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Bulletin Publishing Group is a division of OTC Publications Ltd Registered Office: 4 Poplar Road, Dorridge, Solihull B93 8DB, UK. Registered in England No 2765878 OTC29-11-13p1Draft_OTC15/11/2005 p1&24 26/11/2013 16:12 Page 1

29 November 2013

COMPANY NEWS 3 PGT expandsVMS reach Endo to pay US$1.6 billion 3 for Canada’s PaladinLabs BioGaiastrikes Braziliandeal 3 withSwisse Wellness deal MerckKGaA to invest 4 in Consumer Health Celesio’s European network 5 GT Healthcareisset to expand signifi- collaboration is part of our DNA,”the spokes- moves closer Pcantly its reach in the global vitamins, person pointed out. “With so much innovation SalesofBranded Products 6 minerals and supplements (VMS) market in the healthcare market, there are manypeo- riseatStada after signing an exclusive licensing agree- ple out there doing interesting things that could Prestige Brands eyes 7 ment with Australia’sSwisse Wellness. complement our portfolio and would benefit global acquisitions Under the terms of the deal, PGT –the in- from our unique capabilities.” GNC sees growth across 8 ternational OTCjoint venture between Procter Outlining what PGT waslooking for,the allits businesssegments &Gamble and Teva –will roll out more than spokesperson said the companywas happyto KerasalNeuroCream gets 9 100 of Swisse’sVMS products in “all markets hear from companies which had a“novelOTC wider distributioninthe US across Asia, Europe and Latin America”. The product, innovative packaging solution, or tech- Valeant wantsOTC brands 10 range is already available in Australia, New nology or service” that would improve PGT’s to grow in Emerging Markets Zealand and the US. “manufacturing and go-to-market capabilities”. Perrigolines up rival 11 The move is PGT’sfirst major global deal PGT was“especially interested in the respi- to OTCNasacort since it wasestablished just overtwo years ago ratory,digestive wellness and VMS categories”, (OTC bulletin,16November 2011, page 1). the spokesperson added, butwas “open to op- GENERAL NEWS 12 PGToperates essentially in all markets outside portunitiesinmanyother self-care categories”. of North America and also develops newbrands Explaining the rationale behind the tie-up, Health Canada proposes 12 for the North American market. Teva is acting PGTand Swisse said that the deal would com- omeprazoleOTC switch as manufacturer and supplier both for the PGT bine both firms’ “core strengths and capabil- EFSA opinion giveshope 13 to botanicals business and Procter &Gamble’sNorth Amer- ities”. This would enable the rapid expansion ican OTCbusiness. of Swisse-branded VMS products into new Sanofi sues FDAtoprevent 16 releaseofNasacortdetails Aspokesperson for PGT told OTC bulletin countries, “creating anew global ‘megabrand’”. that the companywas on the look out for fur- The collaboration would benefit from “the WSMI head sees evidence 17 as keytoboosting self-care ther deals similar to the one struck with Swisse. deep consumer understanding, unrivalled mar- “PGT Healthcare is ‘open for business’ and ■ Continued on page 27 MARKETING NEWS 18 McNeiltosupportGerman 18 launchofNicorette Spray Meda canbackMidNite claims 18 CFR sees OTC synergies with Adcock Reckitt focuses on twins 19 TC synergies worth US$80 million (C59 Alejandro Weinstein, significant synergies could to highlight E45difference Omillion) are among at least US$440 mil- be unlocked by bringing Adcock’s“cost-com- Sanofi scores Cenovis tie-up 19 lion in total sales and cost synergies that CFR petitive”analgesic, digestive and cold and flu Blackmores encourages 20 Pharmaceuticals believesitwill be able to un- brands into the US$12 billion Latin American Australians to stress less lock if Adcock Ingram’sshareholders accept a OTCmarket that had grown by 12% per year ZAR12.6 billion (C919 million) binding take- on average between 2007 and 2012. FEATURES 22 overoffer for the South African company. Noting that the Chilean company’sK2con- Industrylooks for more 22 At present, shareholders representing 29.3% sumer healthcare division had generated aturn- from outsourcing of Adcock’svoting shares have givenirrevo- overofUS$82 million last year,Weinstein com- Synergies spell trouble 24 cable undertakings to back the deal, while Pru- mented: “CFR’sOTC portfolio is currently for OTC firms dential –which owns a7.5% stake–has given positioned towards higher-income consumers aletter of support. In total, CFR claims around and does not target the mid-to-lower end of REGULARS 45%ofAdcock’sshareholders have indicated the market.”Introducing CFR’sOTC brands support for the offer.But one of Adcock’smajor into South Africa, he added, would represent Events – Our regularlisting 21 shareholders, South Africa’sPublic Investment “additional upside”. People – Bootsexpands itsUKteam 27 Corporation (PIC), has voiced its opposition. Of the targetted US$440 million in total with Walgreens’executive According to CFR’schief executive officer, ■ Continued on page 8

OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 3

COMPANY NEWS OTC

DistributionAgreements Mergers&Acquisitions BioGaia strikes Endo to pay US$1.6 billion Brazilian deal for Canada’s Paladin Labs ioGaia’sprobiotic drops and tablets will Bsoon be available in Brazil, after it signed ndo Health Solutions has agreed to pay adistribution agreement with local pharma- EUS$1.6 billion (C1.2 billion) to acquire ceutical companyAché. Paladin Labs, the Canadian speciality pharma- Underthe terms of the deal, Aché has the ceuticals firm that holds acontrolling 61.5% exclusive rights to sell in Brazil BioGaia’sPro- stakeinSouth Africa’sLitha Healthcare. Tectis baby drops and ProTectis tablets con- The CA$77.00 (C55.16) per share offer –to taining theprobiotic Lactobacillusreuteri. be conducted through anewly-formed Irish Both thedrops and tablets would be co- holding company–represents a20% premium branded, the Swedish probiotic specialist point- overPaladin’sclosing share price on 4Novem- ed out, with thelaunch planned for 2014. ber of CA$63.91. Commenting on the agreement,Peter Roths- “Paladin’sprovenCanadian franchise, robust child, BioGaia’spresident, said he was“con- near-term pipeline and emerging markets busi- AcquiringPaladin Labs will give Endo arange of OTC brands, including theTempra analgesics line vinced” that Brazil would become one of the ness complement Endo’sUSstrengths,”the US firm’s“most important markets within the not companyinsisted. uct; Plan Bemergencycontraceptive;Tem- toodistant future”. Highlighting the Canadian firm’s“proven pra paediatricpainkiller range; VagiSense OTC Earlierthis year,BioGaia announced it track record of acquiring and in-licensing inno- vaginal infection screening test; and Zinco- would be devoting time and resources to find- vative newproducts and developing internation- faxnappy-rash line. ing distributors in the so-called BRIC countries al growth platforms”, Endo’spresident and Ayear ago, Paladin snapped up the exclusive of Brazil, Russia, India and China (OTC bul- chief executive officer,RajivDeSilva, said the rights to sell DynamiclearAustralia’s natural letin,10May 2013, page 10). deal would “accelerate Endo’stransformation OTCtopical cold-sore treatment Dynamiclear In September,Rothschild revealed that this from an integrated health solutionscompanyto Rapid in Canada for an undisclosed sum (OTC strategywas “starting to pay off”, following atop-tier global specialityhealthcare leader”. bulletin,26October 2012, page 3). adistribution deal with Chinese firm Beijing Under the terms of the stock-led transaction, The companyisalso awaiting approvalto Keyuan Xinhai Pharmaceutical (OTC bulletin, Paladin –which owns acontrolling stakein launch the Travelan OTCproduct for prevent- 13 September 2013,page 7). Mexico’sLaboratorios Paladin –will continue ing travellers’ diarrhoea in its home market. OTC to be aseparate operating companyunder its Paladin acquired exclusive rights to Travelan in current management team, led by chairman Canada, Latin America and Sub-Saharan Africa IN BRIEF and founder Jonathan Ross Goodman. The from Australia’sImmuron in November 2011 firm’sCanadian operations will continue under (OTC bulletin,30November 2011, page 7). ■ HEALTH IMPACT has signed adeal to the Paladin Labs name. Paladin reported second-quarter 2013 sales distribute anumber of its skincare and food Endo expects to realise US$75 million in up by 41% to CA$52.3 million. Earnings be- supplement products in Thailand through the annual post-tax operational and tax synergies fore interest, tax, depreciationand amortisation Swiss ‘market expansion services’ firm DKSH. after it closes the deal in the first half of 2014. (EBITDA) grewby32% to CA$22.7 million. Under the agreement,DKSH will provide ware- Paladin markets anumber of OTCbrands US-based Endo focuses on branded and housing, distribution and other services. in Canada, including the Aminosense amniotic generic pharmaceuticals, devices and services. OTC fluid leak detection kit; Emtrix nail-care prod- OTC

29 November 2013 Number 413 Advertising enquiries: [email protected] Terms &Conditions: No part of this publication may be copied, reproduced, stored in aretrievalsystem, distributed or Individual subscriptions: Editor: Matt Stewart transmitted by anymeans, including electronic, mechanical, Asubscription to OTC bulletin includes this hard-copynews- photocopying or recording, without the prior written permission Editor-in-Chief: Aidan Fry letter published 20 times ayear –twice monthly,except of the publisher,orunder the terms and conditions of aGlobal Production Editor: Jenna Lawrence monthly in July,August, December and January,and de- Site Licence or of alicence issued by the Copyright Licensing livered by air mail –and afree weekly email newsflash Agency(CLA) in London, UK, or rights bodies in other countries Assistant Editor: Marie McEvoy news@OTCbulletin published 45 times ayear.Annual sub- that have reciprocal agreements with the CLA. Neither may this Business Reporter: TomGallen scriptions in Europe cost £685.00 (additional copies at the publication be exported, distributed or circulated by anymeans Contributing Editor: David Wallace same address £385.00); outside Europe £715 (£415). Single outside the staffwho work at the address to which it is sent by copies cost £50 each. Subscription rates may be adjusted the publisher without the prior written permission of the publisher. Advertising Controller: Debi Minal to coverany period and can be backdated. Subscriptions may While due care has been taken to ensure the accuracyofinform- Director of Sales &Marketing: ValDavis only be cancelled at expiry. ation contained in this publication, the publisher makes no claim Corporate subscriptions: that it is free of error and disclaims anyliability whatsoever Awards Manager: Natalie Cornwell for anydecisions or actions taken as aresult of its contents. Managing Director: MikeRice Global Site Licences are available to companies. These pro- vide in-house electronic access for stafftoOTC bulletin ©OTC Publications Ltd. All rights reserved. OTC bulletin® is OTC bulletin is published by OTCPublications Ltd, and [email protected] ask for aquotation. Such registered as atrademark in the European Community. 4Poplar Road, Dorridge, Solihull B93 8DB, UK. licences are supplied strictly on the condition that both pub- ISSN 1350–1097. Tel: +44 1564 777550. Fax: +44 1564 777524. lications are the intellectual property of the copyright holder, Companyregistered in England No 2765878. Email: [email protected] OTCPublications Ltd, and are protected by copyright, trade- Printed by Warwick Printing CompanyLimited, Website: www.otc-bulletin.com mark and other laws. Leamington Spa CV31 1QD, UK.

29 November 2013 OTC bulletin 3 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 4

OTC COMPANY NEWS

Third-QuarterResults Merck KGaA to invest in ConsumerHealth

erck KGaA has made “substantial pro- Business Third-quarter Change EBIT Change Mgress” in returning its Consumer Health sales (C millions) (%) (C millions) (%) division to agood levelofprofitability and is ready to restart investment to help growthe busi- Merck Serono 1,483 -1.9 274 +80.3 ness, according to Stefan Oschmann, member Merck Millipore 639 -0.6 67 -1.5 of the executive board responsible for Merck Performance Materials 406 -9.0 177 +7.9 Serono and Consumer Health. Consumer Health 131 +7.0 21 >100 Speaking shortly after Merck reported arise Corporate and others ––-57 – in Consumer Health’ssales and earnings in the third quarter,Oschmann said the company Total Merck 2,659 -2.3 482 +51 would nowlook at howbest to support the Figure1:Merck KGaA’s sales and EBIT in the thirdquarter of 2013 (Source –Merck KGaA) organic growth of the division’s“strong con-

sumer brands, particularly in emerging markets” at developing at least three strong brands, gen- Rest of World where theyhad “significant potential”. erating aminimum of 3% total share per key 3% North Emerging America Udit Batra, Consumer Health’spresident and market, focusing on 20 strategic investment Markets <1% chief executive officer,said the third-quarter markets,”Merck revealed. 28% performance confirmed that its focus on “build- Six of the firm’seight “strategic brands” ingstrong global and regional brands, develop- –Bion, Cebion, Femibion, Kytta, Nasivin and ing arobust innovation pipeline and driving Sangobion –had grown at double-digit rates growth particularly in emerging markets” was in the period, Merck said, and had gained mar- delivering consistentresults for the business. ketshare in the division’s“keycountries”. This Restructuring measures introduced by Batra had been due to improvedresource allocation Europe twoyears ago substantially to reduce Consumer and tightly-managed expenses, Merck noted. 68% Health’sproduct range and focus on promising From ageographic perspective,all regions markets were “increasingly paying off”, Merck except for Rest of World posted an increase in Figure2:Sales by Merck KGaA’s Consumer Health noted. These changes had resulted in a“more sales in the third quarter. Carebusiness in the thirdquarter of 2013 – C131 profitable business model”, it added. In Europe –Consumer Health’slargest mar- million –broken down by region (Source –Merck KGaA) Speaking to OTC bulletin in April, Batra ketinterms of sales (see Figure 2) –turn- mins brand had had a“visibly positive”effect said that operational discipline, afocus on costs, overadvanced by 10.5% to C89.5 million. The on the country’ssales during the three months, and mining the potential of acore group of rise had been drivenbythe German and French Merck reported. brands in keyregions, would help re-establish markets, Merck said, which had compensated In France, growth had been drivenbyin- the Consumer Health division as aleader in the forthe “weak performance” of its UK subsid- creased sales of seasonal products such as the global marketplace (OTC bulletin,26April iary SevenSeas. Apaisyl anti-itch brand, Merck revealed, com- 2013, page 18). In 2012, Merck announced the closure of bined with the launch of its Bion Energie Con- Implementationofefficiencymeasures – its SevenSeas manufacturing facility in Hull, tinue vitamin brand during the three months. such as lowering its logistics and salesforce ex- UK (OTC bulletin,26October 2012, page 7). Sales in Emerging Markets edged up by penses –had improvedthe division’scost struc- Merck said that the closure, coupled with the 0.4% to C36.9 million, with growth stifled by a ture, Merck pointed out, and led to a“visible in- discontinuation of aportion of SevenSeas’ UK- negative currencyeffect of 20%. Organic growth crease in profitability” during the third quarter. sourced portfolio, would “lower the sales base of 20.3% in the region had been due to its Bion, Consumer Health’s earnings before interest in Europe” in 2013 (OTC bulletin,26April Cebion and Sangobion vitamin brands, Merck and tax (EBIT) surged by 156% to C21.1 mil- 2013, page 19). said, plus its Nasivin nasal spray. lioninthe third quarter,with sales advancing The launch of an odourless version of the Pulling out of the Canadian market earlier by 7.0% to C131 million (see Figure 1). company’sKytta joint-carebrand in Germany this year effectively ended Consumer Health’s “The companyispursuing astrategy aimed and a“strong demand” for its Femibion vita- interest in North America. Nevertheless, due to afavourable comparison with the prior-year quarter,sales in the region increased dramati- cally by 73.5% to C0.6 million. IN BRIEF Sales in the Rest of World region had de- ■ WALGREENS has completed its acquisi- ■ CHURCH &DWIGHT said its sales had clined by 6.8% to C4.0 million, Merck reported, tion of US regional drugstore chain Kerr Drug movedforward by 11% to US$805 million due to a“significant” currencyexchange im- foranundisclosed sum. The deal –announced (C596 million) in the third quarter of 2013, pact. Excluding the currencyeffect, the region in September (OTC bulletin,27September “drivenlargely” by the Avid Health vitamins, had posted organic sales growth of 10.1%. 2013, page 3) –gives Walgreens 76 retail stores minerals and supplements (VMS) business it Consumer Health accounted for 5% of located across the US state of North Carolina, acquired in October 2012 (OTC bulletin,14 Merck’stotal third-quarter turnover, which fell along with Kerr Drug’sspecialitypharmaceu- September 2012, page 1). by 3.1% to C2.75 billion. ticals operation. OTC OTC

