MAT Q2 2018: 5 Key Trends & Developments

Our latest Q2 2018 trend reports on the OTC market at global, regional and Top 20 level are now available on the OTC DASHBOARD website. Here we highlight some of the key trends & developments that have emerged in the latest data.

  1. Europe and Asia drive CCA upturn: Improving CCA growth helped the global OTC market report a slight upturn in Q2 (+4.2%). This followed a return to CCA growth in Europe (+2.7%) in Q2 2018, powered by the UK (+5.8%) and Germany (+4.1%), while France (+0.5%) also returned to positive territory. CCA growth in Asia-Pacific (+5.7%) likewise improved in Q2, thanks to a clear upturn for Systemic cold & flu (+4.7%), with key markets like S Korea enjoying high growth (+6.6%) on the back of OTC innovations such as the relaunch of Dong-A’s Pantec Q.
  2. Sanofi reclaims the No.3 spot from J&J: While GSK maintains its clear lead as the global OTC No.1 marketer, a tight three-way race remains in play for the No.2 spot between Bayer, Sanofi and J&J. Bayer is still the global No.2, while Sanofi reclaimed its position as the global No.3 in Q2 2018, moving ahead of J&J. In Sanofi’s Q2 results, the company reported a return to OTC growth in Europe and a continued strong rise in Emerging Markets, especially in Latin America. The company reported a CCA upturn in both regions, offsetting US allergy decline.
  3. US market behind VMS upturn: Higher Q2 growth in North America’s vast supplements market (+4.0%) has been the key trend behind the improving global picture. In Q2, multivitamins (+2.8%) underwent a clear upturn while the trend for probiotics (+6.9%) and immune supplements (+10.4%) also improved. The latter category has been a particularly vibrant source of OTC innovation in recent months; for example, Nestle has launched elderberry immune gummies as part of its mykind Organics line, while post-surgery immunity supplements and those with a digestive health crossover have also been popular.
  4. Where’s the growth potential? 1. Adjacencies: OTC marketers are increasingly looking to build new consumer healthcare adjacencies, either via switch – in the case of erectile dysfunction and Pfizer’s Viagra Connect – or new product innovation, in the case of medical cannabis. Canada recently voted to legalise cannabis, though the future for CBD and THC supplements remains uncertain. We don’t yet include sales of medical cannabis products in OTC DASHBOARD, though we do track developments in this category closely in both our innovation database, OTC New Products Tracker, and regulatory newsletter, OTC.NewDirections.
  5. Where’s the growth potential? 2. New territories: Rest of World countries (mainly Middle East & Africa) enjoyed continued high in Q2 2018, with sales up 6.6% in the 12 months to end-June 2018, to total US$9.2bn. High growth for analgesics (+7.2%) and CCA products (+6.7%) ensured a strong regional rise overall, allied with a dynamic performance in the key regional market of Turkey (+13.3%). RB is one marketer performing well in the region, claiming a spot among the Top 5 OTC marketers in Q2 2018, following dynamic growth of its CCA portfolio, powered by sore throat remedy Strepsils and its strong support via A+P and line extensions.

With M&A activity in the CHC industry increasing rapidly, now may be the right time for your business to explore growth opportunities. Our specialist M&A boutique is working with a number of strategic and financial partners to assess potential opportunities — for buyers and sellers — and is well placed to discuss the current business climate and possible synergies. To find out more, please contact ammar.basit@NicholasHall.com

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J&J to buy Zarbee’s

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J&J Consumer has entered into a definitive agreement to acquire natural healthcare products company Zarbee’s Naturals for an undisclosed sum. With a 50% CAGR, the Zarbee’s Naturals business racked up sales of US$68mn in 2017, according to Nicholas Hall’s global OTC sales database DB6, and there is lots of room for growth ahead.

J&J’s VMS portfolio accounts for just 0.1% of its total consumer healthcare business, so the Zarbee’s deal will provide a significant boost (see the table from OTC DASHBOARD below showing J&J’s current OTC sales split by major category). There will also be scope to build the brand internationally – at present, Zarbee’s focus is almost exclusively on the US market, so J&J will likely use its considerable marketing muscle to roll out the brand in other key regions where it has a strong presence, like Europe and Asia-Pacific.

