The Otc Pharmaceutical Market In Emerging Countries 3bl26

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The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

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$3835 August 2010

The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

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Report overview The over-the-counter (OTC) pharmaceutical market includes nonprescription medicines that are sold directly to consumers through pharmacies, drugstores, convenience stores and grocery stores. Most countries follow the “two-class system” for the classification of medicines as prescription (Rx) or non-prescription (OTC). The OTC pharmaceutical market may be segmented into multiple categories such as analgesics, cold, cough and allergy, digestive remedies, traditional medicines, and vitamins and minerals.. China, Brazil, Russia, India, Turkey and Mexico – the key emerging markets – have always been attractive markets for pharmaceutical companies looking for low-cost manufacturing. However, manufacturers have started to realize the growth potential for pharmaceuticals including OTC products in these markets.

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“Use this report to gain an overview of key drivers and trends that have impacted the OTC pharmaceutical market across all six emerging countries.”

Demographic trends, lifestyles changes, growing economies, affordability, and awareness about self medication are driving the OTC market in emerging countries. Moreover, the increased number of Rx-to-OTC switches has also widened the market significantly. Rx-to-OTC switch signifies the change of status of a medicine from prescription to OTC. The pharmaceuticals industry is facing a major patent cliff, where patents for most of its blockbuster drugs are nearing patent expiry, which in turn is resulting in more product switches to OTC driving their sales and reducing competition from generics. The regulatory environment varies in each country, with Brazil, Mexico and Turkey moving towards more stringent guidelines for OTC distribution, while the regulations in India, China and Russia remain relatively liberal.

The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

Key findings The leading players in the OTC market in emerging countries include J&J, GSK, Bayer, Novartis and Sanofi-aventis. They have started to increase their focus on the R&D activities for their OTC divisions with the aim of introducing new innovative products in the global OTC market. ANVISA, the National Health Surveillance Agency of Brazil, which regulates the registration of drugs, cosmetics and medical devices, introduced a new regulation that restricts the sales of OTC products only through pharmacies as Behind-the-counter (BTC) products. This has resulted in the growth of ed pharmacies within the supermarket. India and China have large rural populations, with limited accessibility and affordability to healthcare facilities. Manufacturers aiming to penetrate the rural market are offering OTC products at a different price point to lure rural consumers. The OTC market in Mexico has grown due to the increasing accessibility of OTC medicines which were previously available as prescription only.

Figure 6: OTC pharmaceutical market by value in emerging countries, 2004–09 “The OTC market in the six key emerging countries (Brazil, Russia, India, China, Mexico and Turkey) reached $28bn in 2009, exhibiting a Y-o-Y growth of 8%. The traditional medicine category led the market with around one-fifth of the market, followed by cough, cold and allergy and analgesics. The distribution channels for OTC products in emerging markets was dominated by pharmacies followed by supermarkets and grocery stores. This was primarily due to the fact that a significant number of OTC products are not allowed to be dispensed through any other channel than pharmacy.”

Use this report to... • Gain a comprehensive understanding of the dynamics of the OTC pharmaceutical market across the key emerging markets. • Discover how each of the OTC markets differs widely across countries and the influence of the economic and demographic factors on the market. • Discover which OTC category has the greatest potential for growth and understand the growth drivers in the emerging markets.

• Gain up-to-date competitive intelligence across the OTC market and understand the major challenges affecting key players in the emerging countries. • Compare the performance of leading pharmaceutical players with respect to their performance in the OTC segment and R&D activities. • Gain a comprehensive understanding of the impact of the government regulations on the growth of the OTC market in emerging countries.

The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

Key issues... Rx-to-OTC switches: Rx-to-OTC switches are primarily a company's strategy to increase the life of a product. A product nearing patent expiry is due to encounter generic competition, but the switch from RX-to-OTC provides the company with exclusivity for additional years, provided the company s the switch with additional clinical trials to prove the efficacy and safety of the OTC formulation. Product availability at a different price point: In India, OTC products have always been considered to be targeted toward the urban population. As a result, OTC products have struggled to penetrate the rural markets. Most of the leading companies now offer products at all price points to capture all segments of the population. Moreover, many companies are launching products specifically targeting the rural market, such as the 'sachet' concept for OTC products. Growing disposable income in Russia: Despite the economic crisis, consumer spending on healthcare has not declined in recent years. This is primarily due to high levels of disposable income, preference for preventive medication, and growing concern for appearance among Russian consumers. Moreover, Russians are very brand-conscious and prefer to buy expensive international brands which they associate with quality (rather than products from local manufacturers which are not GMP-certified). 'Natural' buzz gaining grounds in OTC market: The consumer trend of shifting to natural products is becoming widespread in the OTC industry. Consumers are shifting to traditional/herbal medicines in most emerging geographies, particularly China and India. Indeed, in China, the traditional medicine category led the market in 2008 with around a 30% market share. The boom in traditional medicines in emerging markets is due to the fact that these countries have significant rural populations which have faith in traditional medicines.

