2013 IMS Asia-Pacific Insights Magazine-Issue 3

© 2013 IMS Health Incorporated or its affiliates. All rights reserved. IMS Asia-Pacific INSIDE THIS ISSUE • Keeping pace with the burgeoning Asia-Pacific oTc market • HTA: The new face of Asia Pacific and the emerging role of pharma companies in the future of healthcare • Understanding the paradox of Asia’s pharma market to ensure growth success • Price-volume strategies and differential pricing – strategic levers for driving growth by increasing affordability in Asia Insight Issue 3 | 2013 2 WelcoMe letter ............................................................................................................................... 3 KEEPING PACE WITH THE BURGEONING ASIA-PACIFIC OTC MARKET ....................................................................... 4 OTC drugs now stand in the spotlight. Nowhere is this more true than in Asia Pacific, where for the third consecutive year OTC sales in the region (excluding Japan) significantly outpaced the global OTC market. See the opportunities driving growth in this market. HEAlTH TECHNOlOGy ASSESSMENTS: THE NEW FACE OF ASIA PACIFIC ANd THE EMERGING ROlE OF PHARMA COMPANIES IN THE FUTURE OF HEAlTHCARE ................................................................................................. 11 The need to control rising health care costs while meeting the demands of increasing numbers of patients has forced national health authorities to respond with new cost containment measures. See how Asian markets are seeking involvement from pharma companies in the development of the HTA process and how they can strengthen their collaborations with HTA authorities. UNdERSTANdING THE PARAdOX OF ASIA’S PHARMA MARKET TO ENSURE GROWTH SUCCESS .................................... 15 Asia is a series of submarkets, grey areas, and paradoxes. As a result, there is the need to temper discussions of the region’s growth potential with a recognition of the many challenges presented by its diverse market conditions. See why companies need a well-built, strategic framework that properly identifies – and quantifies - opportunities and growth levers in order to lay the foundation for an effective market-entry strategy. PRICE-VOlUME STRATEGIES ANd dIFFERENTIAl PRICING – STRATEGIC lEVERS FOR dRIVING GROWTH IN ASIA............. 21 Cohesive price-volume strategies can effectively drive awareness, accessibility, and affordability. learn how to play, where to play and what constitutes winning when it comes to price-volume strategies in Asia. Contents 3 Welcome letter Today at IMS Asia-Pacific, our teams are at work in dozens of countries assessing trends, building strategic frameworks, identifying opportunities and helping healthcare companies from all around the world succeed in this dynamic environment. It is our privilege to be leading the conversation, and to be on the cutting edge of what is new and innovative in a region that we believe offers enormous opportunity. Throughout 2012 we were enthused by trends suggesting that the pharmaceutical market in Asia will likely reach USd $350 billion in 2016, comprising 30% of the global pharmaceutical market and driving close to 50% of global, incremental growth through 2016. At the same time, we watched as over-the-counter (OTC) sales in the APAC region yet again significantly outpaced global OTC growth, despite the declining rate in the global OTC trend for the past two years. In fact, according to the September 2012 IMS OTC Global Analysis, MAT (Moving Annual Total), the APAC region (excluding Japan) grew by 16% over 2011— a remarkable 14 percentage points higher than the global OTC market growth rate. Asia Pacific continues to be a region with significant opportunities for exploration. And so, when we sat down to plan the 2013 issue of our annual IMS Asia-Pacific Insight Magazine, we looked for ways to illustrate both the challenges and the opportunities ahead. The stories you’ll find here explore the submarkets and hybrid conditions of the Asia-Pacific region and outline the best approaches to building meaningful frameworks that address key issues in awareness, accessibility, and affordability. They look at the price-volume strategies that are making a difference. They explore surging OTC markets as well as the opportunity for pharmaceutical companies to play an integral role in the health technology assessment tools that have become central to pharmaceutical planning throughout this region. As always, our stories represent the in–depth industry expertise of IMS Health in collaboration with our business partners and clients. We look forward to partnering with our healthcare industry colleagues in 2013 to continue to identify opportunities in the fast growing Asia-Pacific markets. Sincerely, Andy liu President, Asia-Pacific and