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September 26, 2013 Winning the Battle for Consumer Healthcare Consumer Health Products Canada The Health Driven Consumer

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Page 1: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

September 26, 2013

Winning the Battle for Consumer Healthcare

Consumer Health Products Canada – The Health Driven Consumer

Page 2: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Discussion Topics

1) The Consumer Healthcare Market

2) The Battle for Consumer Healthcare

3) Convergence of Food and Medicine

4) Preparing to Win

Page 3: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Discussion Topics

1) The Consumer Healthcare Market

2) The Battle for Consumer Healthcare

3) Convergence of Food and Medicine

4) Preparing to Win

Page 4: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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The market for consumer healthcare is defined by broad boundaries - „consumer needs‟ and the „quality of the claim‟

Pharma active

Disease Aspiration Preventative

Scientific claims

Perceived benefits

Herbal Remedies

Analgesics

Anti-aging creams

Energy drinks

Health nutrition

“Therapeutic” toothpaste

Probiotic yogurt

Quality of

claim

Consumer Need

Map of Consumer Needs vs. Quality of Claim

Vitamins/ Minerals

“ ”

Source: A.T. Kearney analysis

Page 5: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Consumers are moving increasingly towards early preventative and aspirational treatments

With these headwinds, we expect Consumer Healthcare will become a Mass Market, impacting all aspects of consumer products and services

Spending trends of an

aging population

Increased focus

on prevention

Governments and payers

are investing in public

health to change behaviors

and begin

early treatment

Increased

consumer spending on

healthcare

Consumer

spending is filling the “gap”

left by challenged health

systems

Older population have a

wide range of

self-medication options

and aspirational treatments

Page 6: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Despite the attention on some emerging countries, the largest growth is expected to come from emerging markets

1. Estimated Sales Data (Retail Value MSP/US$ million/ Historic Constant 2012 Prices, Forecast Constant 2012 Prices/ Historic Fixed 2012

Exchange Rates, Forecast Fixed 2012 Exchange Rates)

Sources: Euromonitor, 2012: Consumer Health, Passport database; A.T. Kearney analysis

$250B

$198B

$149B

2007 2012

CAGR +5.3%

2017E

Global Consumer Healthcare Market

USD billion, MSP¹

50

30

10

0

90

70

2017E 2012 2007

CAGR 2007-2017

7.8%

6.5%

6.0%

7.4%

7.1%

4.4%

1.1%

North America

Middle East and Africa

Latin America Western Europe

N. America (non-vitamins) Eastern Europe

Australasia

Asia Pacific

Consumer Healthcare Growth By Region

3.3%

Page 7: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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The Canadian market is expected to see growth rates slightly below the global average

Sources: Euromonitor, 2012: Consumer Health, Passport database; A.T. Kearney analysis

Canadian Market Growth by Category

USD billion, MSP¹

0.5

1.0

1.5

2017 2012 2007

Dermatologicals

Analgesics

Cough, Cold and Allergy Remedies

Paediatric Consumer Health

Weight Management

Digestive Remedies Herbal/Traditional Products

Vitamins/Dietary Supplements

CAGR 2007-2017

4.7%

3.%

3.7%

1.4%

3.1%

3.2%

3.8%

1.9%

Canadian Market Growth

2007 2017E 2012

$5.2B

$4.5B

$3.6B

CAGR +3.8%

Page 8: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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„Sweetspots‟ emerge at the intersection of markets and categories

Consumer Healthcare – Finding the sweet spots

1. Sales Data (Retail Value MSP/US$ million/ Historic Constant 2012 Prices, Forecast Constant 2012 Prices/ Historic Fixed 2012 Exchange Rates, Forecast Fixed 2012 Exchange Rates)

Sources: Euromonitor, 2012: Consumer Health, Passport database; A.T. Kearney analysis

