2014 apac consumer health smr summary by ims health

APAC OTC Market Trends ReportAnthony Morton-Small, Senior Principal, IMS HealthDecember 2014

AGENDA

• Global OTC Market Context

• APAC OTC Insights

• Summaryy

APAC SMR December 20142

GlobalWhile Pharma experiences a number of constraints, OTC benefits from a range of growth drivers.

Top Corps contribution to growth f lli idl

Low number and quality output from R&Dfalling rapidly R&D

Generics dominating large therapy areas

Demand constrained by payers

PHARMA

Emerging markets have the critical mass to influence growth

OTC

Key players building strong brand identities

Payers keen to promote self medication

g

Companies seek to exploit switch opportunities

Increasing access through new channels


identities medication

The Traditional Consumer Health Segments comprise:OTC, Personal Care, Patient Care and Nutrition.

Global

OTCOver The Counter

PECPersonal Care

PACPatient Care

NTRNutrition

• Registered and unregistered products

• Pure OTC/ Pharmacy

• Products for beauty and hygiene

• Examples: Emollients,

• Examples: Test and measurement instruments, wound care, stoma care,

• Examples: Infant and adult formulas, slimming aids, diabetic food,

(and other channels)

• Examples: Cough/ cold, pain, digestive, vitamins and minerals, etc

face and hair care, fragrances, oral hygiene

contact lens care, etc. nutritional products, etc.

etc.

$114bn* $237bn* $12bn* $222bn*

* IMS Estimation

4APAC SMR December 2014

GlobalHowever the shift of focus towards health & wellness has led to new transversal market segments.

Blurring the boundaries (or broadening the scope!) and attracting new competitors

Pharma-ceuticals NutraceuticalsCosmeceuticalsTopically applied Provides medical or health

benefits includingVitamins, herbs, various oils, and botanical extracts typically added

May not claim drug-like or

benefits, includingthe prevention and/or treatment of a disease

Typically sold in the medicinal form of capsule, tablet,

NutritionPersonal Care

y gtherapeutic effects

p , ,powder, solution

Sometimes associated with functional foods

Nutricosmetics Ingestible. Containing ingredients such as botanical actives, enzymes, proteins, and vitamins


vitamins.Marketed specifically as beauty aids

As OTC becomes increasingly attractive, industry players become more diverse.

Global

Pharma Consumer Health FMCG/CPG

Consumer packagedConsumer packagedgoods

Pharma moving into consumer health

CPG moving into consumer health

Pure play consumer health

• Payer and generic pressure driving diversification

• Rx to OTC asset leverage• Broader patient/consumer

• Higher consumer health margin and prices

• Leverage consumer and trade marketing muscle

• Lower private label

• Leverage sales and marketing capabilities

• Economies of scale in supply chain

• Leverage consumer • Broader patient/consumer healthcare coverage

• Lower private label competition

• Leverage consumer understanding

6APAC SMR December 2014

OTC continues to show healthy growth, while Pharma growth improves.

Global

14%

16%

14.0

16.0 Year on Year Value Growth & OTC Share of Total Pharma Data for MAT to Q2 2014

Total Pharma = $ 1024 bn

9.4

10.6% 10.4% 10.3% 10.1% 10.2% 10.4% 10.4% 10.7% 10.7%11.2%

10.9%

10%

12%

10.0

12.0

(%)

Total OTC = $ 111 bn

7.36.4

6.8

5.2 5.56.2

7.7

6.05.4

6.37.0 7.0 6.9

6.16%

8%

6.0

8.0

Va

lue

Gro

wth

(

54.6

4.1

1.5

4.2 4.6 4.6 4.5

2%

4%

2.0

4.0

V

0%0.02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pharma Growth (%) OTC Growth (%) OTC Share of Total Pharma (%)


Source: IMS OTC audits plus estimates NB. Change in estimation methodology from 2014

GlobalEmerging Markets dominate the global OTC growth contribution – led by LatAm, South Asia & China

20OTC Growth by Region: Short vs Long term

Global 3 Year Average Growth 4.2%

L AMERICA

CHINA

SOUTH ASIA

15

owth

(%

)

CEE

CHINA

SE/N ASIA5

10

test

Yea

r G

ro

Gl b l L Y G h 4 2%GLOBAL

W EUROPE

JAPAN AUSTRALASIA0

5

La Global Latest Year Growth 4.2%

N AMERICA-5

-5 0 5 10 15 20

3 Years Average Growth (%)


Source: IMS OTC Global Analysis

GlobalDeveloped markets must innovate to drive growth, whilst developing regions also see base sales growth.