china 4 5 In recent years, worldwide sales of over-the-counter (OTC) drugs—medicines sold without the aid of a prescription or the governance of a physician—have surged. Self- diagnosis and self–medication have created momentum, as has the greater availability of healthcare information, thanks to media ranging from print to TV. Additionally, OTC drugs typically carry fewer side effects and warnings than prescription medicines, tend to be more affordable, and can help to manage acute symptoms such as pain and cough—all of which have been key factors in the market’s growth. Keeping pace with the burgeoning Asia-Pacific OTC market Once a secondary line of business for many multinational pharmaceutical companies, OTC drugs now stand in the spotlight. Nowhere is this more true than in Asia Pacific, where for the third consecutive year OTC sales in the region (excluding Japan) have significantly outpaced the global OTC market growth. In fact, according to the September 2012 IMS OTC Global Analysis, MAT (Moving Annual Total), the market grew by 16% over 2011—a remarkable 14 percentage points higher than the global OTC market growth rate. Furthermore, as of September 2012, OTC sales in the Asia-Pacific region account for 21% of global OTC sales. “OTC drugs are the talk of the industry here in Asia Pacific,” confirms Katherine Te, Senior Manager for Consumer Health, Asia Pacific. “General pain relief products, expectorants, skin treatments, adult multivitamins, asthma products and anti-allergens, cold and flu remedies, anti-diarrheals and calcium supplements have all experienced consistent double-digit growth since 2010; and many companies have been reengineering their business models to capitalize on the trend. They’re also recognizing the opportunity inherent in non-reimbursed markets, especially within young healthcare infrastructures.” While local companies have always focused resources on this business space, what’s new and game-changing is the increasing number of multinational companies (MNCs) such as GlaxoSmithKline, GlOBAl OTC OTC MARKET TRENdS (PAST 3 yEARS) IN % BASEd ON USd 2010 0 5 10 15 20 25 2011 2012 9 10 2 22 21 16APAC EXCl. JAPAN GlOBAl OTC APAC EXCl. JAPAN FIGURE 1 Source: IMS OTC Global Analysis, MAT September 2012 FIGURE 2 Source: IMS OTC Global Analysis, September MAT 2012 SHARE OF SAlES VS. SHARE OF GROWTH IN % BASEd ON USd SHARE OF SAlES 21 100 79 0 SHARE OF GROWTH 120 100 80 60 40 20 0 APAC EXCl. JAPAN REST OF WORld REST OF WORld APAC EXCl. JAPAN 21 100 6 Johnson & Johnson, Pfizer and Sanofi, who are now actively exploring this market. leveraging both their own market knowledge, and a general consumer preference for well-known brands, these firms are extremely well-positioned to capture the opportunity here. UNdERSTANdING THE MARKET Developed OTC Markets An excellent way to gain insight into this market is to look closely at developed OTC markets—those markets in which OTC advertising and self-medication are established norms. Australia, Japan, Singapore and the Philippines all fall into this category and are distinguished by the following characteristics: • Self-medication is established as a norm in the consumer mindset, and is reinforced by advertising messages. • Products are highly accessible and consumers are clear in their preference at point-of-sale. In Australia, for example, access to OTC products is quite liberal, with point-of- sale channels ranging from the traditional pharmacy to supermarkets. In these developed markets, the goal should be to increase the depth of coverage within existing channels (via greater share of shelf or optimized inventory levels) while simultaneously tapping a new user base. This can be done in the following ways: • Communicate brand information to as wide a base as possible, including doctors and pharmacists in addition to consumers. • Pay particular attention to geographical differences and trends in distribution and availability. • Build a distribution model that is able to capitalize on expanded point-of-sale opportunities and ensure constant stability in stock levels. • Saturate traditional media before experimenting with new media, unless otherwise dictated by consumer/market dynamics. The tendency to experiment with new media too soon is a common pitfall. It can wreak havoc on the overall marketing mix, especially if the other core elements such as channel-specific messaging and product availability have not yet been established. Developing OTC Markets The landscape, however, is significantly different in developing OTC markets, where both consumer habits and the trade regulatory environment are still works- in-progress. Here, self-medication exists but it is heavily constrained by advertising regulations and government reimbursement practices. Interestingly, governments are becoming