NRF forecasts strong US holiday season sales

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According to a report this week by the National Retail Federation, US holiday retail sales (in November and December, and excluding automobiles, fuel and restaurants) are forecast to increase 4.3-4.8% this year vs the same period in 2017, to total US$717-721bn. This upturn compares to an average annual increase of 3.9% over the past five years.

In 2017, health and personal care store sales accounted for 17.8% of this total (US$59.3bn), a growing share compared to the year before (17.4% share in 2016, or US$56.9bn). If this trend of growing US retail sales in the holiday period – plus a growing share for healthcare sales – continues as forecast in 2018 then OTC marketers active in the US market can expect a strong finish to the year.

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According to NRF Chief Economist Jack Kleinhenz: “Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected. With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”

NRF’s holiday forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales. The number includes online and other non-store sales.

Explore growth opportunities in the CHC industry with Nicholas Hall’s specialist M&A boutique, which works 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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Perrigo to revive flagging OTC allergy sales?

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According to the latest MAT Q1 2018 data, global growth of OTC allergy remedies has slowed to just +0.2%, compared with a rate of +3.7% in the year-ago MAT Q1 2017 period, and +10.3% in the MAT Q1 2016 period. A drop-off in Rx-to-OTC switch activity has been a key factor, so last week’s news that Perrigo has signed an agreement with Merck & Co for exclusive rights to market, sell and distribute a non-prescription version of Nasonex (mometasone furoate monohydrate) in the US will be a welcome boost for the category.

Financial terms were not disclosed and the deal is subject to receipt of all necessary regulatory approvals. Nasonex is currently available on prescription only in USA, where it is marketed by Merck & Co. The corticosteroid anti-inflammatory nasal spray is indicated for the treatment of the symptoms of seasonal allergic or perennial allergic rhinitis in people aged 18+ years. In those markets where the product is available OTC, such as Australia, it is marketed by Bayer.

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Perrigo has often been first to launch private label equivalents of recently switched OTC brands – generic versions of Flonase and Zegerid OTC were launched in 2016, while a copy of Nexium 24HR was launched by the company last summer – but this deal marks a new phase for Perrigo into switching brands.

As Perrigo Executive VP & President, Consumer Healthcare Americas, Jeff Needham, commented: “This product in-licence is the first of its kind for Perrigo. As other similar products that have previously switched from prescription to OTC status, we are working diligently to bring this important product to consumers and customers more quickly than the average 5-year OTC switch timeframe. This strategic investment into the OTC category creates an innovative product offering for Perrigo. We expect to execute the Rx-OTC-switch, fully penetrate this market with a branded offering and provide a future store brand alternative.” 

Comment from Ian Crook, Managing Editor, Nicholas Hall’s Reports: Nasonex enjoys dynamic growth in the handful of markets where it has been switched to OTC by Bayer and generated sales of US$23mn in 2017 (+28% CAGR 2013-17). In the brand’s largest market, Australia (where it switched in 2014), award-winning advertising helped it build a strong presence among consumers; it ranked 4th with sales of US$10mn (+5%) in 2017, comfortably the No.1 in the nasal sprays segment. How the brand will fare in the USA — if and when Perrigo successfully navigates the switch process — remains to be seen. Nasal steroid switches in the USA have historically driven high growth among allergy remedies, but later arrivals like Nasonex are unlikely to make as big a splash as previous INS switches.

Perrigo is one of the Top 20 OTC players profiled in the 2018 version of our bestselling OTC YearBook. This essential annual report also gives an extensive, up-to-date overview of the OTC industry across the globe, including reviews of M&A activity, Top 15 markets and major OTC categories, plus much more. For more information or to order your copy, please contact melissa.lee@NicholasHall.com.

 

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.

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

Competition rises in sleep devices category

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Now available to buy in the US and selected European markets via the Nokia Health store, the new Nokia Sleep device is a sensor pad that can be placed under the mattress to monitor sleep patterns, track heart rate and detect snoring. 

It also syncs up to Nokia’s Health Mate app and provides smart home control via IFTTT (if this then that) integration, which allows for automatic thermostat regulation and light adjustment. The app also allows the user to view their Sleep Score to get an insight into what makes a good night’s sleep and how to improve night after night.

