OTC Healthcare: 2009 – A year in review

December 30th, 2009
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by Monica Feldman.

As year 2009 comes to close, Euromonitor
briefly reflects on important events that influenced the OTC healthcare industry.

The H1N1 flu stirs the world

Fears of a grave pandemic made the headlines across the globe in 2009, fortunately the severity of the H1N1 influenza
did not materialize to become a threat wiping out humanity. Its emergence
created an interesting set of actions from the governments and the OTC industry. While some countries like the UK
encouraged self-care to treat non-life threatening cases, other countries such
as Ecuador went to the extreme of banning the sales of all OTC cold/cough medications. The H1N1 influenza taught
new lessons to the governments, the industry and consumers that should be
considered in preparation for the next pandemic. This exercise could help
re-evaluate the importance of self-care or self-medication.

Launch of Alli in Western Europe

The Western European Rx to OTC switch
approval of Orlistat in January 2009 followed
the introduction of OTC obesity drug, Alli
(GlaxoSmithKline), in the summer. The launch became a success and complemented
the new generation of OTC drugs aligned to
treat chronic conditions. The new generation of OTC drugs also include statins and triptans. Obesity
is one of the most watched health indicators across the globe that affects a
larger number of people each year, including Europeans. Sedentary lifestyles and
diets loaded with fats and carbohydrates are to blame and almost certainly will
support the demand for OTC obesity drugs in the

Acetaminophen now under the radar of regulatory agencies

The Federal Drug Administration (FDA) in the US posted a warning confirming
that high doses of acetaminophen/paracetamol can cause liver damage. The warning
will not shy away acetaminophen from OTC
shelves; rather special attention was raised on the consumption of acetaminophen
along with popular combination cold/cough drugs containing this analgesic. This
consumption pattern is a major concern for regulatory agencies saying that it
could result in an unintentional overdose. Companies and industry associations
now rush to introduce awareness campaigns teaching consumers on the dangers of
overdosing. Innovative dosing devices are to pave a new road in the industry,
especially for child-specific medications in the US, the UK and Canada.

EFSA to revamp health claims in dietary supplements

The booming trend on health and wellness led many companies and retailers to
capitalise on health claims promising a wide array of benefits. As more research
takes place, it becomes clear that some of these claims are questionable and can
no longer be supported by scientific proof. Consequently, regulatory agencies
like the European Food Safety Authority (EFSA) currently take a second look at
health claims based on scientific acceptance under Article 13. Sadly, the safety
of dietary supplements has been tainted with false claims and weak quality
standards forcing regulatory agencies around the world to step forward. Upcoming
stricter regulation on these products will reward and bring new opportunities to
companies which are ahead of the game and prepared with enough scientific
evidence to support the claims. Regulatory initiatives like the one spearhead by
EFSA are aimed to clean up the system by achieving an adequate level of safety
and efficacy to protect consumers.

Major mergers and acquisitions shake the marketplace

Not only did Merck & Co grab Schering-Plough, but Pfizer gulped down
Wyeth, and Sanofi-Aventis celebrated the end of the year with the acquisition of
Chattem. The business strategy message clearly reveals the intention of strong
pharmaceutical companies moving into the steady revenue stream of OTC. Big pharmaceutical innovation shifts to oncology
and diabetes, leaving little development in other areas that could support
prescription blockbuster revenue in the future. Many patents will expire in the
next five years, and under this scenario it makes more sense for big
pharmaceutical companies to move into the OTC
field. The merger trend also includes strategic acquisitions of regional and
smaller companies specializing in generics and biotechnology research.
Sanofi-Aventis, for example, acquired generic makers Medley in Brazil and
Laboratorios Kendrick in Mexico in 2009. Big
pharmaceutical companies are anticipated to gain presence in the generics market
as consumers trade down on basic OTC drugs.

Retailing reshapes the industry

Private label made a significant dent in sales in 2009 thanks to a depressed global economy, where many
consumers replaced brands with less expensive private label and generics. This
trend is palpable in the regions of Western Europe, Latin America and North

In terms of distribution channels, the internet gained share as more
computer-savvy consumers join the digital world and order their drugs online.
Yet, in Japan, internet sales of OTC drugs,
except for vitamins and products with minimal side effects, have been banned
since June 2009. Emerging retailing formats
such as sales of OTC products through doctor's
offices acquired a good track while pharmacies in Europe changed their
landscape. Conzum pharmacy chain in Croatia expanded its presence at
supermarkets. Deregulation of pharmacies in Scandinavia brought an extended
retailing horizon. Norway increased sales of OTC products in non-pharmacy outlets, while in
Sweden, Apoteket pharmacies are no longer under the Swedish government's control
so as to foster competition and reduce government's budget costs. In contrast,
India extended the sales of OTC generic drugs
through government-sponsored stores to provide access to affordable medicines to
its people.