12-Sydney Clark-OTC Market in Latin America
Transcript of 12-Sydney Clark-OTC Market in Latin America
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Sydney Clark | IMS HealthOctober 2013
OTC Market in Latin AmericaOverview and trends
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Source: IMS OTC Global Analysis, IMS MIDAS; *N.B. Trend break due to change in estimation methodology
7.5
9.7
7.57.1 6.9
5.5 5.3
6.5
4.34.6
2.02.2
4.84.4
5.9
5.1
6.6
7.7 7.7
5.4
6.6
5.8
11.6%11.1%
10.8% 10.7% 10.5% 10.6%10.8% 11.0% 11.1%
11.3%11.7%
0%
2%
4%
6%
8%
10%
12%
14%
0
2
4
6
8
10
12
14
16
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
V a l u e
G r o w
t h ( % )
Year on Year Value Growth & OTC Share of Total Pharma
MAT Q1 2013
Total Pharma Total OTC OTC Share of Total Pharma
Total Pharma = $913bn TotalOTC = $107bn
On a global perspective, OTC has been outgrowing Pharmasince 2008
Global
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OTC and consumer health products play an important role inprevention and reducing overall health care costs
Trend in society towards focus onpreventative health and nutrition
OTC as a means of reducing overallhealth care costs 1
Media campaigns heighten awareness ofunhealthy lifestyles
Growing number of advertisements,magazines and blogs for self-medication with vitamins, minerals and other dietarysupplements
Emerging markets following mature markettrends of adopting supplements as part of ahealthy diet
Payers are recognizing the long-term cost-benefits to preventative treatments
Many health insurance providersencourage active lifestyles and healthyeating as part of their membership schemes
As a result more companies are enteringinto the space which has now become aseparate market to just nutrition
The market is expected to continue withstrong growth
It is estimated that OTC medicines providea value of US$102 billion to the UShealthcare system
Each dollar spent on OTC medicines saves$6-7 for the U.S. healthcare system
240 million people in the U.S. currently useOTC medicines 60 million of themwould not seek alternative (e.g., Rx)treatment if OTC medicines were notavailable
If OTC medicines did not exist, an additional56k medical practitioners would needto work full-time to accommodate theincrease in office visits by consumersseeking prescriptions for self-treatableconditions
If OTC medicines were not available,additional Emergency Departmentvisits , primarily by patients on Medicaidand uninsured individuals, would drive upnearly $4 billion in healthcare system costs
Source: (1) Booz & Co. CHPA Study The Value of OTCMedicine to the United States, 2012
Global
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This shift of focus towards health & wellness has led tothe development of transversal market segments
Pharmaceuticals
NutritionPersonalCare
NutraceuticalsCosmeceuticals
Nutricosmetics
Topically applied, but contain
ingredients that influence thebiological function of the skin
Vitamins, herbs, various oils,and botanical extractstypically added
Manufacturer may not claimthat these products penetrate
beyond the skin's surfacelayers or that they havedrug-like or therapeuticeffects
E.g.: Stiefel (GSK),Galderma(Nestle/Lreal), ROC(J&J)
Often derived from food
products, provide medical orhealth benefits, includingthe prevention and/ortreatment of a disease
Typically s old in the medicinalform of capsule, tablet, powder,solution
High growth rates andattractive margins have fueledinterest from BigPharma /Food companies
E.g.: RB buys SchiffNutrition, Valeant buysSwiss Herbal and Probiotica,Nestle buys Pfizer Nutrition
Ingestible products containing ingredients such as botanical actives,enzymes, proteins, and vitamins that offer antioxidant benefits and that are
formulated and marketed specifically as beauty aidsE.g.: Inneov (LOreal), Imedeen (Pfizer), Oenobiol (Sanofi)
Global
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Source: IMS OTC Global Analysis, MAT March 2013
NorthAmerica
95%
5%
Japan
90%
10%
WesternEurope
88%
12%
APAC
85%
15%
LatAm
77%
23%
CEEMEA
75%
25%RXOTC
Share of OTC and Prescription market by region(retail channel, US$ basis)
In emerging markets, including LatAm, OTC represents agreater share of retail channel drug expenditures...
Reduced access tophysicians drivespopulation to seekOTC as 1 st line oftreatment
Largely non-reimbursed (out ofpocket) marketsfavor lower cost OTCalternatives (vis avis RX)
Long standingculture of self-medication in manyLatAm countries
Latam
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Source: IMS OTC Global Analysis
21 21
18 18
1422
13178
1126
12
0
10
20
30
40
50
6070
80
90
100
Global LatAm 2
Value Contribution (%) of Category to OTC Sales
All Others
Skin
Digestive
Pain Relief
VMS &Tonics
CCR
...despite lower availability of molecules with OTCalternatives
Examples of RX to OTCSwitches since 2000
Prilosec (omeprazole) $175myearly sales
Zyrtec (cetirizine) $150m yearlysales
Allegra (fexofenadine) $130myearly sales
Zocor Heart Pro (simvastatin) UK only, behind the counter
Latam
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LatAm region is a key contributor to growth in OTC
Source: IMS OTC Global Analysis
LatAm represents roughly 10%of the global OTC market
Latam
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The OTC market in LatAm totals USD11.4 billion andhas been growing at 15%
Source: IMS MIDAS, MAT Aug 2013Note: Ex-manufacturer MIDAS price level USD at constant exchange rates from Aug 2013
0,5(4,7%)
9,8
1,7(17,2%)
1,8(15,5%)
4,3(49,8%)
4,9(50,3%)
5,8
(51,1%)
1,4(16,5%)
2011
8,6
Others +8,2%
0,4(4,5%)1,2
(12,3%)0,9
(9,9%)
1,6(14,1%)
1,7(19,6%)
+14,9%
Venezuela +37,0%
2012
0,4(4,2%)
1,5(15,7%)
2013
Argentina +21,6%
Brazil +16,5%
11,4
Mexico +2,0%
1,7(14,6%)
LatAm OTC marketUS$ (billion)
CAGR13x11
LatAm
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Company performance per country is inconsistent, withlocals typically gaining share
Source: IMS MIDAS, MAT Aug 2013Note: Ex-manufacturer MIDAS price level USD at constant exchange rates from Aug 2013
LARank Corporation Sales(US$ MM) CAGR13x11 Bra Rank Mex Rank VenzRank Arg Rank
1 SANOFI 807 11% 2 4 6 9
2 HYPERMARCAS 725 13% 1 - - -
3 BAYER 544 11% 15 2 5 2
4 EMS 511 20% 3 - - -
5 GSK 478 7% 5 14 16 3
6 GENOMMA 478 21% 11 1 - 1
7 NESTLE 439 22% 10 8 2 27
8 J&J 420 7% 6 6 10 28
9 B.I. 411 10% 8 3 9 5
10 TAKEDA 320 15% 4 17 41 21
Other local players amongst Top 10 in countryAche Pisa Gr Farma Elea
Leti Andromaco
Roemmers
Bago
Leading OTC Corporations in LatAm
LatAm
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9
2011 2012
Generics
2013
+11,4%
Brands
93,1%
6,9%43,9
93,0%
7,0%48,9
93,3%
6,7%
54,4
2011 2012 2013
+13,3%
94,2%
5,8%4,1
95,5%
4,5%4,5
95,7%
4,3%5,2
Brazil OTC marketStandard Units (billion)
Brazil OTC marketUS$ (billion)
Source: IMS PMB MAT Sept 2013.Retail channel only. Prices at PPP price level. Constant exchange rate of 1 US$ = R$2,18
The OTC market in Brazil has grown double digits over thepast two years brands drive market growth
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Mix in OTC shifts towards higher value added categories andaway from commoditized segments
10Source: IMS PMB MAT Sept 2013.Retail channel only. Prices at PPP price level. Constant exchange rate of 1 US$ = R$2,18
0
5
10
15
20
25
30
35
40
-2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Dermo-cosmetics (763)
Ophthal. (237)
Nutrients (276)
A-A/F/U/Laxatives (392)
Muscle Relax (293)Cough & Cold (693)
Others (603) Analgesics (606)
Other Derm (292)
Other GI (405)
Vitamins & Sup. (684)
% Generics penetration
2 0 1 3 x 2
0 1 1 C A G R ( % )
Brazil OTC market growth by therapy areaUS$ (million)
Size of bubble represents size oftherapy area (US$ million)
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Despite lack of generics, competition in higher value addedsegments intensifies
11Source: IMS PMB MAT Sept 2013.Retail channel only. Prices at PPP price level. Constant exchange rate of 1 US$ = R$2,18
0
5
10
15
20
25
30
35
40
-2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Dermo-cosmetics (763)
Nutrients (276)
Cough & Cold (693)
Analgesics (606)
Other Derm (292)
Vitamins & Sup. (684)
% Generics penetration
2 0 1 3 x 2
0 1 1 C A G R ( % )
These 3 segments represent roughly 50% oftotal absolute growth since 2011
Derma-cosmetics Local players gaining space Genomma
(Cicatricure, Pointts), Hypermarcas, Biolab, Ache,others
Line extensions of sun protection and hidrationproducts
Nutricosmetics
Bepanthol
Nutrients mainly uptake of pediatric formulationsfrom MNC (e.g. Nestle, Danone, Abbott)
Vitamins & supplements Vitamin D (Depura, Addera D3, others) Multivitamins and Vit C few global brands
growing (e.g. Centrum, Redoxon); many localbrands gaining share (e.g. EMS, Marjan, Cifarma,Biolab, Cimed, Eurofarma)
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Lower growth segments partially driven by underlying shift inconsumer behavior towards niches
12Source: IMS PMB MAT Sept 2013.Retail channel only. Prices at PPP price level. Constant exchange rate of 1 US$ = R$2,18
0
5
10
15
20
25
30
35
40
-2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
A-A/F/U/Laxatives (392)
Cough & Cold (693)
Analgesics (606)
Other Derm (292)
% Generics penetration
