Q4 2020 results round-up

Early signs from quarterly results published last week by CHC marketers, with both a global (P&G) and European (Galenica, Alliance Pharma) focus, indicate that consumer healthcare growth continued to be robust in the final quarter of 2020. There are some warning signs on the dashboard, notably P&G’s reference to a “historically slow start” to the cough, cold & flu season – which inevitably will impact its key CHC brand and global No.1 Vicks – but the strong performance of the former Merck KGaA OTC products that P&G acquired in 2018, including various VMS brands (Neurobion, Seven Seas, etc) which produced growth in the “high teens” in Q4, point to the importance of a strong portfolio mix.

In its January 2021 investor presentation, Swiss-based Galenica said it has slightly exceeded its sales guidance (+2-5%), generating a 5.4% rise in net sales in 2020 to CHF3.5bn (US$4bn). Health & Beauty recorded net sales of CHF1.7bn (US$1.9bn, +3.1%); Retail accounted for CHF1.5bn (US$1.7bn, +2.7%); and Products & Brands CHF111.7mn (US$126mn, +9.4%). Cold, beauty, travel-related and ibuprofen products were very negatively impacted by Covid-19, with additional sales from hygiene and prevention products only partially compensating for this. Growth was driven by expansion activities such as acquisitions in the pharmacy network and product portfolio. In its facts & figures for 2020 (see below), Galenica pointed to several CHC trends, such as the sharp decline of cough products and the rise of antiseptics & disinfectants like Septo Clean.

Source: Galenica

According to an unaudited trading update for the year ended 31st December 2020, UK-based Alliance Pharma said that “see-through” revenues (including underlying sales from Nizoral anti-dandruff shampoo) for 2020 were down 5% on the prior year at £137.5mn (US$188mn), both on a reported and constant currency basis. The company noted this reflects the impact of Covid-19. Consumer Healthcare revenues were up 1% to £93.0mn (US$127mn). Scar treatment Kelo-cote revenues rose by 12% to £34.7mn (US$47mn) and Nizoral was 4% ahead at £21.0mn (US$29mn). The recent acquisition of US-based Biogix, which brought Amberen – a fast-growing brand for the relief of menopause symptoms – into the group, is expected to be earnings-enhancing in FY 2021 and significantly earnings-enhancing from FY 2022.

Alliance Pharma CEO, Peter Butterfield, said: “The group continued to deliver a robust operational and financial performance in H2 2020, despite the ongoing challenges of the pandemic. While topline revenue growth has been constrained overall, our Consumer Healthcare business has performed well given the market backdrop and we have seen some strong performances from a number of our brands, in particular Kelo-cote.”

We have just announced a full schedule of webinars to take you through 2021. Exploring a range of trends and issues impacting the industry, we are kicking off with regional overviews of the Sleep, Memory & Mood markets. You can sign up for either the Asia-Pacific Hot Topic Webinar on 24 February, or the North America & Latin America Hot Topic Webinar on 3 March. Find out about the rest of our online events for 2021, by contacting elizabeth.bernos@NicholasHall.com.

Ad Watch: 2020 A+P Trends

Two advertising stories caught our attention this week. First was the news that P&G is no longer the world’s No.1 advertiser, with Amazon taking the top spot, according to Ad Age, which publishes an annual list of the largest marketing spenders. The online retail giant spent US$11bn on A+P in 2019, 34% ahead of 2018, when it ranked fifth. P&G was placed second, with US$10.7bn in ad spending in its fiscal year ending in June 2020, while L’Oréal came in at No.3, spending US$10.3bn in 2019. Ad Age notes: “2020 ad spending figures for top marketers are going to be depressed – with exceptions for some advertisers that increased spending to take advantage of market opportunities amid the coronavirus pandemic.”

Secondly, Contagious published its review of the biggest trends in advertising and the best campaigns of 2020. Among the Top 25 campaigns of the year, there were several healthcare & beauty brands listed, including RB’s Dettol, backed by a huge social media initiative on TikTok (#HandWashChallenge) in India. According to Contagious, the campaign involved some of India’s biggest influencers and generated over 125bn views on Dettol’s TikTok page.

