MAT Q1 2018: Global OTC growth steady at 4.1%

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According to Nicholas Hall’s global OTC database, DB6, the OTC market maintained 4.1% growth in the 12 months to end-March 2018. This steady but slower rate of global OTC growth compares to a faster pace during the first three quarters of 2017, when growth peaked at 4.6%.

The key factor in the persistent slowdown in Q1 2018 was lower OTC growth in the USA (+2.5% vs +2.8% for calendar 2017), with faster development held back by a weak allergy season. As highlighted in our OTC DASHBOARD market summary for North America, the impact of recent Rx-to-OTC switch activity in the US market has also been minimal.

Some positives emerged in the MAT Q1 2018 data. OTC growth in Western Europe improved to 1.8%, boosted by a high incidence of cough & cold in the first quarter of this year, while Latin America’s OTC market continued to increase strongly (+11.8%), with leading country Brazil up by 9.8%.

The OTC performance in Asia-Pacific (+4.7%) was mixed, with China (+6.3%) and India (+7.9%) improving upon their 2017 growth, however Japan and Australia remained flat in Q1 2018. Growth in the Middle East & Africa remained stable at 6.7%, while Central & Eastern Europe decelerated further to 5.5%, with weakening growth in both Russia (+3.5%) and Poland (+3.3%).

If you are not a subscriber and would like to find out more about what DB6 covers, please contact kayleigh.griffinhooper@NicholasHall.com for a free demo.

 

#NHOTC17: Day 1

OTCINACTION

Our 28th European OTC INSIGHT conference, centred on the theme of Making the Most of New Technology, took place in Munich last week. Following Nicholas’ annual overview of the global OTC market, and what’s ahead, there was a packed schedule of presentations on topics including the future of digital OTC and what we see technology providers delivering now and in the future.

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Nicholas Hall kicked off proceedings on Day 1

Richard Learwood of PGT Healthcare got our brains into gear on the morning of Day 1 with a thought-provoking discussion on accelerating growth in consumer healthcare, and this was shortly followed by Dr Dennis Ballwieser, of Wort & Bild, who shed some light on the future of partnerships in digital publishing and how digital is affecting the print industry in healthcare.

Leading into the lunch session, Infirst Healthcare’s Manfred Scheske led a thought-provoking session, which showed us how our industry is extremely focused on Strategic Growth and Share Grab, but needs to step up its ambition to shape market conditions and to grow markets. He addressed the increasing number of line extensions, which have successfully grown many big OTC brands, but less and less new products offer meaningful news, and patients and pharmacists and the general public are increasingly irritated and confused by the tidal wave of ‘plus’, ‘forte’, ‘extra’, ‘ultra’, ‘max’, ‘advance’, ‘extra advance’, ‘rapid’, ‘express’, etc.” Certainly food for the mind before we ate our lunch!

After lunch, Alison Hartley from Sanofi got the conference back into swing with a presentation on Digital Excellence, explaining that content is key but distribution is queen! Alison also delved into the many ways that digital has enabled us to do things we wouldn’t have been able to do without digital media.

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Alison Hartley focuses on Digital Excellence in OTC

Our very own Monica Feldman also enlightened us on e-connecting the revenue dots, explaining that VIRAL = REVENUE and to have this you must have humour, heart, brains and guts. Trevor Gore of Maestro Consulting took to the stage as our final speaker on Day 1, alongside David Taylor, leading us to contemplate whether technology is helping us or making us addicts? Trevor certainly lifted spirits with his stand up presenting style!

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Our Global Director of Client Services, Monica Feldman

Look out for more Dashboard blog content coming soon, including Day 2 of the conference and the Nicholas Hall Awards. As an official announcement now the conference has ended, we hope to see you next year in… Barcelona, for our 29th European OTC conference #NHOTC18.

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.

Top 10 Q1 2016 Countries

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.

Battle lines are drawn over distribution in Italy

Matteo Renzi’s Italian government is plotting a fresh wave of liberalisation reform to help stimulate the floundering economy. The package includes measures for the banking, transport, energy and insurance industries, but also for pharmaceuticals. The bill proposes allowing all non-reimbursable (Class C) medicines with prescription to be sold outside pharmacies. The move echoes the Bersani Decree of 2006 – which made all non-prescription medicines available in the mass market – and could be understood as a continuation of Italy’s more recent liberalisation measures, including the Mario Monti government’s switch of 356 formerly Rx medicines to non-prescription but non-advertisable (SOP) status in 2012, with an additional 191 switched in March 2014.

If the bill is passed in spring this year, just as with all OTCs in Italy, the non-reimbursable (Class C) Rx medicines would still have to be sold under the supervision of the many hundreds of qualified pharmacists operating in drug stores across the country. These stores require the same level of security and medicine controls as pharmacies, so issues regarding consumer safety are minimal.

Of course, the hope for our industry is that increased distribution to the Rx medicines might eventually persuade the Italian government to switch more of these to non-prescription status. Even though the 500+ formats switched since 2012 remain with SOP status, they have provided some drive to a relatively stagnant OTC market. Categories significantly boosted by the switches include anti-fungals, wound healers and eye care.

But there’s a long way to go. The voice of the pharmacy lobby in Italy is a powerful one. Mario Monti’s government tried to push through the same measure in its early crisis days in December 2011, but met with a wave of protest, having to settle instead for the slightly softer mass Rx-to-SOP switch.

As expected, pharmacy-owners have again kicked up a tremendous fuss over the potential loss of earnings the new bill might bring, coupled in public statements with concerns relating to possible widespread medicine misuse and the all-too certain belief that the measures will bring no growth to the economy, with many citing that 7 years after the big Bersani decree, only around 10% of OTCs/SOPs are sold outside of pharmacies… So on that basis, the pharmacy-owners won’t lose too much. Way to shoot yourself in the foot. In fact industry sources put pharmacy earnings through Class C medicines – including OTCs and SOPs – at just over 15%, so if around 10% of this were to leave the pharmacy, it wouldn’t be a huge loss after all.

The bill is up for discussion at by the Government’s Council of Ministers meeting on 20th February 2015. Time to smear on the war paint…