OTC Healthcare in China

Growing Health Awareness and Disposable Incomes Fuel Growth

OTC healthcare continued its healthy growth in 2008, mainly due to rising disposable income levels and growing health awareness among consumers. Robust economic development in China underpinned improving living standards, which enabled consumers to spend more on OTC healthcare. Meanwhile, consumers also became more educated about personal wellbeing via conventional mass media such as TV and newspapers as well as via emerging new media channels such as the internet. OTC healthcare manufacturers also played an important role in consumer education during the review period. Consequently, consumers gained more confidence in self-medication, leading to stronger sales of OTC healthcare.

Vitamins and Dietary Supplements Lead Growth

Vitamins and dietary supplements accounts for the largest share of sales in overall OTC healthcare. Within this, calcium supplements represents almost a fifth of total vitamins and dietary supplements value sales. Apart from growing health-consciousness, consumer education is also crucial for sales growth. Due to education campaigns, consumers began to realise the deficiency in calcium intake in the Chinese diet because of its lower intake of dairy products. Vitamins and dietary supplements continued to see strong growth towards the end of the review period, contributing greatly to overall robust growth for OTC healthcare.

Amway Leads Fragmented OTC Healthcare

OTC healthcare in China is fairly fragmented, with most players having a small share except Amway (China) Co Ltd. Amway enjoys a strong lead thanks to its performance in vitamins and dietary supplements. After obtaining a direct selling licence at the end of 2005, Amway restructured its direct selling system in China. The company adopted a diversified network involving direct sellers and retailing outlets, with 207 Amway shops operating in over 170 cities across China. The established Amway brand, aided by its continuous support of charity, also helped the company to gain a strong foothold in OTC healthcare in China.

Chemists/pharmacies Lead But Direct Selling Grows Fastest

As the traditional distribution channel for OTC healthcare, chemists/pharmacies continued to lead value sales, thanks to their easy access and clear product displays on shelves. However, direct selling saw the fastest growth in share, benefiting from offering personal service and convenience. The leading direct selling companies, such as Amway, also helped strengthen the development of this non-store retailing channel. Internet retailing also emerged in China in the review period but remained insignificant alongside powerful direct selling.

Steady Growth for Forecast Period

Even though some product areas are expected to see saturation in the forecast period, OTC healthcare overall is forecast to maintain steady growth. Increasing health-consciousness will be the key driver of growth. With improving living conditions, consumers will be able to better afford OTC healthcare. OTC healthcare will also increasingly be used to boost consumers' immunity and enhance their personal wellbeing on a daily basis. Widening penetration is also expected to boost sales, with growing rural distribution. OTC healthcare was under-developed in rural areas in the review period.