Discover... • How has the OTC market in emerging countries evolved in the last 5 years?

• How is the regulatory environment in different countries affecting the OTC players?

• What are the current trends within the OTC markets in the emerging countries?

• Why are the governments in almost all the countries promoting self-medication?

• What are the current drivers and challenges in the OTC market in each of the emerging countries?

• Which are the leading players in the OTC pharmaceutical market in emerging countries?

• How are the demographic and economic conditions impacting the OTC market in emerging countries?

• What are the growth strategies of leading players to succeed in the emerging countries?

The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

Table of Contents EXECUTIVE SUMMARY • The global OTC pharmaceutical market • The OTC pharmaceutical market in emerging countries • The OTC pharmaceutical market in Brazil • The OTC pharmaceutical market in Russia • The OTC pharmaceutical market in India • The OTC pharmaceutical market in China • The OTC pharmaceutical market in Mexico • The OTC pharmaceutical market in Turkey • Competitive landscape

CHAPTER 1 INTRODUCTION - What is this report about? - Countries covered - Companies analyzed

- Methodology

- Key trends -

Increased M&A activity Rx-to-OTC switches OTC market players adopting 'small packs' 'Natural' buzz gaining ground in OTC market

CHAPTER 4 THE OTC PHARMACEUTICAL MARKET IN BRAZIL • Summary • Brazil - Overview - Brazil's OTC pharmaceutical market - Market segmentation - Regulatory framework - Growth drivers - Expanding distribution channels - Affordability of OTC products - Favorable government regulations for OTC

CHAPTER 2 THE GLOBAL OTC PHARMACEUTICAL MARKET

CHAPTER 5 THE OTC PHARMACEUTICAL MARKET IN RUSSIA

• Summary

• Summary

• The global OTC pharmaceutical market - Definition

• Russia - Overview - Russia's OTC pharmaceutical market - Market segmentation - Regulatory framework - Growth drivers

- Regulatory bodies

- Market overview - Market segmentation - By category - By geography

- Growth drivers - Market outlook

- Growing popularity of direct and online sales channels - Growing disposable income - Growing smoking and obese population

CHAPTER 3 THE OTC PHARMACEUTICAL MARKET IN EMERGING COUNTRIES

CHAPTER 6 THE OTC PHARMACEUTICAL MARKET IN INDIA

• Summary

• Summary

• Introduction

• India - Overview - India's OTC pharmaceutical market - Market segmentation - Regulatory framework - Growth drivers

• OTC market landscape in emerging countries • Drivers and resistors - Drivers -

Strong economic growth in emerging countries Growing smoking and obese population Regulatory environment Widening distribution channels Growing consumer awareness and confidence in selfmedication

- Resistors -

Lack of appropriate infrastructure Product pricing for diverse population Difficult to achieve brand loyalty Intensified competition

-

Changing consumer attitudes Widening distribution channels Liberal regulatory guidelines for OTC Product availability at different price points Higher margins in OTC

The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

Table of Contents CHAPTER 7 THE OTC PHARMACEUTICAL MARKET IN CHINA • Summary • China - Overview - China's OTC pharmaceutical market - Market segmentation - Regulatory framework - Growth drivers -

Booming economy Growing obese and smoking population Aging population Growing consumer awareness and confidence in selfmedication

CHAPTER 8 THE OTC PHARMACEUTICAL MARKET IN MEXICO • Summary • Mexico - Overview - Mexico's OTC pharmaceutical market - Market segmentation - Regulatory framework - Form of preparation - Nature of the drug

- Growth drivers - Intensified competition from private label brands - Retail competition - Unwillingness to spend