4 OTC bulletin 29 November 2013 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 5

COMPANY NEWS OTC

Nine-MonthResults Celesio’s Europeannetwork moves closer

ubstantial progress” had been made by Business Nine-monthsales Change EBITDAChange “SCelesio with the pilot phase of its pro- ( C millions) 2012/2013 (%) (C millions) 2012/2013 (%) posed European pharmacynetwork under the PharmacySolutions 13,477 -4.6 273 +2.5 LloydsPharmacybanner in 2013, according to the pan-European wholesaler and retailer’schief Consumer Solutions 2,515 -2.2 189 -6.7 financial officer,DrMarion Helmes. Other ––-63 – Speaking as the firm prepares itself to be- Total Celesio 15,991-4.2 399 +1.1 come part of US pharmaceutical wholesaler McKesson (OTC bulletin,8November 2013, Figure1:Celesio’s sales and earnings beforeinterest, tax, depreciation and amortisation (EBITDA) from continuing operations in the first nine months of 2013, broken down by business (Source –Celesio) page 1), Helmes pointed out that Celesio had opened 80 pilot pharmacies across anumber of tive currencyeffects. Adjusted for portfolio and sio noted, while earnings had also grown “sig- European markets during the past nine months currencyeffects, turnoverhad movedforward nificantly” thanks to cost-saving measures. and had nearly reached its target of 95 pilot by 2.5%, the firm pointed out. Celesio’sfledgling Swedish pharmacychain stores by the end of the year. Sales at the Lloydspharmacychain in the had also fared well in the period, the company Eventually,Celesio plans to rebrand all of its UK –which accounts for 66% of Consumer said, thanks to abetter product mix and price 2,177 retail pharmaciesacross six European Solutions’ turnover–had been held back, Cele- increases. Rebranding the Swedish stores to countries under the Lloyds banner as part of its sio said, by government measures. LloydsPharmacywas nowcomplete, it added. newstrategy,which also includes pulling to- Despite the difficult sales environment, Consumer Solutions’ earnings before interest, gether apan-European virtual pharmacynet- Lloydspharmacy’searnings in the nine months tax, depreciation and amortisation (EBITDA) work. The Lloyds name originatedinthe UK, had grown, the firm noted, thanks to anew op- fell back by 6.7% to C189 million. Adjusted for where the Lloydspharmacychain nowincludes erational structure that more closely linked the special effects, EBITDAdeclined by 9.3%. more than 1,500 stores. pharmacyand wholesale operations. The Consumer Solutions division accounted Helmes gave the update as Celesio reported for 16% of Celesio’ssales in the nine months, a2.2% drop in nine-month sales at the firm’s Strong performance in Norway which dropped back by 4.2% to C16.0 billion. Consumer Solutions division, which houses its Across the rest of Europe, sales at the com- EBITDAadvanced by 1.1% to C399 million. retail pharmacybusiness. pany’sNorwegian pharmacychain –its second Celesio’sdominant PharmacySolutions Consumer Solutions’ turnoverhad slipped biggest after the UK –had developed well, wholesale division posted a4.6% fall in sales back to C2.51 billion in the period (see Figure 1), Celesio pointed out, with turnoverfrom OTC to C13.5 billion in the period. EBITDAatthe Celesio noted. This had been due to austerity products growing strongly.However,this was PharmacySolutions business edged up by 2.5% measures affecting healthcare policyinanum- not enough to offset the negative impact of ris- to C273 million. ber of European markets –including the UK – ingcosts on earnings, the companyadded. US pharmaceutical wholesaler McKesson is as well as to the sale of the company’sunder- In Italy,anincrease in sales of OTCproducts set to acquire its European counterpart Celesio performing Czech retail business and to nega- hadoffset adrop in prescriptionrevenues, Cele- in an US$8.3 billion (C6.2 billion) deal that, ac- cording to the twocompanies, will create a “leading global healthcare services platform”. Celesio’smajority shareholder Franz Haniel Nine-MonthResults &Cie has already agreed to sell its controlling 50.01% stakeinthe wholesaler and retailer to Non-prescription sales advance at Krka McKesson for US$23.00 per share. ales of Krka’snon-prescription products East Europe region, turnoverincreased by 11%. McKesson is also set to launch atender offer S –including self-medication lines and cos- During the period, the companygained ap- for the remaining Celesio shares at the same metics –advanced by 14% to C 89.9 million in provalthrough the decentralised procedure for price, which representsa39% premium overthe the opening nine months of 2013. naproxen product Nalgesin 220mg in seven three-month volume-weighted average price The rise had been drivenbyincreasedturn- European countries, Krka said. prior to 8October 2013. overfrom Krka’scold and flu brands –includ- Furthermore, Krka noted its “well establish- The deal –which will also see McKesson ingthe Herbion cough remedy –the Slovenian ed” Septolete throat lozenge brand had been assume Celesio’sdebt –isexpected to close by firm said, plus improvedsales of its Bilobil expanded into Western Europe. Marketing ap- mid-2014, with McKesson taking full opera- ginkgo biloba product. provals had also been granted for its Septo- tional control of Celesio later that year. In its domestic market, Krka’snon-prescrip- aqua nasal sprays in Russia and Ukraine, Krka After completion of the transaction, Mc- tion sales movedforward by 5% to C 5.0 mil- pointed out. Kesson and Celesio will retain their ownbrands lion, helped by sales of Nalgesin S, which is Non-prescription products accounted for and continue to supply all their customers Krka’sleading non-prescription analgesic. 11.2% of Krka’sHuman Health products sales through existing channels (see page 24). Turnoveradvanced by 15% in Krka’sEast in the opening nine months, which grewby6% The combined entity will have annual sales Europe region. Non-prescription sales also grew to C 802 million. This was93% of Krka’stotal in excess of US$150 billion, around 81,500 em- by 15% in each of Krka’sCentral Europe and group sales that were 5% higher at C 858 million. ployees and operations in 20 countries. West Europe/Overseas regions. In Krka’sSouth- OTC OTC

29 November 2013 OTC bulletin 5 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 6

OTC COMPANY NEWS

Nine-MonthResults Sales of Branded Products rise at Stada

tada Arzneimittel said sales at its Branded Business Nine-month sales Change Operating profit Change SProducts division had increased by 15% in (C millions) (%) (C millions) (%) the opening nine months of 2013, as the Ger- man companycontinued to expand and reshape Generics 903 +3 120 +20 the business. Branded Products 504 +15 125 +28 Sales of Branded Products improvedtoC504 Commercial 30 +30 >1 – million in the period (see Figure 1), as the firm Group/other –– -57 – paid £221 million (C264 million) for the UK Total Stada 1,436 +8 188 +27 OTCcompanyThornton &Ross (OTC bulletin, 23 August 2013, page 1). It also dropped the Figure1:Stada’s sales and operating profit in the first nine months of 2013 by business (Source –Stada) Hemopharm brand name in Germanyaspart of Country Group sales Change Branded Products’ Change Branded Products’ ashake-up of its sales operations in its home (C millions) (%) sales (C millions) (%) shareinStada (%) market (OTC bulletin,11October 2013, page 4). Following the close of the period, Stada ex- Germany314 -8 97 +4 31 panded Branded Products’ reach in Russia by Russia 292 +25 174 +35 60 agreeing to pay C131 million for the Aqualor Italy 126 +10 19 -25 15 range of seawater-based spray and drops (OTC Belgium 103 +3 5+10 5 bulletin,25October 2013, page 1). Spain 79 -5 8+11 10 The rapid expansion of the Branded Products France 68 +6 8+511 division is part of adrive to reduce the com- Serbia 62 +20 10 +22 16 pany’sexposure to hard-pressed national health- UK 45 +12 38 +14 85 care services. Stada’sdominant Generics busi- Others 347 –145 –42 ness wasparticularly exposed to “regulatory intervention”, Stada pointed out. It had there- Total Stada 1,436 +8 504 +15 35 fore decided to focus on growing its better pro- Figure2:Breakdown of sales by Stada and its Branded Products division by countryinthe first nine months of tected and higher-margin Branded Products busi- 2013, together with the proportion of group sales represented by Branded Products (Source –Stada) ness and taking it into newmarkets, particularly “high-growth emerging markets”. and branded, OTCand prescription products sales in the country,which improvedbyaquar- Meanwhile, in Stada’shome market of Ger- under three different umbrella brands. ter to C292 million. many –primarily under the Stada and Hemo- Commenting on the reorganisation, Hartmut In Italy,turnoverfrom Branded Products pharm brand names –sales of Branded Products Retzlaff, chairman of Stada’sexecutive board, had dropped by 25% to C19.0 million, Stada improvedby4%toC97.4 million (see Figure 2). said that the move would allowthe companyto pointed out, due primarily to the disposal of a This was31% of the group’stotal sales in the distribute in Germanyall its “high-margin brand- product portfolio in the third quarter of 2012. country,which fell by 8% to C314 million. ed products under the strong Stada name”. As aresult, Branded Products accounted for In October,Stada announced that starting Acquisitions in Russia had drivenupRus- only 15% of the company’stotal sales in the in early 2014, the firm would drop the Hemo- sian Branded Products sales by 35% to C174 country,which grewbyatenth to C126 million. pharm name and group its domestic generic million. This represented 60% of Stada’stotal Stada’sBranded Products turnoverinBel- gium increasedbyatenth to C5.4 million, ac- counting for 5% of its total sales, which edged up by 3% to C103 million. Third-QuarterResults In the UK, Branded Products accountedfor 85% of the company’sturnover, with sales ris- WesternEurope hits turnover at Meda ing by 14% to C38.1 million. Stada’stotal sales eda said its OTCportfolio had performed SB12 –had remained flat at SEK60 million. in the UK advanced by 12% to C44.9 million. M“behind expectations” in the third quar- The poor performance of the company’s Acquiring on 1February 2012 the French ter of 2013, as sales edged up by just 2% at con- OTCbrands in Western Europe had been com- nutritionalsupplements and dermatology com- stant exchange rates. This wasdue to apoor pounded by lower OTCsales in the Nordic panyLaboratoires d’Etudes et de Recherches performance in Western Europe. region, the firm said. en Oligo Eléments Théraphie (LERO) drove up OTCsales had reached SEK786 million On apositive note, Meda said sales of its Branded Products’ sales in France by 5% to (C88.9 million) for the three months, the Swed- Betadine antisepticbrand had been “strong” in C7.8 million. This accounted for 11% of Stada’s ish firm said, butorganic growth had been flat. the three months, with turnoveradvancing by total French sales in the nine months, which Lower sales of its CB12 bad-breath prod- 11% to SEK191 million. grewby6%toC67.7 million. uct in France and Italy had impacted OTCturn- OTCproducts accountedfor 25% of Meda’s Branded Products accounted for 35% of overinWestern Europe, the companypoint- group sales in the third quarter,which improved group sales in the nine months, which improved ed out, adding that worldwide sales of the brand by 5% to SEK3.19 billion. by 8% to C1.44 billion. –which is also sold in some markets as OTC OTC

6 OTC bulletin 29 November 2013 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 7

COMPANY NEWS OTC

BusinessStrategy/Second-QuarterResults Prestige Brands eyes globalacquisitions

S-based Prestige Brands has around US$1 ground in the Asia-Pacific region. This allow- success in the convenience-store channel, which Ubillion (C745 million) to spend on acqui- ed it to be more aggressive in terms of pursuing it entered when it acquired the BC and Goody’s sitions and has identified opportunities to ex- opportunitiesinthat area of the world. analgesic brands as part of awider deal with pand its OTCbusiness in anumber of markets Meanwhile, the return of anumber of high- GlaxoSmithKline in 2012 (OTC bulletin,16 around the world, according to chief executive profile rivalOTC brands to the US market had April 2012, page 5). officer MatthewMannelly. hit sales in Prestige’s keycategories in its sec- The convenience-store channel –which con- Speaking as Prestige announced its results ond quarter,the companynoted. sisted of over147,000 stores across the US – for the three months ended 30 September 2013, Therelaunch of McNeil’sTylenol and Motrin wasbecoming areal “strength” of the company, Mannelly said that the firm would be “aggres- brands into the US OTCpaediatric market had Mannelly noted, with Prestige having gained sive and disciplined” when it came to acquisi- led to a0.5% decline in sales by Prestige’score distribution in anumber of outlets. tions, noting that he believedthere would be a OTCportfolio. Leveraging the strong brand equity of BC number of “significant opportunities”togrow Prestige’stotal OTCsales –including core andGoody’shad enabled the companytoplace the business in the next fewyears. and non-core brands –movedforward by 3.4% the Clear Eyes, Dramamine and Luden’sbrands In North America, twomajor pharmaceuti- to US$143 million in the three months, driven in the channel, Mannelly pointed out, adding cal companies –Merck &Coand Novartis –had by the Care acquisition and better sales from that in the three months, sales of those five said that their consumer healthcare divisions non-core OTCbrands. brands in the convenience channel had improv- were under review, Mannelly pointed out, so an Increasing the firm’sadvertising and pro- ed by afifth. opportunity might come from that direction. motional spend behind its OTCbrands would OTCturnoveraccounted for 85% of Pres- Elsewhere, the firm’srecent acquisition of be akey component of its strategy for competing tige’stotal group sales in the quarter,which ad- Australia’sCare Pharmaceuticals (OTC bul- with the returning brands, Mannelly said, noting vanced by 4.1% to US$168 million. Household letin,26July 2013, page 3), he added, meant product development would also play apart. Cleaning accounted for the remaining 15%, that Prestige nowhad senior management on the Mannelly also highlighted the company’s with turnoverupby8%toUS$25.8 million. OTC