increasingly aware of the variable rates of education among their populations and so they have committed to putting more regulatory safeguards into place to protect their citizens against misleading messaging. India, China, Vietnam, Indonesia, Thailand, Malaysia and South Korea all fit this profile. Each is further characterized by big populations, increasingly savvy consumer awareness, greater purchasing power, new product introductions and wider accessibility to products in pharmacies and drugstores. In South Korea in particular, changes in government regulations related to the sales channels, not to mention an increased desire by pharmaceutical companies to invest in OTC, have begun to exert a significant influence on consumer behaviors and local market growth. Another significant characteristic of developing OTC markets is the prevalence, and preference, for traditional medicines over western medicines. Some local companies have been quick to address this dynamic by launching products that use familiar, traditional ingredients in a more modern delivery mechanism, such as herbal supplement pills to treat common pains or coughs. In the Philippines for example, the cough brand ASCOF® is derived from the herb Vitex Negundo, or lagundi, which is a local cure-all remedy. ASCOF® was ultimately able to secure leading a position in the cough category by capitalizing on its popularity as a natural home remedy. FIGURE 3 Source: OTC Global Analysis, September MAT 2012 REST OF APAC 0 105 15 20 0 5 9 7 1 4 16APAC Market excl. Japan Rest of APAC Other OTC VMS-Others Pain Relief-Gen Systemic Other Skin Treatment Multivitamin-Adult CH-IN-SK-Id-AU 18 35 16 12 0 2010 30 40 15 14 16APAC Market excl. Japan Selected 5 Markets Other OTC VMS-Others Pain Relief-Gen Systemic Expectorants Other Skin Treatment CATEGORy GROWTH OF TOP OTC MARKETS GROWTH IN % 2012 VS 2011 KeePIng PAce WItH tHe burgeonIng ASIA-PAcIfIc otc MArKet 7 Within the Asia-Pacific region, the top 5 OTC markets —China, India, South Korea, Indonesia and Australia— are growing collectively at 18% as of MAT September 2012. In these markets, the top 10 OTC categories have grown by double digits vs last year. The rest of the Asia-Pacific region also represents attractive opportunities, collectively growing at a rate of 9%, still above the global growth rates. GAINING SUPREMACy IN THE OTC MARKET Potential success factors across the Asia-Pacific OTC market differ not just from country to country, but also from category to category. The decision to enter a specific category should thus be tempered by the local environment, as some categories perform better in one country compared to another. Even aesthetic adjustments are necessary; brand messaging can certainly determine a product’s success, and packaging can play an essential role in consumer trials and continued preference. Adapting global positioning to fit local nuances is, therefore, a prerequisite for OTC companies hoping to make the most of the OTC drug trend across this diverse region. In theory, many elements of a successful strategy may seem obvious, and as such they are often taken for granted. Paying attention to each of these strategic initiatives, however, is absolutely critical to cultivating a meaningful and profitable presence: • Effective brand-awareness campaigns. • Variation of pack size, so that consumers can be introduced to a product through trial-sized portions. • Smart utilization of all media—TV, print, radio, and digital—to engage consumers. • dominant shelf presence and availability coupled with promotional efforts aimed at both trade partners and consumers. • Smart pipeline management that continually reinvigorates brands with new flavor variants and/or similar product extensions. • Effective communications with physicians and pharmacists, who play a key role in securing brand value, especially for new products. Indeed there is no one-size-fits-all strategy, no single formula for success, and the subtle differences are often the most essential ones. Consider the branding of vitamins. In Europe and the Americas, positioning tends to focus on providing quality of life through balanced nutrition; in Asia, however, the same brand might best be positioned as one capable of improving performance or giving more energy in pursuit of a better quality of life. And so flexibility and ingenuity are key in purposefully adapting global strategies to local conditions. Successfully tapping into developed OTC markets in particular also requires a certain level of creativity in expansion strategies and the willingness to look at new distribution channels to secure greater access and awareness. “We’re talking about supermarkets, convenience stores, health-food stores, gyms, and innovative co-promotion deals” explains Te. “And we’re talking about tactics