Top 25 segment opportunities, 2012 – 2017

USD million, MSP¹ Canada

North America

Western Europe

Asia Pacific

Latin America

Eastern Europe

Middle East and Africa

Vitamins and dietary

supplements 104 7,965 1,128 11,430 1,256 1,549 792

Herbal and traditional

products 32 855 7,016 755

Digestive Remedies 73 743 672 514

Cough, cold and allergy 137 1,231 2,663 1,473 1,009 660

Analgesics 155 797 1,338 1,148 576

Sport nutrition 31 2,532

Pediatric consumer health 10 1,215

Dermatologicals 61 1,108

Weight management 35 707 1,827 626

Higher growth ($1B-$5B) High growth ($500M-$1B) Highest growth (>$5B) <$500M not represented

Page 9: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Discussion Topics

1) The Consumer Healthcare Market

2) The Battle for Consumer Healthcare

3) Convergence of Food and Medicine

4) Preparing to Win

Page 10: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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A large mass market has develop midway between pharmaceuticals and consumer goods companies

Product

Market /

Population

Niche

market

Mass

market

Consumer

Healthcare: Growing

mass market linked to

growing health risk

factors

Disease Aspiration At risk

Page 11: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Consumer

Healthcare

Both industries are already trying to address similar needs by leveraging their historical positions

Example – Cholesterol-lowering Products

Consumer

Goods

Major

Pharmaceutical

Niche Consumer

Healthcare players

Sources: A.T. Kearney estimates

Page 12: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Scientific Research Patented

New Science Customer

needs

Product innovation Customization

Targeting New solutions to

old problems

Distributions/ Logistics Mass market and specialist

Specialist

Marketing Consumer demand

Consumers and HCPs

As CPG and Pharma companies continue to converge towards the new battleground, they must navigate how to compete

Consumer Good capabilities

Pharmaceutical company capabilities

Low High

Consumer Goods

Pharma

Regulations/ Compliance Demonstrated

benefit Claims

compliance

Sales Shelf space maximizing

Professional recommendation

Flexible Manufacturing Low Cost Secure

Source: A.T. Kearney estimates

Relative organizational capabilities

Page 13: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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We have identified four potential go-to-market strategies for companies looking to own this space

Product

Niche

market

Mass

market

Disease Aspiration At risk

Market /

Population

Category and Channel Champions

Discovery Driven

Disruptors

Mass Market Maximizers

Scientific Leadership

Page 14: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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What are winning Go-to-Market strategies for different players?

Product

Niche

market

Mass

market

Disease Aspiration At risk

CPG Winning Strategy

Mass Market Maximizer

• New products to the mass market

– Brand led consumer marketing

– Mass market distribution

– Line extensions, offers

– Increased clinical results

Market /

Population

Page 15: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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What are winning Go-to-Market strategies for different players?

Product

Niche

market

Mass

market

Disease Aspiration At risk

CPG Winning Strategy

Category and Channel Champions

• Owning the customer need

– Segmented products and needs

– Professional endorsement

– Build relationships with specialists

Market /

Population

Page 16: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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What are winning Go-to-Market strategies for different players?

Product

Niche

market

Mass

market

Disease Aspiration At risk

Pharma Winning Strategy

Discovery-Driven Disruptors

• Consumer solution to medical problems

– Growing disease-market

– Rx-to-OTC switches

– Extend brands that “own” the disease

– Lobby for “Behind the Counter”

Market /

Population

Page 17: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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What are winning Go-to-Market strategies for different players?

Product

Niche

market

Mass

market

Disease Aspiration At risk

Pharma Winning Strategy

Scientific Specialists

• Non-reimbursed medical products

– Professional recommendation

– Scientific proof and patents… especially targeting slowing disease

– Increase RPh scope of responsibility

Market /

Population

Page 18: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Discussion Topics

1) The Consumer Healthcare Market

2) The Battle for Consumer Healthcare

3) Convergence of Food and Medicine

4) Preparing to Win

Page 19: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Nutraceuticals is one example of an emerging category that is being defined by the battleground in Consumer Healthcare

Replace a Traditional Rx

Therapy

Complement a Traditional Rx

Therapy

Fill Whitespace where there is no

Traditional Rx Therapy

Nutraceutical Spectrum

• Products can support the treatment of the condition or enhance the effects of traditional Rx therapy

• Product can provide new mechanisms of delivery or address issues traditional Rx therapies do not currently address