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29 November 2013 OTC bulletin 7 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 8

OTC COMPANY NEWS

Third-QuarterResults Third-QuarterResults Herbalife reports GNC sees growth across double-digit gain allits business segments erbalife posted adouble-digit rise in sales Hto US$1.21 billion (C879 million) in the NC reported sales up by 8.7% to US$676 GNC recently added to its portfolio of third quarter,asturnoverimprovedinfiveof Gmillion (C491 million) in the third quarter online outlets –consisting of GNC.com and its six business regions. of 2013, as turnovergrewacross its Retail, Fran- LuckyVitamin.com –with the acquisition of UK Sales rose by 19% at the US-based direct- chise and Manufacturing/Wholesale operations. firm A1 Sports and its DiscountSupplements selling supplement company, led by growth Sales at GNC’sRetail division –including sports-nutrition e-tailer (OTC bulletin,11Octo- company-owned stores in the US and Canada ber2013, page 3). The companysaid it expected Region Third-quarter Change and e-commerce –advanced by 9.5% to US$487 to begin selling GNC sub-brand products on sales (US$ millions) (%) million (see Figure 1), drivenprimarily by a the Discount Supplements website in 2014. 6.7% rise in same-storesales. Meanwhile, GNC’sFranchise revenue grew Asia-Pacific 284 -2.0 Joe Fortunato, GNC’schairman, president by 9.3% to US$119 million during the quarter. South and Central 241 +44 andchief executive officer,said that the launch An increase wasalso reported in its Manufac- America of the company’s‘member price’ programme, turing/Wholesale segment, with sales up by North America 229 +10 which offered customers discounts on arange 2.4% to US$69.5 million. EMEA* 182 +23 of products in return for an annual fee, had Looking ahead, Fortunato said GNC would Mexico 141 +11 continued to “drive customers into the stores” seek to enter newmarkets while “substantially China 137 +77 during the quarter. improving” its direct-marketing efforts to “capi- Growth in the Retail segment had also been talise” on its expanding customer base. Total Herbalife 1,214 +19 supported by the “strong” performance of As of 30 September 2013, GNC waspresent *Europe, Middle East and Africa GNC’snewly-opened stores, Fortunato noted, in more than 8,400 locations, of which over

Figure1:Herbalife’s sales in the thirdquarter of with 148 stores opened in the past 12 months. 6,300 –including 984 franchisesand 2,206 2013 broken down by region (Source –Herbalife) Furthermore, sales at GNC’se-commerce Rite Aid in-store units –were based in the US. business had risen at apace that exceeded mar- Thecompanyalso had franchise operations in in China and the South and Central America ketgrowth rates, Fortunato claimed. some 54 countries. region (see Figure 1). China –Herbalife’ssmallest market in terms Business Third-quarter sales Change Proportion of sales –was the stand-out performer,with (US$ millions) 2012/2013 (%) of sales (%) sales jumping by 77% to US$137 million. Retail* 487 +9.5 72 Michael Johnson, Herbalife’schairman and Franchise** 119 +9.3 18 chief executive officer said the firm’s“record Manufacturing/Wholesale*** 69.5 +2.4 10 performance” during the quarter had been driv- en by “increased daily consumption” of its nutri- Total GNC 676 +8.7 100 tion products. This had resulted from the “global *Retail segment consists of company-owned stores in the US and Canada obesity epidemic and an aging population”. ** Franchise segment consists of franchise-operated domestic and and international locations Herbalife’stotal operating income improv- *** Manufacturing/wholesale consists of third-party contract manufacturing, wholesale and consignment sales with Rite Aid, PetSmart, Sam’sClub, and www.drugstore.com ed by almost afifth, rising by 19% to US$192 million during the quarter. Figure1:GNC’s sales in the thirdquarter of 2013 broken down by business (Source –GNC) OTC OTC

IN BRIEF Mergers&Acquisitions ■ RECORDATI has acquired a67% stake CFR sees OTC synergies with Adcock in Tunisian pharmaceutical company Opalia Pharma for C 22.6 million. The Italian firm re- ■ Continued from front page Weinstein said acquiring Adcock wasconsis- vealed it would snap up afurther 23% “in the synergies on a‘net present value’ (NPV) basis, tent with its strategy of strengthening its pres- coming months”. Recordati said the deal form- around US$280 million are to come in the ence in emerging markets. ed part of its strategy to increase its presence form of revenues from taking products –in- Combined, the twocompanies would be- in emerging markets. Opalia Pharma markets cluding OTCbrands –into newmarkets. The come “one of the most diversified and uniquely branded generic drugs with leading products other US$160 million is to be generated through positioned emerging markets multinationals” in dermatology and in the gastrointestinal and manufacturing and sourcing savings. in the world, Weinstein claimed. respiratory therapeutic areas. The companygen- CFRannounced in July that it had opened The enlarged firm would be a“pan-emerging erates annual sales of approximately TND40 talks to acquire Adcock (OTC bulletin,26July markets pharma leader”, he added, with pro- million (C 18 million). 2013, page 1). forma sales in 2013 of about US$1.40billion. OTC Explaining CFR’smotivesbehind the deal, OTC

8 OTC bulletin 29 November 2013 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 9

COMPANY NEWS OTC

Third-QuarterResults DistributionAgreements OTC sales rise Kerasal NeuroCream gets at Hypermarcas wider distributioninthe US ypermarcas said increaseddemand for its H portfolio of OTCbrands and prescription obergPharma said that the number of The product expands the Kerasal range, generics had drivenupsales at its Pharma MWalgreens stores in the US that carried its which is led by Kerasal Nail, anon-prescription division by 15.6% in the third quarter of 2013. Kerasal NeuroCreamproduct wasset to rise product for treating discoloured and damaged The Brazilian companyadded that turnover from 1,000 to 7,000,after an “excellent” re- nails caused by nail fungus or nail psoriasis. at its dominant Pharma division –which com- sponse to the product’sUSlaunch in September. Sales of Kerasal NeuroCreamhad started prises the Dorsay Monange OTCbusiness, to- Described as atriple-action formula that well, Mobergnoted, with astrong response to gether with its prescription interests–had in- relievesstabbing, burning, tingling foot pain, the company’sadvertising for the brand. creased to BRL614 million (C 199 million) in warms cold feet, and soothes and moisturises The expanded deal with Walgreens meant the three months. dry skin, Kerasal NeuroCream contains cap- that Kerasal NeuroCreamnow had full distri- Driving the performance had been intensive saicin and camphor and features a“no mess” bution in anumber of major US retailers, in- marketing support for the firm’sOTC brands, foam applicator. cluding CVS, Rite-Aid and Walmart, the com- Hypermarcas pointed out, along with the expan- Steve Cagle, chief executive officer of Mo- panypointed out. sion of its generics portfolio and an improved bergPharma North America,said the company Peter Wolpert, Moberg’schief executive offi- relationship with healthcare professionals. was“very pleased with the expanded distribu- cer, said Kerasal NeuroCream’s“strong perform- Commenting on the marketing activity be- tion” and with the “positive reception of Kerasal ance”confirmed that its strategy waspaying off. hind its OTCbrands, the firm said that more NeuroCream from consumers”. “Effective marketing operations in the US, than 20 advertising campaigns had been run on “Kerasal NeuroCream strengthens the Kera- in combination with our innovation engine, con- television or radio in the third quarter,covering sal brand, our leadership in the topical OTCfoot- tinue to delivervalue through differentiated prod- anumber of its OTCbrands includingthe Bio- care space in the US and our value to retail part- ucts that consumers appreciate,”headded. tônico Fontoura iron supplement, Gelol anti- ners,”headded. OTC inflammatory and Merthiolate antiseptic. The Pharma division accounted for 55.2% of Hypermarcas’ total third quarter sales, which advanced by 12.0% to BRL1.11 billion. The Consumer division –which comprises all the firm’sbeauty and personal-care brands –gen- erated the remaining 44.8%, with sales up by 7.9% to BRL499 million. Looking ahead, Hypermarcas said it would continue to focus on its strategy of “sustain- able, profitable organic growth” and on im- proving its cash generation. OTC

IN BRIEF ■ ORIOLA KD –the Finnish wholesaler and retailer –posted a 39% increase in operating profit to C 8.6 million in the third quarter of 2013, as sales improvedby11.6% to C 654 mil- lion. The companysaid the advance had been drivenprimarily by adouble-digit rise in turn- overand operating profit at its Swedish whole- saling and retailing business. This had been aided by better sales and asmaller operating loss in Russia. Turnoverand operating profits from the firm’swholesaling and retailing oper- ationinFinland and the Baltics had fallen.

■ ORION said sales of its Burana OTC ibuprofen brand had slipped back by 3.5% to C 5.9 million in the third quarter of 2013. OTC

29 November 2013 OTC bulletin 9 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 10

OTC COMPANY NEWS

Nine-MonthResults BusinessStrategy/Third-QuarterResults Beiersdorfgets Valeant wantsOTC brands consumer boost to grow Emerging Markets urnoveratBeiersdorf’s Consumer division T–which markets the Niveaand Eucerin aleant Pharmaceuticals International is ucts including: Ocuvite and PreserVision eye- global skincare brands –edged up by 1.7% Vlooking to buyOTC products and brand- health vitamins; Alaway, Advanced Eye Re- to C3.89 billion in the opening nine months of ed generic pharmaceuticals to growits presence lief and Opcon-A allergy and redness relief 2013, despite falling sales in twoofits three in emerging markets, according to chairman products; and the Soothe and Advanced Eye business regions. and chief executive officer Michael Pearson. Relief dry-eye ranges (OTC bulletin,31May Sales fell across Europe and the Ameri- Speaking as the Canadian companyreport- 2013, page 1). cas, with only the Africa/Asia/Australia region ed a74% rise in third-quarter sales, Pearson Having closed the acquisition in August, recording growth during the period. said that its Emerging Markets operation had Bausch &Lomb helped lift Valeant’sthird- Beiersdorf said the drop in European sales been changing the product mix to include “more quarter sales by 74% to US$1.54 billion. by 1.5% to C2.14 billion had been due to the andmore branded generic and OTCproducts, In the firm’sDeveloped Markets region, economic downturn in Russia. On apositive which tend to be increasingly cash paid”. turnoverhad grown by 77% to US$1.14 bil- note, Beiersdorf claimed it had seen the “first The companywas trying to avoid govern- lion, drivenbyBausch &Lomb.Meanwhile, signs of aslight economic recovery” in its ment-reimbursed products, Pearson pointed out, in Valeant’sEmerging Markets region, sales Southern European markets. noting that branded generics and OTCprod- had improvedby68% to US$399 million. This Beiersdorf blamed the 2.6% decline in sales ucts were likely to be recommended by adoc- wasagain attributed to Bausch &Lomb. to C696 million in the Americasregion –con- tororpharmacistand then paid for directly Breaking out the company’sperformance in sisting of North America and Latin America – by the consumer. the US –excluding Bausch &Lomb –Pearson on exchange rate changes in Argentina, Brazil said organic sales had increasedby15%, thanks and Venezuela. Reduces exposuretoprice cuts to “strong” performances from both its pre- In Latin America, the company’sturnover “Itmakes us more susceptible to economic scription pharmaceuticals and OTCbrands. dropped back by 5.2% to C449 million as re- cycles, butobviously less susceptible to govern- In other markets covered by the firm’sDev- ported. Excluding negative currencyeffects, ment intervention,”Pearson added. eloped Markets banner,organic sales had ad- sales in Latin America actually movedfor- Asked whether the companywould consider vanced by 3%, Pearson said, with the Develop- ward by 15.5%. Beiersdorf said it had achiev- acquiring alarger OTCbusiness, such as Merck ed Markets business as awhole posting an ed “excellent growth rates” in Brazil, while its &Co’sConsumer Health unit, Pearson said it organic gain of 9% for the three months. Niveaskincare products had recorded “healthy really depended on the opportunity. Meanwhile, in Valeant’sEmerging Markets, growth” across Latin America. “What we are looking for are durable as- organic sales had movedforward by 14%, Pear- sets,”Pearson explained, adding that these were son noted, drivenlargely by sales of contact Big rise in Africa/Asia/Australia “ones where we believe we can achieve signif- lenses and OTCproducts. By contrast to Europe and the Americas, icant synergies and then maintain or accelerate The companyreported an operating loss sales advanced by 12.7% to C1.05 billion in growth in the assets that we have purchased”. of US$891 million in the third quarter,primar- Beiersdorf’s Africa/Asia/Australia region, driven Pearson’scomments came just afew months ily due to impairment charges related to two by an “improvedperformance” in China. after Valeant paid US$8.7 billion (C6.4 billion) prescription products, as well as restructuring The companyattributed the upturn in China for the eye-care specialist Bausch &Lomb, a and other costs associated with the Bausch & to the relaunch of its SLEK and Maestro hair- deal which gave the firm araft of OTCprod- Lomb acquisition. care brands during the period. OTC Turning to Beiersdorf’s core brands, the stand-out performer had been its medical skin- Third-QuarterResults care brand Eucerin, the firm noted, posting a rise in sales of 11% at constant exchange rates. North Americaboosts sales at Atrium Worldwide sales of its Niveabrand advanc- ed by 7.3%, while its La Prairie skincare brand anada’sAtrium Innovations posted turn- Atrium’sEuropean operations had been “basi- posted the smallest increase, moving forward C over up by 12% to US$121 million (C 90.4 cally flat” during the quarter,the firm said, due by 5.4% at constant exchange rates. million) in the third quarter of 2013, driven to “challenging” market conditions. Consumer accounted for 83% of Beiers- by a“solid” performance from its operations Following the close of the quarter,Atrium dorf’s total sales in the nine months, which in North America. expanded its reach into Central and Eastern improvedby2.4% to C4.67 billion. Discount- In the North American Retail channel, sales Europe (CEE) with the acquisitionofthe Czech ing currencyeffects, acquisitions and divest- improvedby16.2% during the three months, companyMucos Pharma. ments, sales improvedby7.3%. while turnoverinthe HealthcarePractitioner Theacquired firm had distributed Atrium’s The company’sTesa self-adhesivesunit gen- channel movedforward by 8.7%. Atrium’s Wobenzym enzyme brand in the region for a erated the remaining 17% of the group’sturn- Contract Manufacturing operation posted sales number of years (OTC bulletin,25October overduring the nine-month period. up by 15.2%. 2013, page 3). OTC By contrast to North America, sales at OTC