that may have a longer payback horizon but will eventually help sustain the brand image and stave off market-share erosion by new players.” With the rising popularity of social media, OTC companies are also encouraged to explore an alternative medium to reach their target audience in a more cost-effective way compared to traditional media. Medicines ranging from cough suppressants to vitamin supplements can utilize social media to engage their customers and gain valuable insights on what drives their purchasing behavior. Xenical®, for example, offers a forum on Facebook to connect with both existing and potential users. They have also used this medium effectively to announce promotional efforts and gain feedback about consumer preferences and concerns. However as mentioned, such a move must be carefully aligned with the rest of the brand communications strategy, and should follow a saturation of traditional media, where return can be more accurately forecasted. Finally, OTC companies in developed OTC industries in Asia-Pacific markets should also consider driving preference among existing customers through the introduction of new, conveniently sized packs, designed to encourage out-of-pocket product trials. FIGURE 4 Source: IMS analysis GROWTH OPPORTUNITIES FOR dIFFERENT MARKET MOdElS developing OTC markets Increase depth of coverage within existing channels Create new market space via thought leadership Adapt and localize best in class strategies Established OTC markets Increase access via new channels Maximize share of wallet via new packs Expand scope via new line extensions 8 Consider Strepsils®, a line of throat lozenges, which are marketed in packs of just two in the Philippines and are therefore ideally suited for individual, as-needed purchases. However, though smaller pack sizes are often a smart choice, consumer expectations —and willingness to experiment— vary by country and pack sizes should differ accordingly. OTC AS A SUSTAINABlE GROWTH AREA There’s no doubt that the OTC market will continue to thrive within the Asia-Pacific region. As has been demonstrated in other parts of the world, as consumers become more educated they are increasingly motivated to find answers and treatments for themselves, and are highly aware of cost and convenience benefits. It is important to remember, however, that OTC portfolios in Asia Pacific cannot —and should not— be managed as traditional pharma products. This is a dynamic market based on seasonal and often acute ailments; consumer behavior varies on a weekly or even daily basis as immediate needs change. Access and availability are also key drivers of success, as the product must be available during that narrow window of time when the consumer is in need. And ultimately companies must constantly benchmark their brand’s success against both internal and external measures so that they can continue to adapt and grow. “The OTC market is poised to enter into a dynamic growth era” concludes Te. “The opportunity to profit from this segment has never been clearer.” KeePIng PAce WItH tHe burgeonIng ASIA-PAcIfIc otc MArKet 9 With the right spark of insight, a bright future in the Consumer Health market is at your fingertips The Consumer Health market isn’t just on the rise – it is one of the fastest growing markets in the pharmaceutical sector. As this market expands, timely and reliable marketing intelligence is mission-critical in evaluating product performance, anticipating competitive threats and validating strategic plans. So, do you have what you need to maximize your business potential in the Consumer Health market? IMS Consumer Health AnalysisTM provides the insights necessary to understand critical market dynamics and efficiently identify opportunities for growth – on a national, regional and even local scale. And now, it is available in Malaysia, Thailand, Philippines and South Korea. Contact us now for a live web demonstration! www.imshealth.com/cha/apac apac.info@imshealth.com For more information, please contact us at: 10 11 In 1999—more than a decade after Canadian lawmakers introduced legislation designed to help evaluate the safety and efficiency of healthcare treatments, and seven full years after Australia introduced its own formal guidelines for pharmaceutical reimbursement—the National Institute for Health and Clinical Excellence (NICE) was unveiled in England and Wales. As an advisory body, NICE was created “to reduce variation in the availability and quality of NHS treatments and care” and to “help resolve uncertainty about which medicines, treatments, procedures and devices represent the best quality care for patients and the best value for the NHS.” It would soon become one of the most widely discussed health technology assessment (HTA) programs in the world. Health Technology Assessments: