The year 2014 set up the stage for new market dynamics that will influence consumer health in 2015. Our newest preliminary findings for the full year 2014 will be formally published on 19 January 2015. In the meantime, we provide a snapshot preview of how Euromonitor International compares its previous estimates with our most recent research. Overall, the industry grew at a healthy pace of 2.4% in constant terms in 2014 from 2013 (5.6% current/nominal terms) at fixed exchange rates. Surprisingly, this growth is more than one percentage point lower from our previous estimates. The year 2014 brought some growth difficulties in the United States, the largest consumer health market accounting for an estimated 28% of global retail value in 2013. 
A weaker than usual cold/flu and allergy seasons earlier in the year dampened the high prospects of sales. At the same time US consumers shied a bit away from their high consumption of vitamins and dietary supplements in favour of functional/fortified food and beverages, and fresh healthy foods in general. The new global estimates of growth seem a little bit lower due to a slowing down in the economies of Brazil, China and Russia, and also to the fact that the US$ dollar gained strength in the second half of 2014 – Euromonitor International typically reports figures in US$. This is not to say that consumer health is no longer a bright spot since the industry continues to grow at a healthy pace. Rather this is a wake-up call for the industry to work on priorities, focus on relevant therapies, manage competitive threats, and selectively invest in geographies that will lead to the next stage of growth.
Consumer Health - Review of Retail Value Sales Estimates 2014
Source: Euromonitor International
Note: Based on preliminary research findings
The stars of category growth for the period of 2009-2014 can be summarized as follows in constant (real) terms:
- Adult naproxen 2.3% CAGR
- Antihistamines/allergy remedies (systemic) 2.4% CAGR
- IBS treatments 5.0% CAGR
- Proton pump inhibitors 8.2% CAGR
- Sports nutrition protein supplements 9.8% CAGR
- Paediatric vitamins and dietary supplements 3.5% CAGR
- Combination Non-Herbal/Traditional Dietary Supplements (typically multivitamins with other added supplements such as probiotics, ginseng, omega fatty acids and/or fibre) 4.7% CAGR
- Probiotic supplements 10.8% CAGR
- Protein supplements (non-sport) for dietary improvement 8.2% CAGR
From this quick analysis, two trends can be clearly identified:
- A larger number of OTC options are being made available to consumers for the treatment of recurrent or non-communicable chronic conditions such as allergies, pain, and digestive ailments. This trend is also the reflection of higher OTC switching activity in those areas in different parts of the world.
- Wellness and prevention has found new niches of growth. Retail value sales of paediatric vitamins and dietary supplements observed a big jump as many more producers and marketers launched paediatric options across the world. Alternatively, newer benefit claims of high protein consumption for wellbeing, the reduction of satiety and the maintenance of muscle mass resulted in more people adding protein powders and drinks to their diets.
Corporate activity redefines growth priorities
The unprecedented pace of mergers and acquisitions that took place in 2014 changed significantly the corporate game for 2015. Pharmaceutical titans Bayer AG and GlaxoSmithKline GSK/Novartis have reshaped the competitive playground by building considerable synergies that will put them at the top two global spots in 2015. These corporate developments have placed competitive pressure for Johnson & Johnson, Pfizer, Sanofi and Boehringer-Ingelheim to fight for market share. Interestingly, Pfizer and Sanofi are placing their future competitive bets in the potential prescription (Rx) to OTC switch of sildenafil and tadalafil respectively as treatment of erectile dysfunction (ED). A study launched in summer 2014 was recruiting participants interested in having an accessible OTC treatment for ED in the United States. Most likely this is an actual use study (AUS) to be used in the filing for a switch. The name of the sponsor was not released yet this development provides a strong indication on the high interest of pursuing this switch.
Other pharmaceutical companies invested in selective regional acquisitions to bolster their global presence and quickly expand in other markets in 2014. Most notably transactions include Abbott Laboratories with their acquisition of CFR Pharmaceuticals in Chile in October 2014 and Veropharm in Russia in December 2014. Separately, Prestige Brands Holdings acquired Insight Pharmaceuticals in September 2014 to increase its investment in feminine care in North America, whereas Perrigo Co announced the acquisition of Omega Pharma in November 2014 to boost its presence in Europe and expand Omega’s business to North America. Perrigo also stroke a deal with the largest convenience store retailer 7-Eleven to launch a new line of OTC private label at the stores in the United States.
From the consumer goods company perspective, Procter & Gamble (P&G) and RB (Reckitt Benckiser) are seeking new ways of engaging consumers. RB signed another partnership strategy with Facebook in August 2014 to engage consumers in wellbeing through the promotion of brands MegaRed and Mucinex. RB is expanding these brands globally as their CEO Rakesh Kapoor invests on giving consumers what they want, not just molecules. Alternatively, P&G has selectively invested in expanding or launching new lines in both OTC and dietary supplements. The Vicks brands continued its expansion in Eastern Europe thanks to PGT Healthcare (joint venture with Teva Pharmaceutical Industries) and it launched the new allergy line extension of QlearQuil in the US. On the supplements side, the company signed a partnership with Australia-based Swisse Wellness Pty Ltd to support global opportunities for expansion and growth in vitamins and dietary supplements, and to indirectly complement the New Chapter brand of supplements. P&G repositioned and extended the Metamucil brand to “Meta”, which now includes the functional foods of a high fibre bar and wafers.
