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OTC Healthcare: 2009 – A year in review

by
December 30th, 2009

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 future.

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 America.

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.

Monica Feldman

A head of industry leader committed to delivering client focused business intelligence solutions with vast experience in corporate strategy, research, analysis, and consulting at Euromonitor and other multinational organizations. An analytical thinker who identifies market opportunities and crafts business solutions. Recent experience focused on global trends in consumer health.