10 OTC bulletin 29 November 2013 OTC29-11-13p3-11FIN_Layout 1 26/11/2013 15:57 Page 11

COMPANY NEWS OTC

First-QuarterResults Perrigo lines up rivaltoOTC Nasacort

errigo wants to have astore-brand version Business First-quarter sales Change Operating income Change P of Nasacort Allergy 24HR on the shelves (US$ millions)(%) (US$ millions) (%) as soon as possible after Sanofi’striamcinolone acetonide-based nasal spray hits the US OTC Consumer Healthcare538 +20 96 +18 market, according to chairman and chief ex- Prescription Pharmaceuticals 204 +25 103 +34 ecutive officer Joseph Papa. Nutritionals 129 +25 15 +35 Speaking as Perrigo announced its results Active Pharmaceutical Ingredients 43 +18 23 +66 for the three months ended 28 September 2013, Other 19 –-57 – Papa pointed out that the companyalready Total Perrigo 933 +21 180 +15 marketed ageneric prescription version of the recently-switched Nasacort allergy product. Figure1:Perrigo’s sales and operating income in the first quarter ended 28 September 2013 (Source –Perrigo) All Perrigo had to do to launch astore- brand OTCversion, he added, wastoget asup- switch could lead to more nasal steroid products recently-launched, store-brand version of Reckitt plementary Abbreviated NewDrug Application moving from prescription to OTCstatus. Benckiser’s(RB’s) guaifenesin-based Mucinex (ANDA) approvedbythe US Food and Drug Meanwhile, Perrigo’sConsumer Healthcare cough brand had performed well, while strong Administration (FDA). business posted sales up by afifth to US$538 consumer demand in the face of the return to Nasacort Allergy 24HR is set to be launch- million (C 399 million) in its first quarter ended market of amajor national brand had driven ed in spring 2014 and is positioned as the “only 28 September 2013. Operating profit increased up sales of its analgesics products by 16%. single active ingredient OTCmedicine” that by 18% to US$96 million (see Figure 1). Turning to the major US OTCand vitamins, relievesthe “full range of nasal allergy symp- Judy Brown, Perrigo’schief financial officer, minerals and supplements (VMS) markets, Papa toms, including nasal congestion, for 24 hours said the rise in Consumer Healthcare sales had pointed out that IRI data for the 52 weeks ended with asingle daily dose”. been drivenbyaUS$40 million jump in turn- 22 September 2013 had shown that sales of Indicated to treat “seasonaland year-round over from existing products, coupled with US$17 national OTCbrands had advanced by 2.8%, nasal allergies in adults and children twoyears million in newproduct sales –primarily in the while sales of OTCstore-brands had moved of age and older”, Nasacort Allergy offered cough/cold and smoking-cessation categories – forward by 4.0% (see Figure 2). the 60 million Americans who suffered from andUS$42 million from the recently acquired Looking ahead, Papa reiterated the com- nasal allergies anew OTCtreatment option, Sergeant’sand Velcera pet-care businesses. pany’sbelief that products with overUS$10 Sanoficlaimed (OTC bulletin,25October These gains had been partially offset, Brown billion in annual US sales were in line to move 2013, page 1). noted, by aUS$7 million drop primarily related fromprescription to OTCstatus during the next While astore-brand OTCversion of Nas- to contract manufacturing and the loss of US$3 five years, with overUS$5 billion of that total acort presented an “exciting” opportunity for million in sales from discontinued products. expected in the next three years. Perrigo, the firm wasalso looking at the wider Commenting on Consumer Healthcare’sper- Papa pointed out that as well as Nasacort, nasal allergy market, Papa said, noting that the formance in the quarter,Brown said that its Merck &Cohad already this year success- fully switched Oxytrol for Women (OTC bul- Store brands Nationalbrands Total for category letin,8February 2013, page 1). This had open- ed up an entirely newOTC category,targetting 15.0 the treatment of overactive bladder in women. However, Papa noted that oxybutynin-based +8.8% Oxytrol for Women had been awarded three 10.0 +8.3% +7.7% +6.9% years of market exclusivity,sothe company +5.6% +4.8% would have to ensure that it had astore-brand +4.3% +4.0% +3.3% +3.3% version of the product ready for when the op- 5.0 +2.7% +1.1% +1.1% portunity opened up. th (%)

ow OTC +1.1% +2.9% +7.2% +2.4% +2.7% +5.7% +2.8% -1.2% 0.0 -1.9% Sales gr -4.1% IN BRIEF -5.3%

-5.0 ■ DAIICHI SANKYO has reported Japan- ese OTCproduct sales down by 0.6% to ¥22.9 billion (C 172 million) in the six months

-10.0 ended 30 September 2013. OTCproducts ac- Analgesics Cough, Cold, Diabetes Gastrointestinal Infant Smoking VMS* Total counted for 8.8% of the Japanese company’s Allergy,Sinus Formula Cessation OTC total domestic turnover, which increased by *VMS is vitamins, minerals and supplements 5.7% to ¥261 billion. Total group sales ad-

Figure2:Retail sales growth of major categories in the US OTC medicines and vitamins, minerals and vanced by 13.5% to ¥428 billion. supplements markets in the 52 weeks ended 22 September 2013 (Source –Perrigo/IRI) OTC

29 November 2013 OTC bulletin 11 OTC29-11-13p12-13FIN_Layout 1 26/11/2013 15:14 Page 2

OTC GENERAL NEWS

Regulatory Af fairs Switches Regulators warn Health Canadaproposes on OxyElite Pro omeprazoleOTC switch egulatory agencies around the world have Rissued warnings overabrand of dietary roton-pump inhibitor(PPI) omeprazole fenac) has been non-prescription in Canada. supplements linked to anumber of liverill- Pcould soon be available without aprescrip- The proposed revision would increase the nesses in the US. tion for heartburn sufferers in Canada. concentration of topical diclofenac diethylamine Regulators across Europe, Asia and Aus- Health Canada is inviting comments on its available without prescription to 2.32% (2% tralasia are advising consumers not to takesup- proposal to switch the medicine from prescrip- diclofenac), Health Canada noted, for the re- plements branded as OxyElite Pro, following tion to OTCstatus on the national Prescription lief of pain associated with minor,localised reports by the US Food and Drug Administra- Drug List (PDL). muscle or joint injuries. tion (FDA) that the products had been linked If successful, 20mg omeprazole will be avail- Health Canada said that the frequencyof to 56 cases of non-viral hepatitis in the US. able without aprescription when sold for the applying the higher strength dosage would be The FDAfirst raised the issue in aWarn- 14-day treatment of frequent heartburn. reduced to twice daily,instead of three to four ing Letter it sent to the manufacturer of the Health Canada pointed out that the use of times aday with the current product. Similar effi- supplements –USP Laboratories –instructing omeprazole at the specified dosage could pro- cacywith no increase in adverse reactions had the companyimmediately to cease distribu- vide frequent heartburn sufferers with sustained been shown for the stronger version, it added. tion of the products. relief from daytime and nocturnal heartburn. In response, USP initiated avoluntary recall Comments on the proposed switch will be Stronger minoxidil products of its OxyElite Pro Super Thermo capsules, receivedbyHealth Canada until January 2014. Also open for consultation is the proposal to OxyElite Pro Ultra-IntenseThermo capsules Omeprazole is already available OTCina allow5%topical minoxidil hair-regrowth solu- and OxyElite Pro Super Thermo powder. number of countries worldwide, includingGer- tion to be sold OTC. Non-prescription status In Europe, the UK’sMedicines and Health- many, the UK and the US. already applies to 2% minoxidil following its care products Regulatory Agency(MHRA) Meanwhile, Health Canada has also opened switch in 1999. and the Spanish Food Safety and Nutrition for consultation its proposals to revise the list- Apositive benefit-riskassessment had been Authority (AESAN) have both warned against ings of diclofenac and minoxidil on the PDL. established for preparations containing 5% min- using anysupplements labelled as OxyElite Pro. Forthe past six years, diclofenac diethyla- oxidil, Health Canada said, based on marketed Regulators in Australasiaand Asia –includ- mine at aconcentration of 1.16% (1% diclo- non-prescription products worldwide. ing the Health Services Authority in Singapore – OTC have also issued warnings overthe products. In the Warning Letter issued in October, Switches the FDApointed out that OxyElite Pro was “adulterated”, as USP had failed to notify the German pill switch passes anotherstage agencythat the product contained anew diet- ary ingredient–aegeline –and had failed to mergencycontraceptive pills containing number of markets, such as the UK and the US. provide evidence that the ingredient wassafe. E levonorgestrel could soon be available with- Switching the product –most commonly The FDAalso stated that its findings had out aprescription in Germany. known as Plan B, the brand name used by Teva suggested a“causal connection” between Oxy- The country’supper house of parliament, the Women’sHealth –has provedcontroversial in Elite Pro and anumber of liverillnesses re- Bundesrat,has passed astatutory order switch- some markets, especially the US, where politi- ported in Hawaii. ingoral forms of levonorgestrel in strengths cal interference meant it wasonly made avail- The 56 cases of non-viral hepatitis in the up to 1.5mg from prescription-only to phar- able OTCtowomen of all ages earlierthis year US linked to the supplements had resulted in 22 macy-only status. ( OTC bulletin,28June 2013, page 1). hospitalisations, the agencysaid, with one death Unless blocked by government ministers, Meanwhile, in the same order,the Bundesrat and twoliver transplants among the patients. theswitch will come into effect on 1May next adopted the rejection put forward by its health The FDAhas advised consumers not to use year.Inthe interim,the Bundesrat said, legis- committee of proposed switches for the migraine anydietary supplements labelled as OxyElite lators would have time to provide aframework remedies sumatriptan and zolmitriptan (OTC Pro while it continues to investigate. for the cost of the contraceptive to be paid by bulletin,8November 2013, page 15). OTC the country’sstatutory health insurance funds. Regulations covering all sevenmarketed trip- In its reasoning for the order,the Bundesrat tans in Germany–including non-prescription noted that levonorgestrel wasavailable without forms of almotriptan and naratriptan,aswell as IN BRIEF aprescription for emergencycontraception “in prescription-only eletriptan, frovatriptan and ■ FDA –the US Food and Drug Adminis- almost all European countries”. rizatriptan –were “not comprehensible”, the tration –wants manufacturers of OTCtopical Facilitating access to the pill would help upper house maintained. antiseptic products to revise product labels to prevent unwanted pregnancies, the upper Due to the lack of uniformity of such reg- to indicate whether the product is sterile or house added. ulations, “mistakes in medical practice are in- non-sterile. Levonorgestrel-based emergencycontracep- evitable”, it believed. OTC tivesare available without aprescription in a OTC

12 OTC bulletin 29 November 2013 OTC29-11-13p12-13FIN_Layout 1 26/11/2013 15:15 Page 3

GENERAL NEWS OTC

Regulatory Af fairs EFSA opinion gives hope to botanicals

he first positive evaluation of abotanical years ago. The move followed concerns that thracene derivativesimprove bowel function”. T health claim for disease risk-reduction by the botanical ingredientswere being treated dif- Vivatech’sproposed claim for Transitech European Food Safety Authority (EFSA) could ferently under the food claims regulation than had been: “Improvesbowel function”, while the help kickstart asolution to the issue of assessing theywere under legislation covering traditional target audience wassaid to be the “general pop- general-function health claims for botanicals. herbal medicines (OTC bulletin,15October ulation experiencing disturbed defecation”. The French firm Vivatech receivedamostly pos- 2010, page 1). recommendeddaily amount wastwo pills per itiveopinion for its health claim that its Tran- Explaining whyithad backed only apart of day,tobetaken overaperiod of 10 days. sitech (hydroxyanthracene derivatives) product Vivatech’sapplication, the NDAnoted that The firm also requested that its proprietary could improve bowel function, after EFSA’s while the companyhad provided twounpub- data be protectedunder the provisions of the Panel on DieteticProducts, Nutrition and Aller- lished randomised trials to support its claim, health claims regulation 1924/2006. gies, the NDA, said acause and effect relation- the available evidence did not establish that any An improvement in bowel function such as ship had been established. The Panel allowed of the food constituentsinTransitech –other areduced transit time, more frequent bowel amodified claim, butquestioned the effective- than hydroxyanthracene derivatives–had an movements, increased faecal bulk, or softer ness of some of the product’singredients. effect on bowel function. stools wasabeneficial physiological effect, Twoearlier unfavourable opinions for Transi- Transitech contains 226.8mg rhubarb, 38mg the NDApointed out, provided that it did not tech had insisted Vivatech had insufficiently mallow, and 18mg artichokeper tablet. Other result in diarrhoea. characterised the combination of ingredients ingredients include pale rose, basil, saccharo- To be able to makethe claim, aproduct must ( OTC bulletin,12October 2012, page 6), and myces cerevisiae Uvaferm SC yeast and lactic provide 10mg of hydroxyanthracene derivatives subsequently that the firm had not established ferments such as Bifidobacterium Rosell-175 per day,the NDApointed out. The amount acause and effect relationship between con- and Lactobacillus Rosell-52. The principal herb- could be derivedfrom: either the root and rhi- sumption and outcome (OTC bulletin,23Aug- al ingredients are standardised for hydroxyan- zome of Rheum palmatum L. and/or Rheum ust 2013, page 18). thracene derivatives. officinale Baillon –and/or their hybrids; the Individual botanical applications for Article Furthermore, the NDAmaintained that as leavesorfruits of Cassia senna L. and/or Cassia 13(5) ‘newfunction’ and Article 14 ‘disease none of the studies had shown the effects of angustifolia Vahl; the bark of Rhamnus frangula risk-reduction’ claims have been rejectedby consuming hydroxyanthracene derivativesalone, L; the bark of Rhamnus purshianus D.C.; Aloe EFSA overrecent years, butthis first positive it could not conclude whether Transitech created barbadensis Miller and/or various aloe species. opinion shows that the current approach to as- an effect “overand above”aneffect of hydroxy- However, the NDAwarned that stimulant sessing health claims –using scientific evidence anthracene derivatives, or led to a“lower inci- laxativesshould only be used “if an effect on from human studies –can be used in relation dence of untoward effects” of hydroxyanthra- bowel function cannot be achievedbyachange to all foods, including botanical substances. cene derivatives. of diet or the administration of bulk-forming Evaluating 2,078 Article 13(1) general-func- In light of the evidence, the Panel found the agents”. Furthermore, theyshould not be con- tionhealth claims for botanicals wasput on hold following wording reflected the scientific evi- sumed continually for periods longer than one- by the European Commission more than two dence which had been presented: “Hydroxyan- to-twoweeks, it added. OTC