Base Value Change 4 -16

Elements of Growth by Region – 5 Year Cumulative Growth %

-15

Price Change

New Products

Line Extensions 6

19

11

-9

12

12

5

13

6

Total Change 42 1

NORTH AMERICAWESTERN EUROPEGLOBAL

9

Base Value Change

Price Change

N P d t 38

2

70

22

-3

26

38

26

New Products

Line Extensions

Total Change 130

21

38

54

10

25

104

13

26

LATIN AMERICA APAC exc JAPANCEE


9


Top 10 Corporations Global OTC

Novartis continues to see strong growth, while RB and Takeda also grow ahead of total market.

Global

4.0%J&J 2.1%

GLOBAL TOTAL OTC +4.2%

Top 10 Corporations - Global OTC Value Share & Latest Year Growth (%)

3.9%

3.8%

3 7%

NOVARTIS

SANOFI

BAYER

7.4%

4.1%

1 1%3.7%

2.7%

2.5%

BAYER

PFIZER

PGT

1.1%

0.4%

-0.5%

2.3%

2.2%

GSK

B.I.

-6.4%

2.3%

Value Share Value Growth > Market Value Growth < Market

2.1%

1.6%

RB

TAKEDA

4.8%

9.0%




GlobalTraditional Key Categories all match or exceed market growth, except CCR, with a poor 2013-14 season.

Global OTC – Key CategoriesValue Share (%)

Value Growth (%)

4.2%TOTAL MARKET

CCR22.3%

OTHERS20.0%

1.8%CCR

VMS &

VMS & TONICS

SKINCARE9.2%

4.6%

5.4%

VMS & TONICS

PAIN RELIEF

18.5%

DIGESTIVE14.5%

5.8%

5 4%

DIGESTIVE

PAIN RELIEF15.5%

5.4%

4.2%

SKINCARE

OTHERSSkincare includes Foot careOthers is dominated by TCM Eye Care Habit & Anti-Varicose



Others is dominated by TCM, Eye Care, Habit & Anti-Varicose

Localisation and market concentration help determine the portfolio and business operation required to succeed

Global

Where to play and how to win?

Country segmentation • Localisation:

onH

igh

LatAm*

− Driven by local roots due to culture, linguistic and medicinal habits

− Impact largely the portfolio (product type, positioning & pricing)

once

ntra

tioed

ium

East EU− Relevant to establish how to win?

• Market concentration− Driven by urbanisation level and

Mar

ket

co

owM

e

Asia Pac

MENA

pharmacy consolidation− Impact largely the business

operation (commercial model to adopt)

Low Medium High

Lo

MENA

The segmentation can vary within each

− Relevant to establish where to play?


Degree of localisation g y

country depending on the CH category

AGENDA



• Summaryy


Growth in APAC comes from both innovation and base value; while Global still relies heavily on price increases

APAC

Global OTC5 Yr Growth = 42%

APAC excl. JP5 Yr Growth = 130%

New Products

Line Extensions

21% NPD:59%

fNPD:19%Price

Increase

Base Value Growth 2%

38%

ofTotal

Growth

NPD:25%

ofTotal

Growth

11%

6%

70%

4%

Contribution to Growth Contribution to Growth


Source: IMS Elements of Growth – Based on 5 year sales from 2009 - 2014

The more developed markets, show the potential for growth in expenditure elsewhere in the region.

APAC

12%

11%

15.0%140

OTC EXPENDITURE per Capita ($) - APAC Countries

118

883%

9%9%

5%

2%

11%

4% 5.0%

10.0%

100

120

nge

(%

)

88

45 39

0% 0% 0%

-4%

2%

-5 0%

0.0%

60

80

on

Yea

r C

han

DO

LLA

RS

28 25

15 12 10 9 82

12

-9%

-10.0%

5.0%

20

40

Yea

r oD

2-15.0%0



Average prices are rising in China, India and ASEAN but flat or declining elsewhere

APAC



Country performances differ and local understanding is critical to capitalizing on the opportunities.

APAC

SINGAPORE

20

wth

(%

)

APAC Growth by Country: Long vs Short term

APAC 3 Year Average Growth 4%

CHINA INDIA

MALAYSIA

HONG KONG10

15

ate

st Y

ear

Gro

wJAPAN AUSTRALIA

SOUTH KOREA

INDONESIA

PHILIPPINES

0

5

La

APAC Latest Year Growth 4.4%

TAIWAN-5

0-20 -15 -10 -5 0 5 10 15 20 25


NEW ZEALAND

-15

-10



15

While VMS and Others (dominated by TCM) are the largest categories, growth is driven by Pain Relief

APAC

Ski4.4%Total OTC

APAC – Key CategoriesValue Share (%)

Value Growth (%)

VMS & Tonics25.9%

Digestive12.2%

Skin9.5%

4.4%

3.5%VMS & Tonics

25.9%

Pain Relief12.3%

3.6%

4.9%

All Others

CCR

All Others19.0%

CCR21.2%

7.0%

4.0%

Pain Relief

Digestive

4.8%Skin


Among the smaller categories, TCM (in Other OTC) is the key driver, while Habit (NRT) struggles, esp in Japan