Another campaign highlighted was Bayer’s support of Berocca in Vietnam, an A+P initiative that we also profiled earlier this year. Working with digital agency Carnival, Bayer devised the Get Supercharged at 2pm campaign, creating a TikTok music video and encouraging people to post videos of themselves copying its dance moves by offering prizes for the most views. This led to 70,000 videos being created by people participating in the #BeroccaMango2PM hashtag challenge. The campaign directed users to e-Commerce platform Shopee, where they could purchase Berocca bundles and combos. Online sales rose 223% compared with the same period the year before, according to Bayer, while offline sales also increased 32%.

Various beauty brands also featured in the Contagious roundup of the Top 25 campaigns of 2020, most notably P&G’s Dove, which was backed by a Courage Is Beautiful campaign at the height of the pandemic, highlighting the strength and resilience of frontline healthcare workers. The Contagious report also cited recent YouGov research that places both Dettol and J&J’s Tylenol among the Top 25 Best Global Brands 2020 in terms of consumer awareness.

You can review innovation by region and country, including a review of the most active marketers globally in terms of NPD, in our recent report from CHC New Products Tracker, Innovation in CHC. This report also highlights ingredient and delivery format trends, showcases 100 innovative products in 2019, plus much more. For further details, or to order your copy, currently available with a 30% discount until 31 December, please contact melissa.lee@NicholasHall.com without delay. 

Market Movers Q1: CCA, VMS brands among fastest movers

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In this week’s blog, we take a closer look at our newly published Market Movers data for MAT Q1 2020, which highlights the brands that performed best and worst in terms of value sales growth or decline in that period. Certain marketers like RB, which last week reported a 12% rise in its OTC portfolio in Q2 2020, have found success from having a well-positioned portfolio of power brands in fast-growing, Covid-driven CHC categories, such as cough & cold remedies (Mucinex), immunity supplements (Airborne) and antiseptics & disinfectants (Dettol).

P&G also reported double-digit organic growth of its Personal Health Care portfolio in Q2 (fiscal Q4), powered by Vicks, which continues to gain share. Vicks NyQuil / DayQuil combo packs were among the six fastest-growing brands in MAT Q1 2020, along with one of China’s leading systemic cold & flu remedies, 999 Gan Mao Ling. VMS products also featured strongly among the Top 6 fastest-growing brands, with Olly and Emergen-C performing well in the US market thanks to their stress / immunity positioning, and Double Whale Vitamin D Drops achieving high growth in China. J&J’s Tylenol, the No.1 analgesic brand globally, also continues to produce dynamic Covid-driven growth.

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Asia-Pacific was the region that underperformed most in MAT Q1 2020 – achieving just 3.4% growth vs 6.3% for North America and Europe – so it is no surprise that five of the Top 6 worst-performing brands are from China or Japan. Tonics & cure alls was the subcategory most responsible for Asia-Pacific’s relatively low growth, with category sales down 25% in China, owing to issues with donkey breeding that have resulted in rising raw material costs and subsequent price rises, affecting two brands in particular – Dong-e E-jiao and Fu Fang E Jiao Jiang – while Hong Mao Medicated Wine was affected by negative claims.

OTC tonic drinks is another VMS subcategory hit by declining sales, with a continued downturn in Japan where the old, male consumer base is retiring and brands face competition from energy drinks. Takeda’s Alinamin EX was among the brands that declined fastest in MAT Q1 2020. Another CHC subcategory affected by weaker sales in Q1 was antacids, as a result of the withdrawal of ranitidine-based antacids from the market owing to concerns around NDMA in the formulation. Sanofi’s Zantac was among the key brands impacted, with Zantac 150 in sharp decline in the US market.

Today is the last chance to pre-order our upcoming Analgesics 2020: Assessing the Current & Future Self-Care Market for Pain Relief at the discounted rate and save up to GB£1,800! Contact melissa.lee@NicholasHall.com to order or find out about special discounts available on purchases of more than one report title!

Top 2 brands powering global CHC growth

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Our blog this week looks at the performance of the Top 10 global consumer healthcare brands, in the context of the 5.6% upturn for the global CHC market in the year to end-March 2020. Inevitably, analgesics and cough, cold & allergy brands have enjoyed the highest rates of growth thanks to Covid-driven demand, with the Top 2 global brands, Vicks (+15.4%) and Tylenol (+18.3%), performing particularly well.

P&G’s CCA range Vicks now generates global sales of nearly US$1.5bn, and its double-digit growth in the MAT Q1 2020 period was powered by dynamic performances in Latin America and North America. In fact, high growth in the US market was behind the double-digit global upturns for both Vicks and J&J’s Tylenol, the latter generating sales of close to US$1bn in its home market.