2 0 1 3 x 2
0 1 1 C A G R ( % )
These 4 segments represent roughly 25% of total absolute growth since 2011
Analgesics Ample generic penetration Ibuprofen gains participation within treatment Combinations grow faster (e.g. Neosaldina, Lisador)
Cough & Cold Generics highly penetrated in select molecules (acetylcysteine, loratadine, ambroxol) Local multisymptom products outperform (e.g. Multigrip, Cimegrip, Decongex Plus) Increased usage of sodium based drugs (e.g. Rinosoro, Sorine, Maresis, Salsep , etc)
Other Derm Generics highly penetrated in select molecules (nystatin, ketoconazole, anti-bacterials/fungals) Genomma outperforms with Aspexia
A-A/F/U/Laxatives Generics highly penetrated
in select molecules(simeticone, dimeticone)
Increased use of herbalproducts
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0
0,2
0,4
0,6
0,8
1
0 1 2 3 4 5
LOWER
HIGHER
LOWER HIGHERLikelihood of occurrence on next 3-5 years
O T C M a r k e
t I m p a c
tPopulation
Aging
Farmcia Popular
program coverage
Association betweenIndependent pharmacies
Consolidation/Expansion of Chains
Income
Increasing
Private payerscoverage increasing Tax reduction
OTC return to back ofcounter
New Competitors
Switch RX
to OTC
Higher prescriptionscontrols
Higher price controls
Physicians inpharmacies
Private LabelExpansion
Source: IMS AnalysisNote: HEOR = Health Economics and Outcomes Research; DTC = Direct to Consumer Advertising
Several events could impact the future market dynamics
Pharmacistprescribing
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175
75
0
150
25
125
50
100
PMBForecasted
RDC44/2010
0
j a n /
1 3
j u l / 1 2
j a n /
1 2
j u l / 1 1
j a n /
1 1
j u l / 1 0
j a n /
1 0
j u l / 0 9
j a n /
0 9
j u l / 0 8
j a n /
0 8
250200
150
10050
S t d
U n i t s
( M i l l i o n s
)
L i s t
P r i c e
( B R L M i l l i o n s
)
25-30%
Antibiotics volume impact of 25-30%,with a higher list price mix
7-11%
Other Classes a higher impact couldbe expected, with winners and losers 1
0.2
Topical Anti-acnePreparations 0.3
Antitussives andExpectorants 0.6
Centrally ActingMuscle Relaxant 0.8
Non Steroidal
Anti Rheumatics1.0
Rx
Vitamins
OTC
Antacids andantiulcerants 1.1
1.1
Nasal Decongestant 0.1
Topical Antifungice
Pantozol, omeprazol
Several
Diclofenac, nimesulide
Torsilax, Tandrilax,Mioflex-A
Adapalene,Tretinoin
Ciclopirox,Isoconazole
Neosoro, Sorinan
Hedera Helix, Acebrophylline
Dorflex, Nevralgex,Sedalex
Eno,Estomazil
Several
ketoprofen, etodolac
Acetylcysteine, Ambroxol
Glycolic Acid + Salycilic Acid, Benzoyl Peroxide
Miconazole, Nystatin +Zinc
Sorine,Narix
Source: PMBNote: Molecules and/or Brands from medicines on the right chart are (non-exhaustive) examples. Preference forgrouping by molecules instead of brands excluding those cases where combinations would be unlikely to be shown inthe chart. (1) Figures from April 2013 MAT Sales list priced
14
Prescription retention enforcement is on the agenda and couldchange the drug consumption profile
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Continued consolidation in a relatively fragmented market Larger chains are planning to open new pharmacies (it is expected 320 new stores for
2013 considering just the top 3 chains), but they are going to face great challenges: To find suitable places in main cities Set up new business models in small cities (eg. Farmasil)
Entrance of Grupo Ultra through the aquisition of Extrafarma Independent pharmacies and small chains are looking for different business
models in order to achieve more benefits in negotiations and logistic efficiency Partnerships/Associations Participation in established franchises (eg . 26 out of 52 new Farmais stores were
independent pharmacies) Using specialization business models to deal with niches
Popular Business model that focused in the new Class C (part of the population that is risingits consumption range) in association or not with partners
Diabetes Compounding Personal & Beauty Care Nutrition
Regulation has been debated with possible significant impacts Limitation of marketed categories, traceability, destination of drugs residues, others
It is expected that distribution & retail will remain dynamic bythe next years
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Conclusion
OTC drugs play an important role in prevention and reduction of health
costs
OTC drugs represent a larger and increasing share of the pharmaceutical
market in emerging markets
There is still ample room for expansion
Therapy areas / molecule availability
Companies expanding their presence across the region
Brazil plays a predominant role within Latin America
All therapy segments grow, but consumption patterns are favoring
market segments of higher value
The outlook for the market is positive, with most potential future
events favoring increased usage of OTC medications
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Sydney Clark | IMS HealthOctober 2013
OTC Market in Latin AmericaOverview and trends
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