APAC

APAC OTC – Minor CategoriesValue Share (%)

Value Growth (%)

HabitAnti-varicos

eAntifungals Weight

Loss Ear C

Anti-haemorrhoids

4.0%

Habit3.1%

e1.8%

(Gyn)1.4%

Loss0.9% Care

0.4% 3.6%

4.4%

All Others

Other OTC

Eye Care19.6%

1.9%

0.7%

Eye Care

Anti-haemorrhoids

Other OTC68.8%

2.6%

14.5%

Habit

Anti-varicose

-4.6%

-8.0%

Antifungals (Gyn)

Weight Loss


7.7%Ear Care

While VMS and Others (dominated by TCM) are the largest categories, growth is driven by Pain Relief

APAC

8

9w

th (

%)

APAC Growth by Category: Long vs Short term

APAC 3 Year Average Growth 4%

COUGH/COLD

PAIN RELIEF

6

7

ate

st Y

ear

Gro

w

DIGESTIVE

SKIN4

5

La

APAC Latest Year Growth 4.4%

VMS

ALL OTHER

ALLERGY2

3

1

0

1

-1 0 1 2 3 4 5 6 7 8



Source: IMS OTC Global Analysis-1 3 Years Average Growth (%)

NB China 3Yr growth rate assumed to be the same as China 1 Yr growth rate

Among the smaller categories, TCM (in Other OTC) is the key driver, while Habit (NRT) struggles, esp in Japan

APAC

15

20

ow

th (

%)

APAC Growth by Minor Category: Long vs Short term

ALL OTHERS 3 Year Average Growth 3.1%

Anti-varicose

Ear Care

10

15

ate

st Y

ea

r G

ro

Other OTC

Eye CareHabit

Ear Care

0

5

La

ALL OTHERS Latest Year Growth 3.6%

Anti-haemorrhoidsAntifungals (Gyn)

Weight Loss

-5

0-15 -10 -5 0 5 10 15 20


Weight Loss

15

-10


NB China 3Yr growth rate assumed to be the same as China 1 Yr growth rate-15

Across APAC, just 4 of the Top10 corporations are MNCs and only Takeda grows faster than the market

APAC

4.9%1. TAISHO 0.2%

Top 10 Corporations - APACValue Share & Latest Year Growth (%) Total APAC

4.4%

2.4%

2.3%

2. DAIICHI SANKYO

3. TAKEDA

1.2%

11.3%

2.0%

1.9%

1 8%

4. B.I.

5. GSK

6. J&J

-0.1%

-4.5%

-1 6%1.8%

1.7%

1.7%

6. J&J

7. ROHTO CORP

8. PFIZER

1.6%

-0.3%

1.8%

1.4%

1.4%

9. SATO SEIYAKU

10. KOWA

-1.3%

-4.8%



Among the western MNCs, RB has the highest growth rate amongst the top players

APAC

2.0%4. B.I. -0.1%

Leading MNCs - APACValue Share & Latest Year Growth (%) Total APAC

4.4%

1.9%

1.8%

5. GSK

6. J&J

-4.5%

-1.6%

1.7%

1.3%

1.2%

8. PFIZER

11. SANOFI

13. BAYER

1.8%

-2.7%

3.9%

1.1%

0.8%

16. NOVARTIS

21. ABBOTT

17.0%

5.4%


0.7%

0.6%

23. RB

28. MERCK & CO

18.3%

7.2%


Value Share Value Growth > Market Value Growth < MarketNB Ranking reflects position amongst all corporations

AGENDA



• Summaryy


APAC Highlights APAC

Pain is a strong grower across APAC while Digestives and Cough & Cold are “average”. But each category has higher opportunity segmentssegments.

Pain shows greatest opportunity in China, India, Pacific and to some extent ASEAN Systemic pain is the least dynamic sector whilst extent ASEAN. Systemic pain is the least dynamic sector whilst Topicals, Muscular Children’s segments grow strongly

C h & C ld h Ch dCough & Cold is strongest as a growth opportunity in China, India and ASEAN and in the cough/expectorant and sore throat segments. Cold & flu remedies are slow growing and highly competitive.

Digestives look most promising in India, China and ASEAN although anti-diarrhoeals are the slowest growing major segment. Probiotics/digestives along with antacids grow fastest


/ g g g

Your Partner in Consumer Health

Thank you!

Anthony Morton-SmallSenior Principal Consumer Health

Veronita P. Rusli

Senior Principal, Consumer Health Email : [email protected] : + 65-8328-3867

Veronita P. RusliSenior Manager, Consumer HealthEmail : [email protected] : + 65-9270-2568

Mungo PatersonEngagement ManagerEmail : [email protected] : + 65-9386-8113


2014 apac consumer health smr summary by ims health

Healthcare

otc benefits

total otc

consumer healthcpg

beauty aidsas otc

pharma growth

health wellness

stoma care

wound care