IN BRIEF Regulatory Af fairs ■ MHRA –the UK’sMedicines and Health- EFSA proposes average requirements care products Regulatory Agency–has an- nounced that herbal medicines that had not he European Food Safety Authority’s be adequate for this age group,”itpointed out. been licensed under the 2004 European Union T(EFSA’s)Panel on Dietetic Products, Nutri- Although the NDAwas also unable to pro- (EU) herbals directive would not be allowed tion and Allergies, the NDA, has issued its opin- vide DRVs for vitamin C, it suggested for men to be sold or supplied in the UK from the end ionsonaverage requirements for manganese an Average Requirement (AR) of 90mg/day of April next year.The agencypointed out that and vitamin C. andaPRI of 110mg/day.For women, the AR on 30 April 2014 the “period of grace” that In its scientific opinion on Dietary Refer- was80mg/day,while the PRI was95mg/day. allowed unlicensed herbal medicines which ence Values (DRVs) for manganese, the NDA APRI of 20mg/day should apply to children were launched prior to 2004 to remain on the noted that there was“insufficient evidence avail- aged one to three years, while boys and girls UK market –despite the end of transitional able to derive an average requirement or apop- aged between 15 and 17 years had PRIs of arrangements in April 2011 –would come to ulation reference intake(PRI)”. Based on the 100mg/day and 90mg/day,respectively.The an end. In July,the MHRA proposed ending mean intakes of manganese in adults, it recom- ARs had been extrapolated from those for the sell-through period on 31 December 2013 mended an Adequate Intake(AI) for mangan- adults, EFSA noted. ( OTC bulletin,23August 2013, page 20). ese of 3mg/day in adults. Meanwhile, pregnant and lactating women However, after considering the responses to the Forinfants aged between sevenand 11 should have additional vitamin Cintakes of proposal, it had chosen the April deadline in- months, EFSA proposed an AI of between 10mg/day and 60mg/day compared with non- stead, the agencysaid. 0.02mg/day and 0.5mg/day.“This reflects the pregnant, non-lactating women. OTC wide range of manganese intakes that appear to OTC

29 November 2013 OTC bulletin 13 Presented by In association with

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2014 Awards Advert-201113.indd 3 21/11/2013 16:09 OTC29-11-13p16-17FIN_Layout 1 26/11/2013 15:15 Page 2

OTC GENERAL NEWS

Regulatory Af fairs Legal Cases Australia guides Sanofi sues FDA to prevent on social media release of Nasacortdetails wned”, “earned” and “paid” are the “Othree types of social media that con- anofiissuing the US Food and Drug Ad- rial is publicly disclosed, it constitutes pro- sumer healthcare organisations must understand Sministration (FDA) to keep the agencyfrom prietary information, the disclosure of which to manage their online presence effectively,ac- making public the packaging and labelling of its would cause substantial completive harm to cording to social-media guidelines published Nasacort Allergy 24HR prior to its launch. Sanofi,”the lawsuit says. by the AustralianSelf-Medication Industry The French firm filed the lawsuit after the “Accordingly,the labelling and packaging (ASMI) for its members. FDArefused arequest to not makepublic Nasa- information falls within Exemption 4tothe Facebook and Twitter profiles are examples cort Allergy’spackaging and labelling ahead Freedom of Information Act and the Trade of “owned” media, the ASMI says, while “paid” of its launch in 2014. Secrets Act, 18 U.S.C 1905,”the lawsuit adds, media includes display advertising and spon- FDAprocedures call for the prompt publi- “until Sanofichooses to makethe labelling and sored tweets. Both platforms can be managed cation of approvalinformation –including de- packaging public in connection with the launch by the individual organisation, the ASMI notes. tails of packaging and labelling –onthe agency’s of the product.” By contrast, firms have no control over Centre for Drug Evaluation and Research’s The companyisasking the court to set aside “earned” media, the ASMI says, as it includes (CDER’s) website. the FDA’sdecision publicly to disclose the Twitter users’ comments and third-party blogs. Sanofiargues that as it did not receive any labelling and packaging information; declare “This categorisation of online media allows market exclusivity for Nasacort Allergy –which that the labelling and packaging details fall for asimple framework within which organisa- wasgranted OTCstatus in October (OTC bul- within Exemption 4tothe Freedom of Informa- tions can manage their content and campaigns letin,25October 2013, page 1) –publishing tion Act and the Trade Secrets Act; or grant an effectively,” the ASMI explains, listing Linked- the details prior to the launch would cause “sub- injunction to stop the FDAfrom disclosing the In and Instagram profiles, YouTube channels stantial competitive harm to Sanofi”. information until Sanofilaunches the product and electronic newsletters as other examples early next year. of social media. Give competitors an advantage Announcing the product’sapprovalinOcto- The guidelines will increase the confidence Explaining why, Sanofisays the move will ber, the French firm said that Nasacort Allergy of its members when connecting brands and give generic manufacturersadvance knowledge wasset to be launched in spring 2014 and would health information with social-media audi- of the labelling theymust match to launch their be the “only single active ingredient OTCmed- ences, believesthe ASMI. ownversions of the product, and will enable icine” that relievedthe “full range of nasal al- “Social media is changing the nature and branded competitors to prepare advertising and lergy symptoms, including nasal congestion, speed at which consumers and healthcare org- promotional materials in advance of the Nasa- for 24 hours with asingle daily dose”. anisations interact,”according to Filomena cort launch. Indicated to treat “seasonaland year-round Maiese, ASMI marketing and business devel- The lawsuit adds that the FDA’sdecision to nasal allergies in adults and children twoyears opment director.“The challenge for anyhealth publish the details before the launch is “arbi- of age and older”, Nasacort Allergy offered organisation is to understand howtomanage on- trary,capricious, an abuse of discretion, or other- the 60 million Americans who suffered from line channels responsibly to ensure consumers wise not in accordance with the law”. nasal allergies anew OTCtreatment option, get access to accurate and reliable information.” “Until Sanofi’slabelling and packaging mate- Sanofipointed out. Maiese points out that the Australian con- OTC sumer healthcare industry has been “cautious” in engaging with social media, due to the Market Research “highly complexregulated environment of health communication”. Homoeopathy demand rises in Germany However, health organisations must now “embrace” the trend of interacting with con- ine out of 10 German pharmacists have theyhad receivedinsufficient education on sumers through social media, Maiese argues. Nseen demand for homoeopathic medicines homoeopathy, and three in four expressed inter- As well as outlining the different types of increase overthe past decade, according to a est in participating in training programmes. social media, the guidelines also address legal survey conducted for Germany’smedicines Almost aquarter of participating pharma- issues and howtomanage online content. manufacturers’ association, the BAH. cists identified homoeopathyasanarea of focus Organisations should be aware of copyright Just overthree-quarters of pharmacists ques- within their store. In those 23% of pharmacies, infringement, it advises, as well as breaches of tioned felt that their ownexperienceswith 94% of their customers asked about homoeo- confidentiality and privacy. homoeopathywere more important than the pathic remediesseveral times aday,compared Staying up-to-date with changes to social- results of studies. Only around 3% of pharma- to an average of 70% overall. media channels is also important, the guide- cists favoured scientific studies overpersonal Noting that purchasers of homoeopathic med- lines continue, to “ensure that campaigns and experience, discovered the representative survey icines were typically young mothers, the BAH consumer engagement are ethical and exe- of 200 pharmacists conducted by market re- said cold remedies were the most commonly cuted to best practice”. search agencyGfK in August this year. bought products, followed by allergy products. OTC Just overfour out of five pharmacists felt OTC

16 OTC bulletin 29 November 2013 OTC29-11-13p16-17FIN_Layout 1 26/11/2013 15:15 Page 3

GENERAL NEWS OTC

Industr yAssociations WSMI head sees evidence as key to boosting self-care

sing clear and substantial evidence to ed approach”, he insisted. “This can only be Ustrengthen working relationships and build achievedifitcan demonstrate the evidence to trust between the OTCindustry and global pub- back up the case for self-care.” lic health bodies is akey priority for the World Explaining howthis could be done, Dzie- Self-Medication Industry (WSMI), according kan said that it wasacase of gathering together to the industry body’srecently-appointed direc- the years of studies, reports and other sources tor general, Dr Gerald Dziekan. that support self-care into acomprehensive evi- Speaking to OTC bulletin shortly after tak- dence base that would demonstratehow self- “Treat Yourself Better” is the message of anew UK consumer campaign aimed at urging people to ing up the role on 1October,Dziekan said pro- care could help manage the manyhealth prob- self-treat winter ailments rather than using antibiotics moting the benefits of self-care and self-medi- lems the world wasfacing. prescribed by adoctor. cation, and ensuring that theyplayed apart in Amedical doctor with aclinical specialisa- Launched by the UK OTC industrybody,the ProprietaryAssociation of Great Britain (PAGB), and tackling the health issues facing the world’spop- tion in infectious disease prevention and control, community pharmacy association Pharmacy Voice, ulation would be the core mission of his tenure. Dziekan joined the WSMI as director-general the ‘Treat Yourself Better Without Antibiotics’ “Todothis, however, the OTCindustry designate in July (OTC bulletin,17June 2013, campaign will rununtil the end of February2014. The campaign will be supported by arange of needs to bond quite intensively with global page 23). Previously he served as programme consumer and trade media activity,with anumber of health organisations –such as the World Health manager at the WHO’sDepartment of Patient PAGB member companies using the Treat Yourself Organization (WHO) –and adopt amore focus- Safety in Geneva,Switzerland. Better logo in the marketing materials for their brands. Awebsite at www.treatyourselfbetter.co.uk has This experience,Dziekan said, would enable also been launched, featuring asymptom checker him to develop the links between the WSMI and advice on how best to self-treat coughs or colds, and public bodies that were needed to promote as well as a“warning signs” page to help people identify when advice from ahealthcareprofessional the self-care agenda. should be sought. “I wasattracted to the WSMI because Ifelt Gopa Mitra, the PAGB’s director of health policy Icould bring together the various organisations and public affairs, said the Treat Yourself Better campaign was an opportunity for the industryto and showhow self-care could contribute to the “encouragepeople with common winter ailments global health agenda,”headded. to self-treat their symptoms and visit their local Pulling together the years of evidence –not pharmacy for advice”. “Research shows that people areunawareof all based on clinical trials or traditional studies – how long winter ailments should last, leading to would not be easy,Dziekan admitted, butit unnecessarygeneral practitioner visits and antibiotic would give the OTCindustry asolid base from prescriptions,” Mitra noted. “Wewant to encourage people to self-treat with Dr Gerald Dziekan, the World Self-Medication Industry’s which it could play arole in maintaining the the help of apharmacist,” she added, “and thereby director general, wants better evidence for self-care world’shealth. reduce pressureonthe UK National Health Service.” OTC OTC

CreativeAgencies nications group Creston, with Hayleyand Dun- ford reporting to the head of Creston’sHealth Loooped aimstoalign brand messages division Catherine Warne. Looking to the longer-term, Hayleysaid that elping healthcare companies develop a “Ourdifference is that we put as much attention Loooped wascurrently UK-focused. But thanks Hstrong, consistent brand message through into howabrand gets onto the shelf as offit.” to its association with Creston, it had the capa- a“mash-up of brand strategy and creative Commenting on Loooped’smission, Dick bility to operate in the US and wasalso on the ideation” is the mission of Loooped, anew Dunford –the firm’sco-founder and former look out for partners in Asia. creative agencyestablished by twoformer ex- executive creative director at TBWA/Paling Wal- ecutivesofTBWA/Paling Walters. ters –said the agencywanted to delivera“last- Andy Hayley, co-founder of Loooped and ing change by developing creative engagement former managing director at TBWA/Paling Wal- that actually changes behaviour”. ters, told OTC bulletin that the newventure Companies needed to ensure, Hayleyand was a“health, wellness and lifestyle” agency, Dunford said, that everyone involved in a designed to “vertically integrate” the “business- brand –from employees to retail customers and, to-consumer,business-to-business and business- of course, consumers –were all “on the same to-employee disciplines”. page” and receiving or broadcasting the same Andy Hayley and Dick Dunfordhave founded Loooped “Atits core, Loooped is amash-up of brand consistent message. to help companies develop consistent brand messages strategy and creative ideation,”Hayleysaid. Loooped is backed by insight and commu- OTC

29 November 2013 OTC bulletin 17 OTC29-11-13p18-20FIN_Layout 1 26/11/2013 15:59 Page 2

OTC MARKETING NEWS

AdvertisingComplaints Line Extensions Meda can back McNeil to supportGerman MidNite claims launch of Nicorette Spray edaConsumer Healthcarehas the evi- Mdence to support its claims that its Mid- cNeil Consumer Healthcare is promis- Nite PM herbal sleep-aid supplement allows M ing a“large-scale television campaign” for “faster” sleep and lets users “wakewithout to support the forthcoming launch of the firm’s grogginess”, the US National Advertising Re- Nicorette Spray nicotine-replacement therapy viewBoard (NARB) has ruled. (NRT) in Germany. ANARB panel reviewed an earlier decision Television commercials will be aired from by the National Advertising Division (NAD) 27 December,afew days ahead of the mint- that the firm should modify its claim “get to flavoured mouth spray becoming available sleep fast, and wake without grogginess” to through pharmacies on 1January next year. makeclear that one of the product’singredi- By introducing the pharmacy-only spray at ents, melatonin, may help improve sleep when the turn of the year,McNeil expects to capitalise taken regularly. on smokers’ NewYear resolutions to quit. As well as featuring on the product packag- Nicotine oral sprays delivering up to 1mg of ing, the claims had appeared in internet and nicotine per spray have held non-prescription print advertisements. status in Germanysince 1March this year,after Meda had also been told to avoid implying the upper house of parliament, the Bundesrat, that sleep improvement would be achievedby passed astatutory order (OTC bulletin,18Jan- Launch trade-press advertising for McNeil’s Nicorette taking afirst or one-time dose of melatonin uary 2013, page 8). Spray in Germany promises atelevision campaign before bedtime. This followed arecommendation to switch But based on the evidence submitted by thespray from prescription to OTCstatus put Similar claims have supported launches of Meda, the NARB panel ruled that the firm had forward by Germany’sexpert committee for pre- themouth spray elsewhere in Europe (OTC reasonably shown that aone-time 1.5mg or 3mg scription (OTC bulletin,31May 2012, page 11). bulletin,17March 2011, page 15). dose of melatonin could promote “faster” sleep. Trade-press advertising preparing pharma- Current television advertising for the brand It wasdecided, however, that Meda must cists for the launch highlights clinical research in Germanyfocuses on the NicoretteFreshmint discontinue claims relating to pain manage- showing that Nicorette Spray “relievesthe acute 2mg lozenges that McNeil introduced earlier this ment and “fast” or instantaneous sleep. desire to smokeinjust 60 seconds”. year (OTC bulletin,10May 2013, page 19). OTC Cannot supportpain claim The NARB panel upheld the watchdog’s ruling that Meda could not provide the levelof “competent and reliable scientific evidence” needed to support its claim that another of the product’singredients –bromelain –effectively managed minor or occasional pain. Other ingredients of MidNite PM include chamomile, lavender and lemon balm. Furthermore, the NARB panel supported the NAD’sviewthat Meda could not substantiate claims that melatonin could promote “fast” sleep. This implied that sleep would “come in- stantaneously or very quickly”, it pointed out. Sachets of ‘jelly-ice’ that can be consumed immediately, refrigerated or frozen arethe latest addition to Sanofi Anyclaims based on the efficacyofmela- Omega Pharma is aiming to help Belgian consumers Consumer Healthcare’s Gastrolyte rehydration line in tonin should not imply that the MidNite PM through the “winter blues” by encouraging them to sign Australia. The Jelly-Ice Block product had been designed product had been tested if no such studies had up for its ‘Coach Vit’ one-month vitality programme, specifically for parents who wanted to rehydrate their which promotes its Davitamon vitamin range. children quickly,the firmsaid. taken place, the panel warned. Participants can register for the programme until Containing 15.8mg/ml glucose, 2.11mg/ml The NADhad also noted in its original deci- 1March. They will receive daily tips or facts via email potassium citrate, 2.6mg/ml sodium chloride and sion that Meda had relied primarily on mel- or Facebook and areminder to take their vitamin 2.53mg/ml citric acid, the 62.5ml sachets add to the product. All those who register for the programme existing line of ready-to-drink formulas, effervescent atonin studies to support its claims, and had not will also have the chance to win afamily ticket to tablets and powders under the Gastrolyte umbrella. provided anytesting on MidNite PM’sblend Dutch theme park Efteling. Available in orange and strawberry flavours, the of ingredients.This would have shown whether Omega is promoting the programme via Gastrolyte Jelly-Ice Blocks would be supported by advertisements on its website, on Facebook and in such pharmacy-specific point-of-sale materials, Sanofi theblend worked with melatonin to provide the women’s magazinesasFemmes and Libelle.Itisalso pointed out, and amodule on its ‘Nosy Club’ online “claimed sleep-related benefits”. providing point-of-sale materials to pharmacies. pharmacy training resource. OTC OTC OTC

18 OTC bulletin 29 November 2013 OTC29-11-13p18-20FIN_Layout 1 26/11/2013 15:59 Page 3

MARKETING NEWS OTC

Sponsorship Campaigns MarketingCampaigns Sanofi scores Reckitt focuses on twins Cenovis tie-up to highlight E45 difference anofiConsumer Healthcare’sCenovis multi- Svitamin brand is sponsoring the Australian wins are the focus of Reckitt Benckiser’s national association football team, nicknamed T (RB’s) £6 million (C 7million) campaign to the Socceroos,asits official vitamin partner. highlight the difference regular daily use of its Scheduledtolast for twoyears, the part- E45 skincare brand can maketothe skin “in nership was“the most exciting in the brand’s terms of hydration and general condition”. history”, the French company’sAustralianbusi- Pointing out that winter exacerbated dry-skin ness claimed. It marked an “ambitiousdirec- problems, the firm said the campaign would tion for Cenovis”, Sanofiadded, which would run until Christmas and again throughout2014. “cement the brand front and centre within the It would focus on the ‘core’ E45 Cream and Television advertising for E45 uses sets of female family vitamin segment”. E45 Lotion products, as well as the range of twins to highlight the difference E45 lotion products Football washugely popular with Australian E45 body lotions. and E45 Cream can make to the skin families and one of the fastest-growing sports The twins currently feature in twonational among the younger population, commented the television advertisements. Using the sign-off firm’sdirector LukeFitzgerald. message: “E45 makes all the difference”, each The Socceroos have also qualified for the spot shows afemale twin that uses an E45 prod- Brazil 2014 World Cup. uct, and one that does not. Adedicated television campaign will sup- In the 30-second creative for the E45 Cream, both twins are said to suffer from eczema. As one twin applies the product, the other stands scratching her skin. The spot notes that E45 is the number-one the Touchably Smooth, Nourish &Restore, and selling brand for dry skin in the UK, and is Intense Recovery lotions, which were launched “clinically proventotreat the symptomsofdry along with aSilkyRadiance variant in 2012 and eczema-prone skin”. (OTC bulletin,16April 2012, page 13). This Meanwhile, the creative for the lotion range has since been discontinued. highlights that 88% of over4,000 women sur- As well as the television campaign –which veyed preferred E45 Lotion –which is said will run across arange of channels during both Socceroos midfielder Matt McKay stars in television advertising promoting the partnership to contain “all the goodness of E45” –totheir peak daytime and evening programmes –there current product. would be digital activity across “a variety of port the partnership, with the current spot show- Apack shot at the end of the spot shows online sites”, RB noted. ing Socceroos midfielder Matt McKay thank- OTC ing his family for supporting his ambitions to become afootballer. MarketingCampaigns Pointing out that Cenovis has been trusted by Australianfamilies for 70 years, on-screen Thornton &Ross runs Covonia contest text highlights that the brand is nowa“proud” sponsor of the team. The creative then ends with hornton &Ross is offering the UK pub- individually or in groups –imitating the well- the tagline: “Cenovis. Powering the Socceroos”. Tlicthe chance to be part of anational ad- known “Covonia” chant. Entrants have until Extensive digital activity and outdoor ad- vertising campaign for its Covonia cough brand 31 December to post their video to the brand’s vertising would further support the campaign, through its “Give it some clout!” competition. Facebook page, or via Instagram and Twitter Sanofipointed out, while pharmacies would To enter,applicants aged 16 years and over using the hashtag ‘Covonia’. receive arange of display options. must upload avideo of themselves –either Celebrity chef AinsleyHarriott –who cur- OTC rently provides the voiceover–will join apanel of judges to decide the winner.Aswell as win- ning the opportunity to record their ownvoice- IN BRIEF overinastudio –which will be used in a ■ SOHM –aUSmanufacturer of generic national television advertisement –the suc- pharmaceutical, nutraceutical and cosmeceu- cessful entrant will receive a£1,000 (C1,200) tical products –has launched its generic OTC cash prize. umbrella brand SohMed in its home market. The competition forms part of a£4million The range includes pain, alertness and ant- campaign to promote the Covonia range over

acid products. Entrants have the chance to win £1,000 and recorda the winter months. OTC voiceover for Covonia’s national advertising campaign OTC

29 November 2013 OTC bulletin 19 OTC29-11-13p18-20FIN_Layout 1 26/11/2013 15:59 Page 4

OTC MARKETING NEWS

MarketingCampaigns Blackmores encourages Australians to stress less

oneed to stress” is Blackmores’ mes- “Nsage to Australian consumers in its AU$5 million (C 3.5 million) campaign to pro- mote its range of stress supplements. Claiming that one in five Australians report- ed moderate to severe levels of stress, the nat- ural health firm said the campaign aimed to “ac- knowledge the manyforms of stress” affect- ing people, and remind them that it could The “No Need to Stress” campaign promotes four key Procter &Gamble has partnered with US television products within Blackmores’ stress supplement range actor Tony Danza to show how its Metamucil fibre “help them find their balance”. brand “does more” by offering US consumers the chance Consumers are encouraged to visit the Black- of 25% on the purchase of ‘key’products in to nominate ahealth and wellness charity to receive mores website to complete astress quiz, allow- the stress range, including the Executive B aUS$100,000 (C75,000) donation in their name. Entrants must submit an essay by 16 December ing them to compare their stress levels with Stress Formula, Digestive Bio Balance, Sleep explaining why their chosen charity should receive what is said to be anationally representative Sound Formula and Sustained Release Multi + the money. sample of over1,500 Australians. Antioxidant variants. Danza will formpartofthe judging panel to choose the top 10 finalists, of which agrand prize winner Those who completed the quiz would be Participants in the stress quiz also have will be selected by fans via an online vote on the directed to relevant and helpful advice on stress, until 6January to submit their best ‘stress-bust- specially-created website, Domorethanyouthink.com. the companynoted, and would be prompted ing tip’ for the chance to win an “ultimate bal- The winner will also receive atrip to New York City to attend arecording of health-based talk to call its free Naturopathic Advisory Service. ance-restoring weekend”. The prize includes show The Dr.OzShow. The firm is also offering an online discount athree-night trip for twopeople to Fiji. OTC OTC

ProductLaunches RB India rolls out Gaviscon nationwide

eckitt Benckiser (RB) India aims to make launch would initiallybepromoted through RGaviscon the “number one heartburn spe- “medical detailing of Gaviscon to doctors and cialist brand” in its home market with the nation- pharmacists across keycities in India”. wide launch of the indigestion-relief liquid. “Gaviscon is an internationally well-estab- After successfully launching the product in lished heartburn specialist and is amongst the test markets in southern states of the country 19 powerbrands in the RB portfolio,”comment- –Tamil Nadu in 2011, and Andhra Pradesh, ed Akhil Chandra, managing director of RB Karnataka and Kerala in 2012 –the firm said India. “Our detailing efforts will focus on edu- it wasready to takethe brand ‘pan-India’, as it cating healthcare professionals about heartburn focuses on further strengthening its healthcare and the need for aspecialisttreatment to quickly portfolio in the country. and effectively treat heartburn,”headded. Noting that the target demographic was A150ml pack of Gaviscon Peppermint Liq- adults aged 25 years and over, RB said the uid Relief has aretail price of INR75 (C 0.87). OTC

Lehning Laboratories is promoting its Biomag Bayer has expanded its Bepanthen skincarerange in Agrumes treatment for stress, anxiety and tiredness France by launching agel treatment for redand with “widespread media coverage” in France. inflamed scar tissue under the name BepanthenCica. Television, press and internet advertising will Containing silicone and dexpanthenol, the supportthe brand, which has been overhauled odourless and preservative-free gel comes in a20g with a“100% natural” new flavour. bottle and can be used to treat redness and “The taste of the tablet is judged to be ‘quite good’ inflammation in scars up to two years old. or ‘verygood’ by 79% of people who tested it,” according Pharmacy-press advertising features the slogan: to pharmacy-press advertising for the product, “Scars? It’s not too late”, and shows awoman delicately compared to just 32% for the non-flavoured version. removing areddened scar from her shoulder. Advertising for the chewable tablets –which BepanthenCica also includes amassage ball contain three magnesium salts –also points out that aimed at helping to smooth skin around ascar.This Biomag Agrumes is available through France’s ‘free can be used on scars that areatleast amonth old. access’ self-selection initiative. OTC OTC

20 OTC bulletin 29 November 2013 OTC29-11-13p21Events_Layout 1 26/11/2013 16:10 Page 2

EVENTS OTC

DECEMBER 31 January 25 February MARCH ■ Understanding the ■ Hot Topics in 16-18 December Decentralised and Advertising 12-14 March ■ Pharmacovigilance Mutual Recognition London, UK ■ 9th Nutra India Summit London, UK Procedures Aone-day event run by the UK Bangalore, India Regulatory developments in phar- London, UK Medicines and Healthcare prod- Athree-day nutraceutical, func- macovigilance and drug safety The differences and similarities be- ucts Regulatory Agency(MHRA). tional foods, dietary supplements monitoring in the European Union tween the decentralised and mutual Contact:MHRA. and ingredients show. (EU), Japan and the US will be recognitionprocedures will be dis- Tel: +44 20 3080 6000. Contact: Niket Donde,MMActiv. covered at this three-day seminar. cussed at this one-day meeting. Fax: +44 20 3118 9803. Tel: +91 22 2438 5007 9. Contact:Management Forum. Contact:Management Forum. Email: [email protected]. Fax: +91 22 2437 9882. Tel: +44 1483 730071. Tel: +44 1483 730071. Website: www.mhra.gov.uk/ Email: [email protected]. Fax: +44 1483 730008. Fax: +44 1483 730008. conferences. Website: www.nutraindiasummit.in. Email: registrations@management- Email: registrations@management- 25-28 February forum.co.uk. forum.co.uk. JUNE OTC Pharma Asia 2014 Website: www.management- Website: www.management- ■ Singapore 3-5June forum.co.uk. forum.co.uk. IBC Asia’sfour-day conference ■ 50th AESGP JANUARY FEBRUARY brings together OTCbusiness lead- Annual Meeting ers and marketers to share the suc- London, UK 30 January 6-7February cess factors and nuances in dif- ‘Self-Care –the Gold Standard in ■ Basics of ■ 6th PharMeet ferent markets. Performance and Healthcare’ is the theme of the an- Pharmaceutical Marrakech, Morocco business opportunities across dif- nual meeting of the Association of RegulatoryAffairs This two-day event is designed to ferent product categories will be the European Self-Medication In- London, UK offer delegates the opportunity to covered and case studies from pro- dustry,the AESGP.The 18th World Aone-day course run by The Org- network as well as the chance to fessionals from across the region Self-Medication Industry (WSMI) anisation for Professionals in Reg- strikelicensing deals for awide will be discussed. Fora15% dis- General Assembly will be held in ulatory Affairs (TOPRA). range of products. count quote: P46233OTCB. conjuction with this three-day event. Contact:TOPRA. Contact:PharMeet. Contact:IBC Asia. Contact: AESGP. Tel: +44 20 7510 2560. Tel: +34 91 637 0660. Tel: +65 6508 2401. Tel: +32 2735 51 30. Fax: +44 20 7537 2003. Fax: +34 91 637 49 55. Fax: +65 6508 2407. Fax: +32 2735 52 22. Email: [email protected]. Email: [email protected]. Email: [email protected]. Email: [email protected]. Website: www.topra.org. Website: www.pharmeet.com. Website: www.otcpharmaasia.com. Website: www.aesgp.eu/events.

29 November 2013 OTC bulletin 21 OTC29-11-13p22-23Draft_Layout 1 26/11/2013 17:03 Page 2

OTC BUSINESS STRATEGY Industrylooks for morefromoutsourcing

With traditional business models under pressure and the definition of Maxinutrition –which it acquired at the end consumer healthcare growing ever broader,OTC manufacturers are looking of 2010 (OTC bulletin,16December 2010, page 1) –was aprime candidate, he revealed. forpartners that can provide market access and services that will enable Thefirm planned, he said, to refresh the brand them to get the full value from their portfolios, according to speakers at a early next year in abid to engage with more conference in London, UK, organised by the global outsourcing specialist mainstream consumers. The Ceuta model offered GlaxoSmithKline Ceuta HealthcareInternational Alliance. Matt Stewart reports. a“one-stop shop” to help growits business in apractical and cost-effective manner,Scarlett- ompanyconsolidation in the OTC mained unsold, and in August last year the com- Smith maintained. market has led to ever-more com- pany announced that it would be rebuilding “In Europe, we are very much considering plex product portfolios and the need the brand in major markets around the world where to deployour internal resources and Cto maketough management choices (OTC bulletin,10August 2012, page 4). where we’dbebetter offleveraging the exper- around resource allocation, strategic focus and Alli no longer fitted within Consumer Health- tiseofpartners,”Scarlett-Smith explained. investment criteria, according to GlaxoSmith- care’sstrategic focus, butuntil the supply prob- “For the purpose of augmenting reach, or Kline’sRoger Scarlet-Smith. lems (OTC bulletin,16March 2012, page 1), where we have asmaller footprint or no critical Speaking at arecent conference in London it had been a£100 million (C120 million) brand mass, we are very flexible in our thinking,”he organised by the Ceuta Healthcare International in Europe, Scarlett-Smith noted, and thus repre- added, “and frankly this is an area where we Alliance, Scarlett-Smith –president of Glaxo- sented a“fantastic opportunity for outsourcing”. want to be led by pragmatismand what works, SmithKline Consumer Healthcare’sEurope, What the brand needed, Scarlett-Smith claim- not egoand pride in ownership.” Middle East and Africa (EMEA) business – ed, waspartners that could expand its “trade- said that while these tough decisions needed to channel reach and geographic footprint”. Pragmatic approach to creating value be made, outsourcing presented an “opportunity GlaxoSmithKline wanted to “foster” the Apragmatic approach to creating value had to maximise the potential of avaluable asset” brand out to partners, Scarlett-Smith added. been the driving force behind the Ceuta Health- that did not fitwithin afirm’sstrategic focus. This would allowthe companytofocus on its care International Alliance overthe past few Outsourcing offered GlaxoSmithKline “prac- core areas, while still getting the most out of years, according to Peter Burrows, the Alliance’s tical and cost-effective solutions for managing what had the potential to be avaluable asset. international business development director. brands and geographies outside of our keycat- This process had nowbegun, Scarlett-Smith Outsourcing wasnolonger just about mak- egories of focus”, Scarlett-Smith pointed out, revealed, with GlaxoSmithKline partnering with ing efficiencysavings, Burrows insisted, but especially in markets where the firm had no sales amember of the Ceuta Healthcare International about offering arange of market-expansion capabilities, or countries where it had no scale. Alliance recently to relaunch the product in tools built on a“unique combination of solu- It also enabled the firm to realise the value Finland and Sweden. tions and services”. of brands that fell outside of its keycategories, Listings in keySwedish wholesalers had Increasingly,manufacturers were turning to he added, highlighting the options for Glaxo- been gained, Scarlett-Smith pointed out, while outsourcing partners, Burrows noted, to help SmithKline’sweight-loss brand Alli (orlistat). in Finland its partner had achieved“65% weight- rationalise complexportfolios,better focus the Avictim in the past fewyears of Glaxo- ed and 50% numeric distribution”. management of brands and build critical mass SmithKline Consumer Healthcare’scategory Looking ahead, plans to relaunch the brand in neworexisting markets. focus as well as supply problems, Alli wascon- in 2014 through third parties in Denmark and This approach also gave innovative develop- sidered to be anon-core asset. Norway were underway,headded, with further ment companies acost-effective wayoflaunch- Despite rivals’ appetite for GlaxoSmith- partnerships on the horizon that could see Alli ing products globally,headded, while providing Kline’sother non-core OTCbrands, Alli re- back on the market in Austria, Germanyand generic pharmaceutical firms and private-equity Switzerland before the end of next year. groups –which were finding the OTCspace in- Partnering with a‘market-expansion services’ creasingly attractive –with aroute to market. companyenabled GlaxoSmithKline to keep tail Ceuta had developed arange of “newser- brands in the Consumer Healthcare business vice offerings and enhanced benefits” for its “wagging”, Scarlett-Smith pointed out. Alliance, Burrows explained. These included His companybenefitted from having adedi- consumer and shopper insights, brand produc- cated client manager within the Ceuta Health- tivity evaluation, mergers and acquisition in- care InternationalAlliance to liaise with the var- telligence and economic insights, he revealed, iouscountry partners, Scarlett-Smithsaid, while which complemented its retail and category- the brands receivedthe focus theydeserved. management services. This multi-market brand fostering model The potential of the Ceuta model had al- could also benefit the core brands that the firm ready been recognisedbythe private-equity planned to expand globally,Scarlett-Smith noted, sector,Burrows noted, pointing out that last Peter Burrows, Ceuta HealthcareInternational Alliance’s and those brands within its four keycategories year US-based firm Juggernaut Capital Partners international business development director,said outsourcing was no longer just about cost savings, but that didn’tget the attention theydeserved. had taken asignificant stakeinthe business. was also about offering market-expansion tools Consumer Healthcare’ssports-nutrition brand Explaining Juggernaut’srationale for the

22 OTC bulletin 29 November 2013 OTC29-11-13p22-23Draft_Layout 1 26/11/2013 17:03 Page 3

BUSINESS STRATEGY OTC

move,John Shulman, the Washington D.C. services offering and support the group as it company’sfounder and managing partner,noted invested in “complementary added-value busi- that companies were “reshaping, repositioning ness”, Shulman insisted, astrategy that would andrestructuring” for future growth. Theywere benefit both Alliance members and their clients. outsourcing market-expansion services as a These expanded services, Burrows said, strategic tool to manage both geographical and would enable Alliance members to offer clients portfolio challenges. aquick and cost-effective wayinto channels “Based on our US experience, utilisation of and markets to which theywere either new, these types of service providers on aglobal or had maybe neglected overthe years. basis is set to explode, which is whyJuggernaut Alliance members at the conference were invested in the Ceuta Group,”Shulman said. presented with some opportunitiesbyclients In the US, Juggernaut had already under- looking for wider product distribution world- taken asimilar exercise by buying into out- wide as well as aproactive approach to busi-

sourcing services provider Advantage Sales & ness development. Roger Scarlett-Smith, president of GlaxoSmithKline Marketing, Shulman pointed out, which served Plans for core-brand Maxinutrition were de- Consumer Healthcare’s Europe, Middle East and not only the health and beauty markets, butalso scribed by some of Scarlett-Smith’scolleagues, Africa business, said outsourcing could help drive value from non-corebrands the food and drinks sector. while products for hair-loss disorders and pre- Less than twoyears after its initial invest- mature skin ageing were described by the rep- tributors that had lower margins. ment, Juggernaut had financed the consoli- resentative of another company. Opportunities Partners should deliverarange of market- dation of 27 of Advantage’sregional partners for oral-rehydration productswere outlined by expansion services, he insisted, that were impor- from across the US into the main business, Shul- athird firm, alongsidepresentationsonnicotine- tant to Procter &Gamble. These included reg- man revealed. This had created the “leading replacement therapies,non-contact thermome- ulatory services, pharmacistdetailing, in-store sales and marketing outsourcing organisation ters and portable insulin coolers. merchandising –toincrease brand visibility– in the US, serving blue-chip consumer pack- Don McKernan, Procter &Gamble’sglobal and customer-relationship management. aged-goods manufacturers”. pharmacyand drug channel manager,said that Procter &Gamble wasalready working suc- From 2004 to 2006, Advantage’searnings after almost twodecades of not paying attention cessfully with Alliance members, McKernan before interest,tax, depreciation and amortisation to the pharmacychannel, the US firm wasnow said. In the UK, the companyhad along stand- (EBITDA) had doubled, he said, as best prac- looking for partners with the right tools to ing relationship with Ceuta –which had de- tices were applied across the consolidated entity. help it win in the sector.Having acquired the livered anumber of successes and demonstrat- This had drivenmargin improvement and rev- Vicks cough and cold brand in the mid-1980s, ed the values Procter &Gamble sought in a enue growth through expansion into adjacent the firm had simply let the brand get swallowed partner –while in Asia the companywas work- segments. Further “tuck-in” acquisitions meant up by the “Procter &Gamble machine”, he said. ing closely with DKSH. that by 2012, he added, its EBITDAhad doubl- Explaining more about Procter &Gamble’s ed again. “Wetook our eye offthe pharmacist” relationship with DKSH, McKernan noted that This model, Shulman said, would nowbe “Wetook our eyeoff the pharmacist,”Mc- for the past five years it had provided ser- applied to the Ceuta Alliance. Kernan admitted, “by reducing our coverage vices and solutions for the companyinthe pan- Currently,Ceuta had invested financially in to almost nothing.” Asia region, such as joint business planning, very fewofits Alliance members, Shulman ex- Twoyears ago, Procter &Gamble took the expert local knowledge and regulatory services. plained. By 2016, the plan wasfor Ceuta to be decision to makeamends and focus on the phar- It had also givenProcter &Gamble the cover- invested in around aquarter of its Alliance mem- macychannel, McKernan said, by establishing age needed in crucial trade channels and quality bers and twoyears later the companywould its Global PharmacySolutions division. detailing, first with dentists –todrive sales of have atangible interest in athird of the Al- The division wasbuilt to “win” in pharmacy its oral-care range –and nowpharmacists. liance, he added. and offer arange of pharmacy-focused products Procter &Gamble wasnow working with Juggernaut’saim wastogrowCeuta’sglobal from across its beauty,health, feminine care, DKSH on over20new projects, he revealed, oral-care and skincare lines, McKernan said. andhad built five business teams to work across The company’splan wasnow to “maximise the partnership. scale” in the channel to enable Procter &Gam- DKSH had brought to the table exactly what ble to have the “broadest reach and coverage”, Procter &Gamble wanted, McKernan said. It McKernan noted. had provided net sales figures, value share re- Procter &Gamble waslooking for inter- ports, trade investment breakdowns and quar- national partners to help develop its pharmacy terly return-on-investment numbers. offering, McKernan acknowledged, buthe Above all, DKSH had been proactive.New warned that the firm’scriteria were strict. business development ideas had drivengrowth Partnership with Procter &Gamble was and had exploited newopportunities, he added. about “joint-value creation”, McKernan said. Procter &Gamble was“not lean and agile, Apartner needed to be more than just a“box- and could be frustrating”, McKernan admitted. moving distributor”. But if potential partners were prepared to put At the very least, potential partners needed their offering “front and centre”, and learned Don McKernan, Procter &Gamble’s global pharmacy to have abroad reach –atleast 70% weighted to “push our buttons”, partnering with Procter and drug channel manager,called on potential partners to deliver arange of services that wereimportant distribution in the territory –McKernan said, &Gamble could pay off, he said. to manufacturers andoffer better cost efficiencies than other dis- OTC

