E-commerce shake-up in India

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India has been one of the major drivers of global OTC growth, with sales up 8.8% in the MAT Q3 2018 period, but there is now uncertainty over the country’s e-commerce sector after the government moved ahead with new rules that took effect last Friday (1st February 2019). The rules prohibit online retailers from selling products via companies or distributors in which they have an equity stake, so e-commerce giants like Amazon and Flipkart (owned by Walmart) have been most affected.

Amazon has now pulled various products from its Indian website, including some of its Amazon Basics line, while Walmart said it was “disappointed” at the government’s haste in implementing the new rules, which will create “significant work” for the company in overhauling its supply chains and systems. Political commentators see Prime Minister Narendra Modi’s decision to stand firm as a move intended to appease smaller Indian retailers ahead of a general election expected in May.

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Amazon saw its shares dip 4% on the day the rules were implemented and it has lowered its sales guidance for India in Q1 2019. Walmart shares also fell, down 2.4%. In the short-term, there will be huge disruption to supply chains and increasing compliance costs, which will inevitably affect the availability and price of products online, while also giving a boost to bricks & mortar retailers. Long-term, however, Amazon and Flipkart have invested huge sums in India’s e-commerce market and will no doubt recover share.

In the meantime, more disruption to the e-commerce sector might be on its way. India issued draft regulations on the sale of medicines by e-pharmacies in September 2018, including a requirement to register for a licence with the country’s pharma regulator, CDSCO, which should be renewed every 3 years. However, the move has drawn protests and petitions from pharmacists, and opposing views in different regions of India, making the future implementation of these regulations highly uncertain.

The latest edition of our bestselling annual OTC Yearbook 2019 is available to pre-order! Scheduled for publication this April, this report will include reviews of major OTC categories, leading companies and brands, Medical Devices, Switch and much more. Pre-order your copy before 31 March to take advantage of our pre-publication rate! To find out more, or to reserve your copy, please contact Melissa.Lee@NicholasHall.com.

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E-commerce: Amazon picks up PillPack

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Amazon’s latest foray into the healthcare sector – a definitive agreement to acquire US online pharmacy, PillPack – has huge disruptive potential for the traditional drugstore pharmacy sector. A start-up founded in 2013, PillPack is licensed in 49 US states to offer pre-sorted doses of medications, coordinate refills and renewals, and ensure timely home delivery to customers. Financial terms of the deal were not revealed, but the transaction is expected to close during Q2 2018, subject to regulatory approvals and other customary closing conditions.

Walmart was rumoured to be interested in acquiring PillPack earlier this year, and the company lost US$3bn in market capitalisation after the Amazon deal was announced on Thursday 28th June. The two companies are now locked in an intense global rivalry, with Walmart coming out on top in India after acquiring a 77% stake in Flipkart in May 2018. Such huge M&A investments will advance e-commerce’s share of the pharmaceuticals market in key markets like India and the US, with the potential to revolutionise the consumer healthcare sector too.

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PillPack is currently a small operation, expected to post revenue of US$100mn this year, but Amazon’s existing customer base and shipping infrastructure could allow it to quickly scale up. Brick & mortar pharmacy chains are already seeing the consequences of the deal; as the news broke, shares in Rite Aid fell 11%, Walgreens Boots Alliance 9.9% and CVS Health 6.1%, a collective US$11bn in market value.

Though consumers in many markets remain hugely reliant on pharmacist advice when making OTC purchases, there’s no doubt that price is a very sensitive area that makes traditional brick & mortar retailers vulnerable in this evolving retail landscape. Certain OTC categories where there is a strong wellness or personal care element, such as VMS and dermatologicals, are most likely to see a significant rise in e-commerce sales.

E-commerce, as well as OTC adjacencies and digital health, are three of the hot topic areas that OTC DASHBOARD will be focusing on this year, in its weekly briefings, infographics and blogs. For a free trial of the service, please contact hannah.burke@nicholashall.com

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. 

Clever Campaign Connects Condoms With Indian Truck Drivers

India has the third-largest HIV epidemic in the world, with 2.1mn people estimated to be living with the disease.

OTC INSIGHT Asia-Pacific reported last week that, in India, around 2 million truck drivers are frequently engaging in unprotected sex with sex workers and only 11.4% of these workers said they had used a condom.

As a result, the level of STDs in this group has substantially increased and, combined with the general population prevalence of HIV, it is nearly five times higher than the national figure. Sexual health awareness is low among truck drivers. Efforts are being made to educate the population on the importance of sexual health.

Tata Motors, one of India’s largest truck manufacturers, decided to tackle the problem head-on but needed to find an approach that would engage with the target group. Tata Motors enlisted the help of creative agency Rediffusion Y&R and launched the “Use Dipper At Night” campaign in April 2016. Indian truckers have a strong cultural identity and “Use Dipper At Night” (reminding drivers to dip their headlights during nighttime) alongside other brightly painted slogans is often written on trucks.

