Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
- Adult mouthcare; Allergy care; Analgesics; Calming and sleeping products;
Child-specific OTC healthcare; Cough; cold and allergy (hay fever) remedies;
Digestive remedies; Ear care; Emergency contraception; Eye care; Medicated
skin care; NRT Smoking cessation aids; OTC obesity; OTC statins; OTC triptans;
Vitamins and dietary supplements; Wound treatments
Executive summary
Sales up in 2006
Value sales of OTC healthcare rose a further 3% in 2006, compared to 2% in
2005. Previous poor performance of cough, cold and allergy remedies began to
turn around in 2006, despite being subject to the continued EDLP (every day
low prices) strategies of leading multiple grocers. Following the abolition of
retail price maintenance (RPM) in 2001, grocery multiples are continuing to
reduce prices on a wide range of OTC products, but rising demand has offset
this negative influence on value sales overall.
Key drivers of growth
Vitamins and dietary supplements, along with medicated skin care and
child-specific products saw particularly high value gains in 2006. In each
case, greater consumer awareness of issues concerning health and wellness
supported sales. In dietary supplements, for example, media coverage espousing
the virtues of fish oils helped stimulate demand. More dynamic growth was
evident in less developed sectors, with OTC statins and emergency
contraception seeing value growth of 38% and 13% respectively.
Consolidation continues
The OTC healthcare market is characterised by a distinct shift towards
consolidation. By far the most significant development during the review
period was the acquisition by Reckitt Benckiser of Boots Healthcare
International, finalised in February 2006 in line with its strategic focus on
its retail pharmacy business. This acquisition has given Reckitt Benckiser
popular UK brands Optrex (eye care), E45 and Clearasil (both medicated skin
care). In addition to this, in June 2006, Pfizer Inc announced its intention
to sell its Consumer Healthcare division to Johnson & Johnson. The deal
creates one of the world' s largest healthcare companies.
Legislation to accelerate reclassification of OTC status
Legislation has proved important in shaping sales across the OTC healthcare
market. In May 2006 the government published its first Better Regulation of
Over the Counter Medicines Initiative (BROMI) report. The recommendations aim
to reduce time spent on administration and divert funds back into speeding up
the reclassification process to enable more products to reach OTC status
sooner.
Multiple grocers fight for OTC share
The major distribution trend in the OTC healthcare market during the review
period was growth in sales through grocery outlets, which has brought chemists
and pharmacies in line to face more direct and fierce competition. The
increasing trend towards purchasing OTC via supermarkets was accelerated by
the abolition of RPM, which meant that chains such Asda, Tesco and Sainsbury' s
slashed the prices of key OTC brands, such as Nurofen, Lemsip and Rennie, and
promoted multiple purchase offers. As a result, newly formed Alliance Boots
lodged a complaint with the Medicines and Healthcare Products Regulatory
Agency (MHRA) about Tesco' s multiple purchase offers on Resolve and Resolve
Extra products. In response, the MHRA agreed with all major retailers to
adhere to the spirit of the 1998 restrictions on pack sizes for analgesics.
Trouble ahead?
Over the forecast period the market for OTC products is predicted to continue
to grow in value, at a CAGR of around 1%. Keener pricing, especially through
major multiples, is likely to continue pressure on prices, especially in what
are rapidly becoming the commodity sectors of cough, cold and allergy
remedies, and analgesics. There could, however, be a bright future in terms of
OTC obesity products, which have already been switched in the Australian
market and, in the current climate of "fat Britain", could well underpin more
substantial growth in the market should they similarly move out of Rx status
in the UK.
View Cart