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Founded in 2008, Zarbee’s Naturals is majority owned by the Growth Fund of L Catterton in partnership with various minority owners, including Sorenson Capital. The deal, which is expected to complete in Q3 2018, will include the full line of Zarbee’s Naturals products for children and adults.

Product innovation has been one of the main drivers behind exceptional growth for Zarbee’s Naturals. In April 2018, the company introduced three Children’s Complete Multivitamins in a gummy format, including Complete Multivitamin + Iron, Complete Multivitamin + Probiotic and Complete Multivitamin + Immune. In partnership with Amazon, Zarbee’s also released a Baby Bee Essentials Gift Set complete with a bee romper and products such as Gripe Water and petroleum-free Baby Soothing Chest Rub. Paediatric products like these will fit well with J&J’s family-friendly image.

As Health and Wellness climbs up the list of consumer priorities, the market for herbal and natural options is booming. Take a look at what the future holds for this market with Nicholas Hall’s upcoming report Herbals & Naturals: Opportunities in a Vast & Dynamic Area of Consumer Health. Scheduled for publication in August, this report will include coverage of 9 leading global markets, analysis into a wide range of categories including Herbal & Natural Supplements, Topical Analgesics, Cough Remedies, Laxatives and more, plus forecast sales. Benefit from early bird rates when you pre-order today! For more information, or to pre-order your copy, please contact melissa.lee@nicholashall.com.

MAT Q1 2018: 5 key trends & developments

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Our latest Q1 2018 trend reports on the OTC market at global, regional and Top 20 level are now available on the OTC DASHBOARD website. Here we highlight some of the key trends & developments that have emerged in the latest data.

  1. Growth draining out of allergy remedies: In the MAT Q1 2018 period, global growth of OTC allergy remedies slowed to just +0.2%. Compare this with a rate of +3.7% in the year-ago MAT Q1 2017 period, and +10.3% in the MAT Q1 2016 period. This gradual slowdown, caused primarily by a drop-off in Rx-to-OTC switch activity, has been one of several key factors in the continued low growth of the global OTC market (+4.1%) in Q1.
  2. J&J edges ahead of Sanofi: The latest MAT Q1 2018 data indicates that J&J is now the No.3 OTC marketer globally, marginally ahead of Sanofi and just behind Bayer. Every one of the Top 5 OTC marketers grew at a rate below that of the global OTC market in the MAT Q1 2018 period, indicating the difficulty in finding new growth opportunities and the continued emphasis on M&A.
  3. Has probiotics growth peaked? Though it remains high at +9.2% in the year to end-March 2018, the global growth of the probiotics category has slowed over the past year, when compared with a rate of +14.0% in the year-ago MAT Q1 2017 period, and +10.8% in the MAT Q1 2016 period. Innovation and expansion of the category into new countries and niches, such as diabetes, have fuelled its growth thus far, but we’ll be keeping a close eye over coming quarters to see if this trend is a temporary blip or the start of a long-term slowdown.
  4. Where’s the growth potential? 1. Adjacencies: OTC marketers are increasingly looking to build new consumer healthcare adjacencies, either via switch – in the case of erectile dysfunction and Pfizer’s Viagra Connect – or new product innovation, in the case of medical cannabis. Though we don’t yet include sales of medical cannabis products in OTC DASHBOARD, we do track developments in this category closely in both our innovation database, OTC New Products Tracker, and regulatory newsletter, OTC.NewDirections.
  5. Where’s the growth potential? 2. New territories: Coverage of the OTC market in the Middle East & Africa is one of the main benefits of being an OTC DASHBOARD subscriber, and looking at the latest Q1 data highlights the importance of this region to the relative success of GSK and RB. GSK performed better than the rest of the Top 5, with its CCA brand Otrivin moving up the Middle East & Africa rankings to the No.3 spot in Q1 after double-digit growth, while global No.6 RB (+4.4%) outperformed the global OTC rate thanks in part to the high MEA growth of Gaviscon and Strepsils.

Explore how we can innovate (and manage the impact of regulatory challenges) at our 1st OTC.NewDirections Executive Conference in London on 12th September 2018Where Innovation meets Regulation. Nicholas Hall and Nina Stimson will be joined by speakers from Medical Brands, Angelini and Arqus Advisory among others to review, discuss and debate major issues impacting the competitive landscape in an industry in which the regulatory goalposts are continually moving. Sessions span New Product Opportunities, Regulatory Affairs (including the potential impact of Brexit across the EU), Medical Devices, Switch, Digital Marketing, New Distribution and e-Commerce. Don’t hesitate — book before 31 July to save with our early-bird discount! For more information on this pivotal meeting, please contact Lianne.Hill@nicholashall.com

Flu Trends: USA, UK seeing 2018 spike

Though it’s difficult to build a comprehensive picture of flu trends across the globe, reports suggest that January 2018 has seen a spike in flu activity in North America and Europe. In its full-year 2017 results, J&J also cited growth for its upper respiratory category as one of the trends underpinning a 3.7% rise (+2.6% organically) for its OTC division in 2017. This included strong Q4 growth for its CCA brands in the Asia-Pacific region, suggesting that cold & flu activity is robust across the northern hemisphere.

According to reports, the US is in the grip of its strongest cough, cold & flu season for almost a decade. In mid-January, Brenda Fitzgerald, Director of the Centers for Disease Control & Prevention, said: “We are currently in the midst of a very active flu season. With much of the country experiencing widespread and intense flu activity … so far this season, influenza A, H3N2, has been the most common form of influenza. These viruses are often linked to more severe illness, especially among children and people age 65 and older. When H3 viruses are predominant, we tend to have a worse flu season with more hospitalizations and more deaths. While our surveillance systems show that nationally the flu season may be peaking now, we know from past experience that it will take many more weeks for flu activity to truly slow down.”

As the chart above shows, the percentage of US patients visiting their doctor with ILI (influenza-like illness) has peaked sharply in late 2017 / early 2018, reaching levels not seen since the 2009-10 flu season. Similarly, in the UK, reports suggest this has been the worst flu season for seven years – since the 2010-11 swine flu epidemic – with doctors visits for suspected flu rising sharply in certain parts of the country (in Wales, they recorded a fourfold increase to 64.9 cases per 100,000).

As we make our way through Q4 2017 results season, we’ll keep a close eye on how this spike in flu activity is reflected in the CCA performance of various OTC marketers, though it may be that we have to wait until the Q1 2018 results come in to see the full effect of this trend.

Q1 2017: Early analysis of the global OTC performance

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Nicholas Hall’s global OTC database, DB6, has just published its latest figures relating to the Q1 2017 performance of the OTC market, and below are some standout trends based on early analysis of the data. Over the coming weeks, our OTC INSIGHT research teams will be compiling the latest trend info at a regional and Top 20 country level, and we’ll alert you as soon as this analysis has been uploaded to the OTC DASHBOARD website.

1. Russia returns to higher growth (+18.2% MAT Q1 2017 vs +11.3% full-year 2016)

A key factor in the slightly improved performance of the global OTC market in the 12 months to end-March 2017 (+4.5%) vs full-year 2016 (+4.3%) was higher growth in Russia. While a modest upturn in the world’s No.1 OTC market, USA, was offset by decelerating growth for both No.2 market China and No.3 market Japan, it was the European countries – largely No.5 Russia, but also No.4 Germany – that accounted for the improved performance of the global OTC market in Q1 2017.

2. CCA growth at the heart of Europe’s revived fortunes in Q1 2017

Global CCA sales were up 4.7% in 2016, thanks to a strong end to the year, and this trend continued into the first quarter of 2017, with growth accelerating to 6.3% in the MAT Q1 2017 period. Europe was largely behind this upsurge, with CCA growth in Western Europe showing a marked improvement (+3.8%), while Central & Eastern Europe was the biggest source of dynamism (+17.8%), led by Russia and Poland. This trend extended to the rest of the northern hemisphere, with North America also reporting higher CCA growth (+4.4%) in the MAT Q1 2017 period, with Canada especially vibrant (+6.9%).

3. Global Top 5 stays the same, but J&J may overtake Sanofi by mid-year

While the Top 5 global OTC marketers – GSK, Bayer, Sanofi, J&J and Pfizer – remain fixed in position and adrift from the rest of the competition, the battle for the No.3 spot between Sanofi (+3.8%) and J&J (+4.1%) continues to intensify. On current trends, it looks as though J&J may overtake Sanofi by the end of Q2 2017, and we will confirm the outcome of this battle later in the year.

In the meantime, please check your weekly briefings and OTC DASHBOARD‘s Charts & Graphs archive for more early analysis of the Q1 2017 results over the coming weeks.

J&J Focuses On Consumer Innovation In Africa

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As part of its ongoing commitment to Africa, J&J has announced the launch of the Africa Innovation Challenge. The project will support Africa’s growing ecosystem and help develop consumer health solutions for local towns.

Earlier this year, J&J announced its global public health strategy in Cape Town, South Africa. The operations expand upon the company’s presence in Africa, which began in 1936.

“Our goal is to improve the health and wellbeing of families and communities around the world,” said Josh Ghaim, J&J’s Chief Technology Officer, Consumer R&D. “With its focus on consumer healthcare, the Africa Innovation Challenge will help to surface important issues impacting local communities. We look forward to engaging with the continent’s top entrepreneurs and scientists, and through collaboration, helping advance their ideas and bringing meaningful solutions across three very important healthcare areas.”

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The Africa Innovation Challenge seeks ideas focused on three critical health areas, promoting early child development and maternal health; empowering young women; and improving family wellbeing.

Challenge participants with successful solutions will receive up to US$100,000 in funding and mentorship from scientists, engineers and researchers in the J&J Consumer Research & Development organisation.

The news of J&J’s latest innovative challenge comes alongside the recent decision to drop ‘McNeil’ from their OTC business name, opting for J&J Consumer instead.

To apply to the challenge and review the applicable terms and conditions, please visit the Africa Innovation Challenge website. The deadline to submit applications is 17th January 2017.

OTC DASHBOARD is your sole Nicholas Hall & Company source of regular updates on the OTC market in Africa and the Middle East. Explore our Rest of World section for the latest content.

US acne OTC market ready to pop

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It’s amazing that the OTC treatment of acne has been limited to benzoyl peroxide and salicylic acid treatments for more than three decades, but now US teens and adults suffering from the condition have new options in the form of a medical device and the pending launch of an Rx-to-OTC switch topical gel.

J&J has launched Neutrogena Light Therapy Acne Mask, said to harness the power of clinically proven technology to clear acne and allow skin to heal itself. The mask emits blue light to kill acne-causing bacteria, while its red light goes deeper to reduce inflammation. Use is simple, with people putting the mask on after cleansing their faces and pushing the button and letting it work for 10 minutes.

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The US$40 mask includes 30 treatments, and subsequent purchases of the Light Mask Activator for US$17 means the mask can be charged for another 30 treatments. Although there are many light devices for acne treatment available on e-commerce sites like Amazon, the cachet of the trusted leading OTC acne brand, Neutrogena, on the label, and the far lower price point compared to other devices makes this product a game-changer.

Meanwhile, Galderma (Nestlé) is getting ready to launch Differin Gel (adapalene), the first retinoid acne treatment to be available as an OTC when the FDA approved its switch from Rx-only status last summer. The topical drug will dramatically change the complexion of retail shelves with a new ingredient for a skin condition that can have a major quality of life impact on millions of consumers. The Differin website promises that the new OTC will be on retail shelves soon.

This month, OTC INSIGHT North America will cover the acne remedies market in more detail as part 2 of its skin care report. To learn more about INA, click below:

Nicholas Hall’s OTC INSIGHT regional periodicals