• Products can be used in place of traditional Rx products

Page 20: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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There are products already emerging globally, each experiencing varying degrees of success

Lessons Learned from Convergence

Company Condition Treated

Early Lessons Learned

Primus Pharma-ceuticals

Osteoarthritis

• Focused marketing on medical benefits to gain recognition

• Demonstrated lower treatment costs to gain reimbursement

• Unable to widely reach physicians and grow awareness

Nutricia (Danone)

Early Alzheimer’s Symptoms

• Struggling with regulatory positioning

• Evidence not yet strong enough to gain experts‟ support; Alzheimer‟s Society says it is costly and may have no long-term benefits

Targeted Medical Pharma

Fatigue & sleep

disorders

• Leverages the success of Sentra (AM/PM) brand to push additional OTC products with less medical claims

Abbott Laboratories

Several, including:

muscle and bone

deterioration

• Rebranded itself as a nutritional supplement

• Shifted focus from prescription medical food to an OTC product targeted at a broader audience

1. Note: Of the products listed, Ensure is the only one with presence in Canada at the present time

Page 21: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Strategic investments and non-traditional partnerships are driving innovation and changing the game

Nestlé has invested over $500M to create a standalone health

science business to help prevent and treat various medical

conditions such as heart disease and diabetes

Danone acquired Nutricia staking out a position as the leader in

healthcare nutrition products for elderly and pediatric care

Non-Traditional Partnerships

Strategic Investments

Sanofi recently partnered with Coca-Cola to launch a

line of beauty drinks in France called Beautific

Oenobiol

Page 22: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Discussion Topics

1) The Consumer Healthcare Market

2) The Battle for Consumer Healthcare

3) Convergence of Food and Medicine

4) Preparing to Win

Page 23: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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To compete in this battleground, companies need to be

proactive in 3 key areas

Regulation Collaboration Market Approach

Shape Regulatory

Environment

Identify Collaboration Opportunities across

CPG and Pharma

Create the

Market

Key Focus Areas

Page 24: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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With regulation in a state of constant change, it is imperative to proactively shape regulations

Regulation Still Developing

Increasingly Stringent Approval Processes

Growing Safety Concerns

Regulation Issues and Mitigation

1. Source: Bourne Partners Nutraceuticals Report 2013

The industry is still developing and it is crucial for product developers take an active role in influencing regulation

Approach all approvals with substantial scientific backing and track safety data before and after approvals to minimize regulatory roadblocks

Concerns with counterfeits and false medical claims enables those with true scientific backing to leverage their data to capture market share and/or justify premium pricing

Page 25: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Collaboration can unlock unique strategic advantages

Collaboration Across Industries

CPG / Pharma

Retailer

New Product Development

Supply / Manufacturing

Planning

Distribution

Merchandizing / Store Operations

• Leverage joint insights and resources to drive breakthrough

innovation

How could we jointly …

• Optimize the assets across distribution network to reduce total

delivered cost

• Pool resources and share best practices in procurement and

production planning to reduce total product cost

• Use collaborative in-store execution to drive improvement in

merchandizing programs/new launches

• Use Collaborative Business Planning (CBP) to link strategy with

execution across organizations

Page 26: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Consumers and providers lack the necessary understanding of newer products

Companies need to find ways to educate and create demand

CP

G

Ph

arm

a

Consumer-centric marketing to raise awareness and

adoption

Education of doctors on product benefits, when to prescribe, and

how to influence patients

Page 27: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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1. Does your team have the right capabilities to play in an

increasingly complex and regulated market?

2. Does your company have the right product portfolio to

address evolving consumer needs and win in this new

market?

3. Does your organization have the right go-to-market

strategy and operating model to lead the development of

the Consumer Healthcare market?

Questions for discussion

Page 28: Consumer Health Products Canada The Health Driven · PDF fileWinning the Battle for Consumer Healthcare . Consumer Health Products Canada – The Health Driven Consumer . 2 . ... Marketing

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Articles

Science Versus the Marketers in Consumer Healthcare

Mobilizing for Action in Consumer Healthcare

www.atkearney.com