Underestimated for a long-time, Amway has now been stirring the waters lately in the consumer health space. Competitors have finally realized that they cannot discount the activities of direct sales companies, also known as MLMs (multilevel). Amway is setting an aggressive growth agenda to become a leading company in the wellness space by investing more in the formulation and quality of their products as well as using synergies in their different corporate divisions and partners to bring research (Van Andel Institute), innovation (Interleukin Technologies) and new products to a larger base of consumers willing to pay premium prices for maintaining good health.
Inspiring ideas that will move consumers in 2015
Engaging consumers via social media remains tricky for most OTC producers and marketers. Yet, if properly executed, it opens a powerful direct conversation and engagement with consumers. Health education, advertising and special promotions are the most common topics seen in social media. Johnson and Johnson, for example, introduced a pollen count social media campaign in the United Kingdom to alert consumers on allergies caused by pollen. In spite of social media gains, mommy-blogs will remain as a strong generator of word-of-mouth in the consumer health space in 2015.
The gamification of health is taking an attention-grabbing approach aimed to inspire new generations to become engaged in healthy lifestyles. The popular videogame Minecraft is being used as a public health anti-tobacco campaign approach. In Sweden, for example, the organization A Non Smoking Generation launched the “Fear Clinic” to engage and educate the youth against tobacco smoking. The clinic actually links young people to the services of a psychologist so they can ask questions or raise concerns about tobacco smoking. The organization partnered with popular YouTube star Joseph Garrett to increase the visibility of the clinic amongst the Minecraft audience. Similarly, the US Food and Drug Administration partnered with YouTube’s celebrity SkyDoesMinecraft (Adam Dahlberg) to develop a Minecraft anti-tobacco smoking campaign to be released in 2015. In terms of wellness the game app Zombies Run! now sells version 3.0 and continues to enjoy from good popularity amongst consumers who like to make of real fitness a nice virtual playing experience. This game was originally launched in 2012 and claims to have 800,000 users around the world. In 2013 the game’s developer Six to Start worked in collaboration with the National Health Service (NHS) in the UK to introduce The Walk, a health gaming app based on spy-thriller tasks to keep people moving. Alternatively, Blue Goji introduced an innovative approach to exercise with the launch of GojiPlay allowing gym goers to link their mobile devices with a gaming device to play virtual games while exercising. Amongst consumer health companies, Johnson & Johnson is not shy about their investments in engagement digital platforms. The company’s division Wellness & Prevention Inc introduced the app Track Your Health in 2014 only available through employer and insurance health plans. It also offers the HealthMedia Step by Step app to the general US population and still sponsors ZamZee, one of the pioneer fitness gaming apps developed for children.
Interesting developments in the retailing space to set up newer ways of thinking in 2015
The pharmacy can now turn fully digital at the point of sales. A new concept of a digital display, known as a video wall, cannot only show virtual images and prices of OTC brands and supplements on video screens, but also provide video information to consumers on how to use an OTC drug. The concept emerged in Germany in early 2014 as pharmacy Westgate Apotheke opened its first digital pharmacy in the city of Cologne. Video walls replace shelves that display the products available for sale. By doing this the pharmacy aims to reduce dispensing time and make more convenient for consumers to choose what they need. Some pharma companies such as Ratiopharm (PGT Healthcare) have invested in ads using the video screens for enhanced visibility of their products.
Retailing consolidation offers growth opportunities for companies and health gains for consumers. Walgreens and Alliance Boots finalized their merger in December 2014. This transaction is a significant win for US-based Walgreen Co to put the retailer in the global map as a consumer health innovator. Walgreens has been extremely aggressive in their expansion plans by investing in the development of consumer loyalty programs such as Balance Rewards for healthy choices (BRhc), expanding its partnership with online platforms such as WebMD, embracing the mHealth movement, investing in the expansion of retail or walk-in clinics, and working with high-technology partners such as Theranos. Particularly, the Boots acquisition also brings the National Health System (NHS) future needs to provide effective off-site healthcare solutions to people in the United Kingdom. The NHS has been setting up more walk-in centres (WICs) at Boots locations and the chain has become a key player in public health initiatives such as NutraCheck (BootDiets is now part of NutraCheck).
Direct shipping to China is becoming a key strategy of growth for foreign players given the complexities of the retailing space in consumer health. Powerful US warehouse club player Costco reported initial success in the sales through their new partnership with Alibaba (Tmall). Costco sells and ships vitamins and dietary supplements to Chinese consumers using the Tmall platform. Alternatively, US-based online retailer Vitacost partnered with the Chinese delivery service company SF Express (Shunfeng Express) to ship directly US made vitamins and dietary supplements to Chinese consumers who are concerned with purchasing high quality and certified vitamins and dietary supplements. According to Vitacost, shipping costs start at US$10.99 for four pounds, making it relatively affordable to a larger base of middle-income consumers in China.