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Industry executives take the pulse of the consumer healthcare market

How can retailers best optimize health and wellness in their stores? Where are the consumer healthcare opportunities and where are potential headwinds? In the weeks leading up to the 2018 Consumer Healthcare Products Association Annual Executive Conference, March 11 to 14, in Aventura, Fla., Drug Store News assembled a virtual panel that included leading consumer healthcare company executives and thought leaders from CHPA and Kantar Consulting to give a frank assessment on what’s happening in the health-and-wellness aisles across America. 

Drug Store News: What’s the outlook for the consumer healthcare business in 2018?

Jeff Vernimb, vice president of global consumer health, Moberg Pharma North America: The outlook for OTC is not much different from prior years — low single-digit growth, steady but not particularly inspiring. Declining trends in brick-and-mortar traffic is concerning and adds new challenges.

That said, we are now in the strongest cough, cold and flu season in nearly a decade. This is when OTC shines. Retail convenience and strong brand selection deliver for the consumer; the shopper is motivated to be in store. In the short term, everyone wins — but will this lead to longer term traffic gains or just a short-term spike, and a future volume gap, should next year’s season return to normal levels?

Scott Melville, president and CEO, CHPA: The outlook for the OTC business in 2018 is quite good. While the overall rate of growth for the category has been in the low single digits for the past few years, I’m optimistic about both the near and the long terms. Longer-term, there has been progress in 2017 and this year to update and modernize the OTC monograph system, which is the regulatory framework overseeing most OTC medicines for the past 46 years. A modernized regulatory structure will be one of the greatest instigators of growth for OTC medicines. A big reason is that both the House and Senate bills include, for the first time, an incentive for OTC innovation under the monograph system — a period of market exclusivity to reward companies that assume the risk and invest the dollars to develop new treatments.

Also, Rx-to-OTC switch remains a very important factor for growth. Under the leadership of FDA Commissioner Scott Gottlieb, there is renewed momentum to move forward on the agency’s long-awaited Nonprescription Drug Safe Use Regulatory Expansion, or NSURE, guidance or proposed regulation. Manufacturers are excited to see it published, and how it might enable the switch of products using new technologies to assure safe use by consumers without a prescription. Publication is on the FDA’s agenda for 2018, and we hope to see it shortly.

Gary Downing, CEO, Clarion Brands: The outlook for the OTC business is good — but it’s essential to always look toward the future. Generation Z is here — understanding them, their needs and the way they want to consume information about their health and well-being are key. But you cannot ignore the millennials, Gen Xers or boomers. They are all still important. You need to know your audience, where they are in in their journey, what they care about and how to reach each one of them in the appropriate way.

Brian Owens, vice president, Kantar Consulting: According to our Kantar Consulting chief economist Doug Hermanson, we forecast consumer spending on OTC drugs will grow 4.4% in 2018 (+3.8% unit volume). According to Kantar Consulting Shopperscape, almost 50% of shoppers are extremely worried about healthcare expenses. I expect in 2018 this will translate into roughly 1-out-of-5 shoppers using more OTC product to be more proactive in their health care for themselves and family members. By 2020, every American household will spend $2 on services for every $1 on goods, and 2018 will be reflective of this shift in demand. Shoppers will be looking for more Ulta-like salon services experiences across retail, so OTC drug and other consumer goods companies should find ways to partner better with retailer assets, since shoppers are increasingly looking for more stress-free shopping experiences that reward both time and energy back to them.

Two tailwinds that will help propel OTC include technology and Amazon. As voice technology matures and artificial intelligent response becomes less generic, there will be more opportunities for OTC suppliers to provide outcome-based solutions. And as Amazon makes a bigger move into health care, both retailers and suppliers will need to become outcome-focused, which should help OTC brands as health regimens become part of the Amazon holistic health solution.

DSN: What are some of the headwinds facing purveyors of consumer healthcare medicines?

Scott Emerson, president, Emerson Group: For brick-and-mortar, e-commerce is not hurting us for that one Advil they buy on Amazon or But they are hurting us with the second or third item shoppers buy on that trip. At what point is brick-and-mortar willing to give up business to e-commerce and Walmart for the 70% of the brick-and-mortar industry that is not Walmart? When a heritage item is below the benchmark — meaning it has highly loyal shoppers — and brick-and-mortar retailers discontinue it, 57% of them will go to Walmart or e-commerce to get that brand. At what level of sales to loyalty is a retailer willing to give up the business? The sales they don’t mind giving up, but they lose the shopper, too. This year, we have to do everything we can to get it above the bar and make the retailer aware they’re just giving that business away.

Tim Toll, chief customer officer and general manager international, Pharmavite: Deep discounting within the VMS category mitigates the growth potential of the overall category. This keeps the average price per unit paid in the category from realizing its full potential; and it’s currently only at about plus 2% in the United States. Introducing more meaningful and transformative product innovation to the VMS category is one way of combating this challenge. Continuing to launch “me too” products contributes in fragmenting the sales and reducing overall productivity of the segment. There is an opportunity for manufacturers to identify white space or latent needs within the category. Enhanced innovation can help drive retail full-margin sales and reduce the heavy dependency on promotions to drive growth in the VMS category.

M’lou Walker, CEO, Matrixx Initiatives: Competition for OTC medicines comes from all the places we never would have considered 20 years ago. We are facing channel shifting, shifts in the path-to-purchase and sei
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