29 November 2013 OTC bulletin 23 OTC29-11-13p24-27FIN_Layout 1 26/11/2013 16:04 Page 2

OTC DISTRIBUTION Synergies spell trouble for OTC firms

McKesson’srecently-announced takeoverofCelesio and last year’stie-up executive officer,has also highlighted oppor- between Walgreens and Alliance Boots may increase the pricing and discount tunities “to partner with large and mid-tier manufacturers to enhance their supply chains”. pressure on OTCmanufacturers, butitalso offers them opportunities, Schmidt believesthat the twodistribution Simon-Kucher &Partners’ Fabian Schmidt tells Matt Stewart. giants will flextheir size and multinational reach at the expense of the negotiating power of OTC hether this month’sMcKesson/ mainly local and therefore do not offer much manufacturers. “Greaterdirect consumer access Celesio deal and the newWal- room for synergies. “It is evident,”hesays, “that and increased private-label offerings further greens/Alliance Boots/Ameri- amajor chunk of the synergies is expected to tip the balance of power in favour of these WsourceBergen axis represent come from procurement.” global distribution and retail groups,”hesays. bigger threats or opportunitiesfor OTCfirms “The companies hope to use their increased “This will inevitably lead them to ask for higher remains to be seen. What is clear,however,is size to negotiate better prices from manufactur- discounts from manufacturers.” that the OTCbusiness landscape will be forever ers. The fact that Alliance Boots and Walgreens Noting the twogroups’ limited power to in- altered by these transatlantic comings together. have already reached out to some manufactur- fluence sales of patent-protected prescription Once theyhavecompleted their US$8.3 bil- ers, putting pressure on sell-in prices, supports brands, he insists their greatest leverfor syner- lion (C6.2 billion) merger,McKesson and Cele- this hypothesis,”headds. gies is with generics and OTCproducts. sio will supply around 120,000 pharmacies and Schmidt makes clear that the business pri- “Both pharma wholesaler and retailer groups hospitals daily across Brazil, Canada, Europe orities of the newly-formed companies are not will likely first focus on their biggest procure- and the US. About 11,000 of the total number the same. While Alliance Boots and Walgreens ment accounts where their negotiation power is of pharmacies will either be owned by the com- represent the biggest pharmacychains in both easiest to leverage, namely the big generics bined business or will be part of avirtual net- Europe and the US, McKesson is the largest players,”hemaintains. work operated by it. pharmaceutical distributor in the US and Canada. Both the prescription and OTCportfolios Celesio’scontribution to the pharmacytotal When combined with Celesio, the merged of generics manufacturerswill be affected, will be 2,200 wholly-owned pharmacies and a entity will be more focused on wholesaling, Schmidt notes, adding: “But it is only amat- virtual pharmacynetwork of over4,000 stores. ter of time until theyapproach It will become part of McKesson’sDistribution “While Celesio and McKesson play a branded OTCcompanies.” Solutions division, led by group president Paul greater role in delivering to pharmacies Alliance Boots and Walgreens Julian. Commenting on the tie-up, Julian said and hospitals, Alliance Boots and have acombined spend on non- he looked forward to “ultimately aligning our prescription branded medicines organisations more closely in the areas where Walgreens have stronger direct access to of more than US$10 billion, ac- we can deliverfurther value for our customers consumers through their retail business.” cording to Zimmerman. and manufacturing partners” (OTC bulletin,8 In the face of such buying November 2013, page 31). Schmidt believes, although it will also have a strength, Schmidt says, OTCmanufacturers Synergies of between US$275 million and significant number of pharmacies. should prepare themselves for inevitable changes US$325 million are expected by McKesson by “The role and importance of the twonewly- in the balance of power during negotiations. the fourth year after it takes operational con- created pharmaceutical distribution and retail He recommends that theythoroughly analyse trol of Celesio. giants will differ for OTCcompanies,”he allalternativesonthe table before giving in to This is considerably less than Walgreens maintains. “While Celesio and McKesson play demands for price reductions. andAlliance Boots intend to realise from their agreater role in delivering to pharmacies and Akey question relatestothe actual balance association. Gregory Wasson, Walgreens’ pres- hospitals, Alliance Boots and Walgreens have of power.“To what degree can an Alliance Wal- ident and chief executive officer,has said that stronger direct access to consumers through greens or aMcKesson Celesio really influence he expects to see combined synergies across both their retail business.” yoursales overtime and in what areas can they companies of US$1 billion by the end of 2016. Walgreens’ and Alliance Boots’ extensive do so?” Schmidt asks. “If there is arelevant Commenting at the time of Walgreens’ first- range of private-label offerings is aserious potential impact on OTCmanufacturers’ sales, quarter results to 28 February 2013, he said the threat, Schmidt adds, to manybranded OTC then Iwould advise them to compare the profit firm’spartnership with Alliance Boots wason products. As aresult, he maintains: “Alliance impact of various alternatives.” track to achieve combined sales and cost-sav- Walgreens seems more influential than McKes- “For example,”heasks, “what if you gave ing synergies of US$100 million to US$150 mil- son Celesio in terms of direct influence on phar- in on price, butkept the same volumes? And lion in the first year after the US$6.7 billion deal macysell-out.” what if you decided to walk away; would vol- wascompleted in August 2012, giving Wal- Schmidt outlines three consequences for OTC umes really shift to competitor brands or just greens a45% stakeinthe privately-held firm manufacturers of transatlantic consolidationof to other wholesalers and pharmacychains?” (OTC bulletin,29March 2013, page 22). pharmaceutical distribution. The first twoare not “What would be the impact of ‘in-between’ Noting the disparity between the twosynergy favourable: adrop in their negotiating power and scenarios,”hecontinues, “in which additional targets, Fabian Schmidt –managing director of an increased vulnerability to pricing pressures. discounts are granted, butare attached to cer- strategy and marketing consultant Simon-Kucher However, the third may be good news: bet- tain conditions?” &Partners in Madrid, Spain –points out that ter support in developing their global brands. Schmidt explains that price is the biggest costs for staff, retail outlets and logistics are Bob Zimmerman, Walgreens’ internationalchief leverfor profits, and that price concessions may

24 OTC bulletin 29 November 2013 OTC29-11-13p24-27FIN_Layout 1 26/11/2013 16:04 Page 3

DISTRIBUTION OTC

be difficult to offset through additional volumes. Retail Wholesale Total “If the conclusion is that you have to increase discounts, at least try to makethem perform-

ance-dependent,”headvises, adding as an ex- Alliance Boots ample that anywholesaler or pharmacyactiv-

ities that drive product sell-out could be con- Walgreens* sidered for conditional discounts. Noting OTCfirms’ increased vulnerability Walgreens and to pricing pressure due to greater pricing trans- Alliance Boots parencyacross awider number of countries, Celesio Schmidt says this broader visibility makes it

easier for the twodistribution giants to exploit McKesson** differencesinOTC manufacturers’ prices and their terms and conditions across borders. McKesson “Alliance Walgreens and McKesson Celesio and Celesio will look into the prices theyare currently pay- 020406080100 120 140 ing in the different countries and will try to ex- Sales (C billions) ploit anydifferences in price and trade terms *Walgreens’ net sales in the 12 months to 31 August 2013 theyfind,”heexplains. ** McKesson’sDistribution Solutions sales in the 12 months to 31 March 2013 Schmidt again believesthe immediatefocus Figure1:Alliance Boots’ Health &Beauty (retail) and Pharmaceutical Wholesale sales in the 12 months to is likely to be on those accounts with the great- 31 March 2013; Celesio’s Patient & Consumer Solutions (retail) and Pharmacy Solutions (wholesale) sales in 2012; Walgreens’ net sales in the 12 months to 31 August 2013; and McKesson’s Distribution Solutions sales est impact and where pricing discrepancies can in the 12 months to 31 March 2013. Total figures for the combined companies areoverall sales in the periods. be exploited most easily.This will be generics Sales figures converted to C euros at £1 = C 1.20 and C 1=US$1.33 (Source –Company reports) and large multinational OTCbrands sold in manydifferent countries, he says. “OTC companies will be forced by the new Schmidt points out that while both acquisi- Products sold in the US and in English- global pharmaceutical distribution and phar- tions will certainly lead to increasing pressure speaking European countries will be especially macyplayers to align their discount levels and on sell-in price as well as terms and condi- on the radar,headds, since their packaging will conditions. And these newplayers will naturally tions for OTCmanufacturers, the newly-formed not have to be modified. takethe country with the most favourable terms transatlantic players are better positioned to “Alliance Walgreens and McKesson Celesio and conditions as abenchmark for negotiations.” support OTCmanufacturers “reaching out with will use anyindefensible price difference that Ideally,Schmidt recommends, OTCman- their brands across the globe”. is large enough further to drive down sell-in ufacturersshould proactively align their dis- “Efficiently-organised, multinational new prices, or to source products where theyare count systems across countries before theyare product launches and multinational campaigns cheapest,”Schmidt observes. approached by the newplayers for negotiations. –along with ensured product availability Furthermore, he adds, the twonew global However, there could be good news for OTC through covering white spaces on the map – players will investigate the size and type of manufacturers, Schmidt continues. Indeed, Wal- are some of the advantages that these multi- discounts theyget from manufacturers’ per- national pharma distribution and re- formance-relateddiscount schemes across those The newly-formed transatlantic players tail players offer,” he notes. countries in which theyoperate. arebetter positioned to supportOTC However, to makethe most of “Alliance Walgreens and McKesson Celesio suchadvantages, OTCmanufacturers will try to exploit anyinconsistencies across manufacturers “reaching out with their must establish global key-account countries. Forexample, if amanufacturer grants brands across the globe”. teams, Schmidt believes. These will aperformance-based discount in one country not only exploit the opportunities,but –that could be related to marketing campaigns greens’ Zimmerman has been keen to empha- also ensure “aligned behaviour” across borders or volume-based –the same discount will be sise partnerships. towards the newplayers in discount negotiations. their goal in all countries,” he says. “Our keystrategic objective is to move be- “Mergers and takeovers likethose between Schmidt advises OTCmanufacturers to align yond atransaction-based relationship to amore these major distributors offer opportunities for their terms and conditions relating to whole- strategic partnership that focuses on leveraging OTCmanufacturers in terms of global access salers and pharmacies with the value that these our scale and patient-reach to get manufacturers and efficiencies in implementation. But when distributors add. closer to their customers,”Zimmerman said. these global players form central procurement “In the consumer goods industry,manyman- He also promised “breakthrough solutions” negotiation teams, OTCmanufacturers will have ufacturers have been dealing with international in the areas of commercial product launches, to respond by setting up their ownequivalents, key-account buyers for years. However, many product lifecycle management and clinical trials. headed by the global keyaccount team, to est- of them have also struggled to defend incon- McKesson noted, when it announced the ablish alevel playing field,”heinsists. sistent terms and conditions.”Asaconsequence, Celesio deal earlierthis month, that the two “It is crucial that OTCcompanies start he adds, manycompanies have started to align firms’ customers would benefit from “global preparing today for achanging customer land- their terms and conditions across countries. distribution and logisticscapabilities”. They scape,”Schmidt concludes. “Theywill need to “The reasons whywholesalers and distrib- would be offered a“broad array” of technology defend their profitabilitywhile exploiting the utors are granted discounts in the OTCspace andbusiness services, as well as “operating best opportunitiesthe newglobal pharmaceutical today –and the levelofthese discounts –differ practices” across an extensive distribution net- distribution and retail companies offer.” widely across countries.” work that covered three continents. OTC

29 November 2013 OTC bulletin 25 NEW

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Manufacturers Wholesalersand Retailers Nählstedt joins Boots expands its UK team Probi as CEO with Walgreens’ executive wedish probiotics specialist Probi has ap- S pointed Peter Nählstedt as its chief exec- lliance Boots has named Richard Ash- Richard utive officer,effective from 7January 2014. Aworth –Walgreens’ corporate operations Ashworth Nählstedt joins Probi from engineering firm vice president for the Western United States – TrelleborgMarine Systems, where he wasre- as director of healthcare at its Health &Beauty sponsible for the firm’soperations in Europe, UK and Ireland division. North Africa and South America. Reporting directly to Simon Roberts,Health Previously,Nählstedt had spent eight years &Beauty UK and Ireland’smanaging director, at GE Healthcare where he held various global Ashworth will lead the development and deliv- executive positions with afocus on strategy, ery of the “Boots healthcare offer” to customers marketing and sales. in the twocountries. Nählstedt will fill the position left vacant Ashworth is the latest senior manager to by Michael Oredsson,who departed the com- cross the Atlantic, following the start of a“strat- pany in May to become chief executive officer egic partnership” between the US drugstore role, Ashworth wasresponsible for the over- at fellowSwedish firm BioInvent (OTC bul- giant Walgreens and UK-based Alliance Boots all development of over2,000 drugstores and letin,31May 2013, page 31). in August last year (OTC bulletin,10August healthcarepoints of care in the US. Gun-Britt Fransson –who had served as 2012, page 8). acting chief executive officer since May –would In August,AlexGourlay left his role as head New marketing director return to her role as vice-president of research of the Health &Beauty division to become Meanwhile, Alliance Boots has promoted and development, Probi said. president of customer experience and daily Elizabeth Fagan –previously marketing direc- Commenting on the move,Per Lundin, chair- living at Walgreens (OTC bulletin,23August tor at Boots UK –tothe role of marketing direc- man of Probi’sboard, said Nählstedt had a 2013, page 31). tor,Health &Beauty International and Brands. “solid strategic and international” background. Commenting on Ashworth’sappointment, Faganwould be responsible for leading the Working with Probi’s“strong management Stefano Pessina, Alliance Boots’ executive chair- “strategic direction of the Boots brand across team”, Nählstedt would “propel Probi into the man, said the move would help to “further com- the Health &Beauty division”, the firm said. next phase of its development”, Lundin claim- bine” the best practicesofthe twocompanies. Furthermore, Andy Ferguson has taken on ed. This would include “continued expansion Since joining Walgreens in 1992, Ashworth the role of director of marketing, Health & and further broadening of the operation” in the has held anumber of leadershippositions at Beauty UK and Ireland. Previously,Ferguson international market, he added. the firm’sstore operations. In his most recent served as managing director of Boots Opticians. OTC OTC

LicensingAgreements PGT added that it would collaboratewith Swisse on manufacturing to help build the best PGT expands VMS reach with Swissedeal infrastructure to support its global expansion. Swisse announced in May last year that it ■ Continued from front page of the leading players in the US$80 billion (C 59 wasseeking “local investors” to provide “in- -keting scale advantages, and global regulatory billion) global VMS market,”the firms said. frastructure, retail access, distribution and fund- andgo-to-marketexpertise of PGT Healthcare”, Radek Sali, Swisse’schief executive officer, ing” to launch its products in Asia, Europe and the companies claimed, along with the “VMS insisted that PGT wasthe “ideal partner” to the US (OTC bulletin,17May 2012, page 19). product development expertise,portfolio of drive the company’sglobal expansion. The companysaid it was“looking to sell equity more than 100 premium products, and unique in newinternationalsubsidiariestolocal part- marketing model of Swisse”. Adds to existing portfolio ners”, butstressed that “no stakeinthe Aus- Brian de Buitleir,PGT’schief executive offi- Swisse offers arange of vitamins and sup- tralian business” would be sold. cer, said Swisse’strack record in Australia was plements for men and women under the Swisse The proposed international range consisted “truly exceptional”. PGT looked forward to brand name; aline of dietary supplements based of “30 top-selling natural health products”, working closely with Swisse, he said, to “repli- on ‘superfoods’;and the Swisse Active sports- Swisse pointed out, including its Men’sUltivite cate this success around the globe”. nutrition brand. The firm also offers arange of and Women’sUltivite lines of multivitamins. PGT will roll out Swisse’srange of products Swisse-branded skincare products. The range would be distributed through mass- into parts of Europe and Asia in the next couple These will join PGT’sexisting VMS port- market retailers, the companynoted. of years, the twofirms explained, with launches folio, which includes the Metamucil fibre range, In March this year,Swisse launched 15 vita- planned in “more than 20 additional countries the Vibovit line of children’svitamins –sold pri- mins and dietary supplements in Walgreens around the globe by the end of the decade”. marily in Eastern Europe, butset to be launch- stores across the US, marking the first time the “The collaboration will endeavortoreplicate ed in Italy and the Netherlands in January 2014 range had been available outside of Australia. thesuccess of Swisse in Australiatobecome one –and other local VMS brands. OTC

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