Packaged as a sensor pad with USB charger, Nokia Sleep retails at $99.95 (USA), €99.95 (Europe) and £99.95 (UK), and the brand website indicates that there are plans to roll out the product in key Asia-Pacific markets like China and Japan.

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Facing stiff competition in the smartphone market from Apple, Google and Chinese manufacturers, Nokia – the former king of mobile phones – is looking to further diversify its business.

Nokia Sleep was due to launch earlier this year, but news of a strategic review of Nokia’s Digital Health business in February 2018 put the rollout in doubt. Nokia will be monitoring closely how this new product fares against established competitor Beddit, which was acquired by Apple in 2017.

Whether you want to find out more about the latest innovations, benchmark the competition or simply keep abreast of new launches, Nicholas Hall’s extensive OTC New Products Tracker is an essential competitive intelligence tool that you simply must trial. Subscribers can also benefit from a newsletter highlighting the key product innovations affecting the industry. Find out more or set up your free trial today by contacting david.redford@NicholasHall.com

Will the new WebMD Symptom Checker impact self-care?

WebMD has recently launched a new version of the iconic Symptom Checker. The tool, which has been available since 2005, has been redesigned to make it easier for the user to operate and help generate more accurate results.

The site receives on average 75mn visits per month and provides people with access to the latest health information, news and trends. The Symptom Checker aims to help people find out more about possible conditions to be best informed on what steps to take next.

The new WebMD Symptom Checker features an improved interface designed to provide visitors with a simple and seamless experience, powered by a professional-grade diagnostic engine used by physicians to support their point-of-care decisions.

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WebMD’s new, improved interface

The new Symptom Checker features three times more symptoms and potential conditions than the previous version. WebMD has also added a search bar, which allows users to manually type in how they are feeling rather than having to connect specific areas of the body with specific alignments, for example in the case of general bodily aches.

WebMD redesigned the tool based on feedback from WebMD users, medical experts and leading academics and researchers. Additionally, an article by The British Medical Journal regarding symptom checker tools was also consulted.

Steven L. Zatz, CEO of WebMD, said: “Our redesign reflects our commitment to continually improving the experience of consumers when seeking answers to their health questions. We take very seriously our role in the consumer healthcare experience, and we have enhanced the tool to deliver the most accurate results possible.”

How will Amazon’s Basic Care line impact OTC?

Amazon recently announced the launch its line of generic OTC medications named the Basic Care range. The line competes with large and established US generic brands including Giant Eagle’s TopCare, Target’s Up & Up and Walmart’s Equate.

The Basic Care line is comprised of 60 items and includes cough, cold & allergy, gastrointestinal, analgesic, hair growth and smoking control products. Technically, Amazon does not own these products, which are produced by private label manufacturer Perrigo, but it does put Amazon in a position to put the squeeze on other marketers. Amazon has taken a very simplistic approach to the branding of Basic Care but claims the products are of the same standard as established OTCs.

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Should OTC marketers worry?

The answer is yes and no. Amazon’s biggest competitive advantage will be on price. Basic Care offers much lower prices compared to established brands especially when buying in bulk. This will work well for consumers who like to stock up on OTC items so they have them to hand when needed. Also the convenience of being able to couple this with a dash button and Amazon Prime will be a winning combination for some.

In an interview with CNBC, retail analyst Scot Ciccarelli suggested some OTC marketers may need to become more willing to lower prices. A number of retailers such as Walgreen’ and Walmart have already had to sacrifice margins to become more of a threat to Amazon after the acquisition of Whole Foods Market.

However, Amazon will still struggle in terms of accessibility. For example when the first symptoms of a headache come on, most consumers will go to their local pharmacy or supermarket to get instant relief. Amazon will not be able to offer convenience by just selling products online.

Is this part of a bigger picture?

Amazon is yet to make its plans for the prescription drug market completely clear. However, reports suggest launching an OTC range could be a step closer to a broader healthcare business play.

Whether you want to find out more about the latest innovations, benchmark the competition or simply keep abreast of new launches, Nicholas Hall’s extensive OTC New Products Tracker is an essential competitive intelligence tool that you simply must trial. Subscribers can also benefit from a newsletter highlighting the key product innovations affecting the industry. Find out more or set up your free trial today by contacting david.redford@NicholasHall.com