CHAPTER 9 THE OTC PHARMACEUTICAL MARKET IN TURKEY • Summary • Turkey - Overview - Turkey's OTC pharmaceutical market - Market segmentation - Regulatory framework - Growth drivers - Economic crisis and government initiatives - Intensified competition from local players - New avenues for advertising

CHAPTER 10 COMPETITIVE LANDSCAPE • Summary • Competitive landscape - Overview - Rx-to-OTC switches in the US during 2002–09

• Bayer - Company overview - Leading consumer healthcare products - R&D: consumer healthcare - Financial performance - Growth strategy - Mergers and acquisitions - Investing in fast-growing countries - Growth through focus on core brands

GlaxoSmithKline - Company overview - Leading consumer healthcare products - R&D: consumer healthcare - Financial performance - Growth strategies -

Focus on emerging markets Innovative 'innovation hubs' Strategic partnerships and acquisitions Retail partnerships

Johnson & Johnson - Company overview - Leading consumer healthcare products - R&D: consumer healthcare - Financial performance - Growth strategies - Acquisition to build-on consumer segment - Focus on building strong brands

Novartis - Company overview - Leading consumer healthcare products - R&D: consumer healthcare - Financial performance - Growth strategies - Geographical expansion in high-growth markets - Focus on core industry - Targeting potential growth categories in each geography

Sanofi-Aventis - Company overview - Leading consumer healthcare products - R&D: consumer healthcare - Financial performance - Growth strategies - Partnerships and acquisitions - Focus on consumer healthcare - Focus on emerging markets

APPENDIX • Glossary

The OTC Pharmaceutical Market in Emerging Countries Market overview, key trends, competitive landscape and growth strategies

Table of Contents TABLE OF FIGURES

• Leading consumer healthcare products of J&J

• Regulatory bodies in major markets • Global OTC pharmaceuticals market, by value, 2004–09

• J&J's financial contribution, by operating segments, FY2009

• Global OTC market segmentation, by category, 2009

• Leading consumer healthcare products of Novartis

• Global OTC market segmentation, by geography, 2009

• Novartis' financial contribution, by operating divisions, FY2009

• Benefits and risks of self-medication • OTC pharmaceutical market by value in emerging countries, 2004–09 • OTC market segmentation in emerging countries, by category, 2009 • Drivers and resistors of the OTC pharmaceutical market in emerging countries • Smoking population as a percentage of total population in five emerging countries • Obese population as a percentage of the total population in five emerging countries • Trends in the OTC pharmaceutical market in emerging countries

• Leading consumer healthcare products of Sanofi-Aventis

TABLE OF TABLES • Market share of leading players in major categories in China • Top 10 global OTC brands, 2009 • Rx-to-OTC switches in the US, 2002–09 • Bayer snapshot • Bayer consolidated financial performance, FY2009 • Bayer's segmental performance of consumer healthcare, FY2009 • GSK snapshot

• Brazil's population growth

• GSK’s consolidated financial performance, FY2009

• Brazil's OTC pharmaceutical market, by value, 2004–09 • Brazil's OTC market segmentation, by category, 2009

• GSK segmental performance of consumer healthcare, FY2009

Russia's population growth

•

J&J snapshot

• Russia's OTC pharmaceutical market, by value, 2004–09

•

J&J's consolidated financial performance, FY2009

• Russian OTC market segmentation, by category, 2009

• J&J's segmental performance of consumer healthcare, FY2009

• Smoking and obese population as a percentage of the total population in Russia

• Novartis snapshot

• India's population growth

• Novartis consolidated financial performance, FY2009

• India's OTC pharmaceutical market, by value, 2004–09

• Sanofi-Aventis snapshot

• India's OTC market segmentation, by category, 2009

• Sanofi-Aventis' consolidated financial performance, FY2009

• China's population growth • China's OTC pharmaceutical market by, value, 2004–09 • China OTC market segmentation, by category, 2009 • Obese and smoking population as a percentage of China's total population • Mexico's population growth • Mexico's OTC pharmaceutical market, by value, 2004–09 • Mexico's OTC market segmentation, by category, 2009 • Turkey's population growth • Turkey's OTC pharmaceutical market, by value, 2004–09 • Turkey's OTC market segmentation, by category, 2009 • Leading consumer healthcare products of Bayer • Bayer's financial contribution, by operating subgroups, FY2009 • Leading consumer healthcare products of GSK • GSK's financial contribution, by operating segments, FY2009

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