The idea behind the campaign was to encourage truck drivers to practice safe sex by linking it to a phrase that resonates strongly with every member of the community. To this end, a new condom brand called Dipper was created and marketed exclusively to truck drivers.

HLL Lifecare, a government-owned corporation and India’s largest condom manufacturer, produces the condoms. The brand identity has been carefully thought out in order to reflect the trucking culture in packaging. Each wallet, which contains three condoms, is decorated with different truck art motifs and slogans, such as “Have a Safe Journey”, to make them more appealing to the target consumer.

GSK helps Indian runners breathe better

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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.

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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

OTCs In Action: Innovative Ayurvedic Acid Relief On the Go

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OTCs are in Action in India, where Sun Pharma’s new Pepmelt updates traditional Ayurvedic medicine with fast-melt granules for speedy relief of acid indigestion and heartburn, allowing Indians to enjoy impromptu meals with friends or new acquaintances.

 “The pioneering innovation of a mouth-melt antacid arose from a big need gap our market research indicated,” said Subodh Marwah, VP & Business Head – Global Consumer Healthcare. “Consumers today lead a very hectic life, eat out a lot and are always on the move. Thus, an easy-to-carry and convenient to use mouth-melt antacid makes Pepmelt extremely relevant to our consumers’ needs. Moreover, the idea of enjoying food without any fear is a key distinction for Pepmelt’s positioning in the antacid category.”

Lowe Lintas’ digital campaign for Pepmelt welcomes heartburn sufferers to the table. “A category defining innovation like Pepmelt, which is also a category disruptive introduction, needs a distinct and refreshing insight,” observed Marwah.”The campaign idea stems from the insight of offering food to someone who’s suffering from heartburn and acidity. This insight is fused into India’s socio-cultural context to create a potentially powerful and progressive brand idea for Pepmelt.”

MAT Q2 2015 update: Three key dynamic market shifts

Global OTC growth hit 5.7% in MAT June 2015 to total US$124bn, and our accompanying OTC Market Stats update revealed several major changes in the leaderboard. Find out how to delve deeper with the latest edition of OTC DASHBOARD’s user tutorial series, below. Meanwhile, our data team is currently beavering away on the upcoming MAT Q3 2015 update, which we expect to publish online next month – Regards, Owen Hartnett.

1. Perrigo is now a Top 20 OTC company

After purchasing European dynamo Omega Pharma earlier this year, Perrigo has entered the global Top 20 at the expense of Genomma. With this enhanced OTC focus, especially within Europe, Perrigo’s sales reached US$678mn in the reporting period (not including private label OTCs), and CEO Joe Papa believes the company is now better-placed to “capitalise on the many megatrends which bend in favour of consumer choice and cost control in healthcare”.

Meanwhile, Mylan’s proposed acquisition of Perrigo is gathering momentum, with the Federal Trade Commission this month providing the final regulatory clearance needed to close the deal. Perrigo continues to “strongly recommend that its shareholders not tender into Mylan’s inadequate offer”.

Quick tip: Click on any marketer in the Company Watch table to launch a pop-up containing a summary of performance with sales split by major OTC category. 

2. J&J is now the leading US OTC marketer

J&J overtook Bayer to reclaim the No.1 US OTC marketer spot in MAT Q2 2015. This was a result of double-digit growth for its US systemic analgesics portfolio, driven by Tylenol and Motrin in both the adult and paediatric segments. These key brands were recently expanded with Tylenol 8HR Arthritis and Motrin Liquid Gels respectively, as the marketer looks to use innovation as a basis to protect its leading position and fend off increasing competition from private labels.

OTC was also a key driving force in J&J’s latest financial results for Q3 2015, with this unit (as part of its Consumer division) posting a 6.3% upturn thanks to a strong performance in Emerging Markets, particularly Russia.

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Quick tip: Our company results tracking feature offers a provisional look at OTC performance ahead of each quarterly update. See the Charts & Graphs archive for a visual round-up of the leading global players.

3. India is now the No.10 OTC market globally

OTC sales in India grew by 9.8% in MAT Q2 2015, enabling it to leapfrog Canada and enter the global Top 10. The market continues to recover from the price caps introduced under the Drug Price Control Order 2013. Meanwhile, key domestic players such as Dabur are focusing on the urban pharmacy channel to obtain recommendations from pharmacists and expand product availability.

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Quick tip: The Market Overview page for all 62 countries provides a snapshot of economic performance, along with soft information to supplement our sales data.

OTC DASHBOARD is a subscription-only web service powered by Nicholas Hall’s DB6 Global OTC Database. To find out how we can help you to save time, work smarter and keep connected, get in touch with us today at: otcdashboard@NicholasHall.com