J and GSK all widely cited as possible suitors. However, there were at least two other major developments in 2017 that could cause a shake-up of the global Top 10 in the coming years – in October 2017, Novartis announced that plans to spin off its Alcon eye care business, following a strategic review, would be delayed until H1 2019 at the earliest, while in the same month the FT reported that Merck KGaA was pressing ahead with the sale of its consumer healthcare unit.

Nestle has been cited as a potential suitor for Merck KGaA’s OTC business and will be one of the companies to watch next year. Last week, Nestle agreed to acquire Canadian-based Atrium Innovations from investors led by Permira Funds for US$2.3bn cash. Atrium will become part of Nestle Health Science upon closing, which is expected in Q1 2018. Atrium’s largest brands are Florida-based Garden of Life, which manufactures certified organic, non-GMO supplements sold in health food stores and online in the US, and the Pure Encapsulations line of hypoallergenic, research-based dietary supplements sold in the US via healthcare practitioners, online and in pharmacies in several European markets. The portfolio also includes specialty brands such as Wobenzym, an oral enzyme combination containing proteolytic enzymes + bioflavonoid for osteoarthritis pain. 

If Nestle were to also acquire the Merck KGaA OTC business next year, and continue on its path of strong M&A growth, it could soon break into the global OTC Top 10. In addition, Merck KGaA would not only be a good fit with Nestle’s strategy of expanding in the field of high-quality vitamins, minerals & supplements, but would also give the company a strong foothold in the Emerging Markets, where Merck KGaA currently generates around half of its global Consumer turnover.

OTCs in Action Episode 41: Eyes on India

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Last week, OTC.Newsflash reported that Bal Pharma is dilating its portfolio with the launch of Eye Spa lubricating eye drops, zoning in on two OTC sweet spots: India and eye care. The Indian OTC market grew by 41% to $2.4bn from 2010 to 2014; Nicholas Hall’s DB6 Global OTC database projects growth of more than 50% over the next five years – and very optimistically, we could see a 10-year trend of 150% growth. The eye care category in India has just about doubled in the past five years to $41.4mn.

The growth of OTCs, especially lifestyle categories, are closely linked to higher income levels. For a Swedish bird’s eye view of the demographic trend that will drive this growth in India, visit statistician Hans Rosling’s Gapminder website for an entertaining historical perspective, and learn the date he predicts that income per person in India and China will match that of the US:

 

That said, in a 2009 interview in India’s Economic Times, Rosling qualifies his growth predictions:

“What I am most worried about is the reaction of the western world when they see India and China become bigger, what really worries me is a possible war. I also see new, subtle trade barriers emerge. For instance, they are calling products manufactured by India and China as contaminated, and are getting experts and researchers to prove that. These trade barriers are very subtle.”

OTCs in Action Episode 35: More play time instead of pain time in Nigeria

OTCinActionheaderThis week, OTCs are in Action in Nigeria where RB has just launched the leading global ibuprofen brand, Nurofen, for both children and adults. “Nigerians are known to be hard working, constantly seeking ways to lead a better life; they therefore do not want anything that would weigh them down or slow their pace,” Mr. Rahul Murgai, General Manager, RB West Africa, said at the launch ceremony. “Nurofen can provide them instant relief from headaches, lower back pain, cold symptoms, dental pain and fever thereby giving them more play time instead of pain time.”

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Rahul Murgai, General Manager, RB West Africa

Legitimate OTC brands that offer consumers safe and efficacious self-medication in developing countries are very important, because they offer an alternative to the under-the-counter (without a prescription) distribution of Rx drugs, which is in common practice. As governments regulate pharmaceuticals, and national healthcare programmes are prioritised, enforcement against UTC sales will become more rigourous. For the time being, the Nigerian government is curbing distribution of counterfeit and substandard drugs, with new government drug distribution centres and a ban on the flow of drugs between manufacturers / importers and retailers.

Markets such as Nigeria will benefit from these regulatory measures, encouraging investment such as RB’s launch of Nurofen. Although the OTC market is quite small at $114mn (+9%) in the 12 months to end-March 2015, Nigerian OTC will continue to grow as brands like Nurofen expand consumer options for legitimate self-medication.

OTCs in Action Episode 10: “Modern” contraception

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This week, OTCs in Action are impacting the sexual health market with New Zealand’s approval of LifeStyles Dual Protect (Ansell for Starpharma) antiviral condom to help prevent pregnancy, HIV and other STD transmission; and EMA regulators’ recommendation for the European Commission to switch HRA Pharma’s ellaOne (ulipristal acetate) emergency hormonal contraceptive from Rx to OTC. ellaOne can prevent unintended pregnancy if taken within 120 hours (5 days) of intercourse; as opposed to current products, which are effective for only 72 hours.

In contrast, OTCs are not in action where they may be most needed…

About 225mn women in developing countries want to avoid pregnancy but are not using modern contraceptives, according to a report published this week by the Guttmacher Institute and the United Nations Population Fund. The study calculates it would cost on average US$25 per woman aged 15–49 to provide reproductive health services (including newborn care) to all women in developing regions each year.

Last month, Indian sterilisation camps came to the world’s attention when 13 women died after undergoing a sterilisation procedure for which they were compensated about US$10. The Wall Street Journal’s India Real Time reported that 4.5mn Indian women underwent sterilisation in the year that ended March 2013. In the same period, just 120,000 men were sterilised.

In the future, multipurpose prevention technologies (MPTs) will be the OTCs in Action to provide women with pregnancy and STD protection simultaneously in formats such as gels, films and devices. Dr Beth Young Holt, co-ordinator of The Initiative for MPTs, wrote in The Guardian this month: “Many of the newest MPTs in development are female-initiated and can be used discretely. Integrative MPT products can deliver an end run around stigma (associated with condom use in many cultures) that can be a barrier to HIV prevention.”

Lifestyle OTCs: Trends, Developments, Opportunities and Strategies was published by Nicholas Hall & Company this week. This report looks at the current market situation, taking in regulatory developments, marketers & brand activity, launches and A+P campaigns, illuminating where growth opportunities are for the future.