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GSK markets four of the other Top 10 brands, including its powerful triumvirate of painkillers – Advil, Voltaren and Panadol. Growth for Advil and Panadol improved markedly in Q1, thanks to accelerated purchases as a result of Covid-19, while Voltaren experienced flat sales in the quarter. That said, the recent US Rx-to-OTC switch of Voltaren Arthritis Pain is expected to provide a significant boost to brand sales in Q2.

Halls also saw growth accelerate in Q1, although not to the same extent as other CCA brands like Mucinex, which rediscovered growth during the first quarter of 2020 to leap ahead of J&J’s Nicorette to reclaim the global No.9 spot. VMS brands Centrum and Nature Made missed out on the overall surge in demand for CHC products in Q1 – in general, growth in the VMS market has been focused primarily on immune supplements and vitamin C products.

Pre-order our upcoming Analgesics 2020: Assessing the Current & Future Self-Care Market for Pain Relief report before 31 July to save up to GB£1,800! Please contact melissa.lee@NicholasHall.com to order or to find out about special discounts available on purchases of more than one report title!

e-Commerce CHC growth accelerating

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All the signs point to accelerated growth for the internet & mail order channel of the global CHC market in the first quarter of 2020. In 2019, the overall global retail CHC market recorded growth of 3.9%, while internet & mail order sales achieved much faster growth of 12.4% that same year, and the channel is forecast to rise by 22.5% in 2020.

Several leading CHC companies reported dynamic e-Commerce growth in their latest quarterly results, with RB reporting a strong e-Commerce upturn across all major platforms and market places, particularly in Greater China, led by Dettol and Infant & Child Nutrition (IFCN), and North America, with Mucinex and VMS in particular making good progress. Likewise, P&G reported 35% growth for e-Commerce channels in its fiscal third quarter (calendar Q1 2020), translating into around 10% of company business. CFO Jon Moeller acknowledged social distancing orders were a key driving factor, but still expects a permanent shift in the portion of business conducted online post-pandemic.

GSK is another company that has been boosted by increased online demand for its analgesics, CCA and VMS products. The company reported that the impact of Covid-19 varied across regions in Q1 2020, as a result of differing government actions and consumer behaviour. USA, UK, Australia and several other markets benefited from increased demand and shopper activity in both traditional retail and e-Commerce channels, which resulted in accelerated purchases across all categories, while some markets, including India and China, were negatively impacted by mandated retailer shutdowns.

Likewise, the benefits of increasing trade channel liberalisation will not be shared equally among all CHC marketers. While many leading companies are well prepared for this increasing consumer appetite for internet & mail order purchases, some marketers with a more limited e-Commerce profile may find it hard to adapt to this shift in demand, especially if they’re highly leveraged in brick & mortar retail outlets, as is the case – for example – with Prestige Brands and the convenience store channel in the USA.

Coming this month — with two timing options on 22 and 23 July — is an all-new Hot Topic webinar focusing on COVID-19: The Impact on the Global and Regional CHC Markets. To find out more or register to join your preferred session, contact elizabeth.bernos@NicholasHall.com.

OTCs in Action Episode 60: Battle for Brazilian Baby Bottoms

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OTCs are in Action this month in Brazil, where J&J has purchased P&G’s Hipoglos nappy rash remedy, which enjoys sales of about $40mn. The purchase was a bit surprising given that, in 2014, J&J launched the leading US nappy rash brand, Desitin Creamy, in Brazil with a rash prevention positioning and a strong A+P campaign.

However, instead of steadily growing share organically with Desitin, the acquisition of a very well-known Latin American brand immediately elevates the baby care powerhouse to second place in the category in Brazil, behind Bayer’s fast-growing Bepanthen range. The two J&J brands will complement the company’s Johnson’s Baby creams, lotions, powders and cleansers.

Just as interesting is P&G’s divestiture of the well-known Hipoglos – owned by Andromaco and Grunenthal in other Latin American markets – which is a logical move given that it does not conform to P&G’s Megabrand strategy, owing to the fact it only competes in one market. That said, the major OTC company’s Brazilian portfolio is now limited to the Vicks Cough & Cold range and a small Metamucil laxative business.

To find out more about OTC in Brazil and other Latin American markets, please join us at our 2nd Latin American OTC Conference in Miami from 9-10 June 2016. Book by contacting jennifer.odonnell@NicholasHall.com or online

http://www.nicholashall.com/events/detail/latin_american_conference_2016/