Last week, the first conference on Business Development and Innovation Opportunities in Consumer Healthcare/OTC organised by OTCToolbox and the Pharmaceutical Licensing Group was held in London. Most of the delegates came from Europe with a few from North America and India. The speakers were from primarily FMCG companies such as Reckitt Benckiser (RB) and Unilever, and from primarily pharmaceutical companies such as Boehringer Ingelheim and Thornton and Ross (Stada). This provided an interesting contrast in the approach to the consumer healthcare market. The primarily FMCG companies such as Reckitt Benckiser and Unilever are heavily focussed on consumers and talk about “thinking beyond discovery of drugs” and “digital technology is the future” especially amongst the millennial generation born since 2000, whereas the primarily pharma consumer healthcare companies take a more traditional approach to marketing driven by their pharma heritage. Roberto Funari, Executive Vice-President, Category Development Organisation at Reckitt Benckiser questioned how retailers and pharmacies would adapt to the digital age. For example would there be ‘virtual shelves’? The impact of digital technology on healthcare is becoming increasingly important and as a result the PLG is holding a conference at the St Pancras Renaissance Hotel, London on 19th May (see below and attached).
Pharmaceutical Business Development in the Digital Health Sector:
current trends and future impact
St Pancras Renaissance Hotel, London
Thursday 19th May
Speakers from PWC, AstraZeneca, Umotif and OJ-Bio will present on business strategies for a digital world, how pharma can work with digital companies, how digital tools can help patients manage their health and digital point of care diagnostics
Full details are available at www.plg-group.com/events/plg-spring-meeting and please see the attached programme and booking form.
To put into context what consumer healthcare companies are doing in business development, Deborah Wilkes of OTCToolbox presented the trends from 2015 including mega OTC deals reshaping the global OTC industry, big pharma including OTC businesses in asset swaps, generic companies building an OTC presence and smaller companies acquiring brands. She said OTC consolidation showed no signs of slowing. Some companies such as J&J have a mixed business model with pharma, devices and consumer healthcare while others are spinning out OTC as a separate company or business. In terms of separating the OTC business within the company, Oliver Freichel, Corporate Vice President BD, Strategy and Rx to OTC Switches at Boehringer Ingelheim Consumer Health Care explained, the benefit of a separate OTC business in terms of cost transparency, the ability to restructure the portfolio and make the business more attractive based on cross functional teams with clear key performance indicators. The need for cross functional teams, including for example regulatory affairs, was reinforced by the presentation from Dorothee Klöpf, Senior Manager Regulatory Affairs at Diapharm and Annemarie Dengler, Director Business Development at red OTC development. They explained that product innovation is a must with 25% of OTC products in Germany originating in the past 5 years. There are a number of product innovation and regulatory options for companies to consider when developing, a medicinal OTC product, a food supplement, a cosmetic and a medical device. The examples they showed demonstrated some of the challenges with each of these options to deal with constantly changing regulatory requirements.
Although the FMCG and pharma companies have a different approach to the market, their approach to innovation and business development is similar. Both rely on continual internal innovation and external collaborations to develop new products. According to Jonathan Hague, Vice President Open Innovation at Unilever, 54% of the value of the pipeline is from partnerships with universities and companies. The importance of innovation was also mentioned by Andy Tisman, Global Senior Principal for Consumer Health at IMS Health. In Western Europe and North America innovation including line extensions and Rx to OTC switches accounts for two thirds of growth. The main area of growth is emerging and developing markets which accounted to 73% of global growth in the 12 months to the end of September 2015. So the challenge is how to achieve growth in mature markets such as Western Europe and North America. In this area, the top 10 consumer healthcare companies are growing less than the market demonstrating that smaller companies are more adept at innovation. This adeptness at innovation was amply demonstrated by Dieno George, CEO of Thornton and Ross who showed how a sales increase of 300% was achieved in the 12 year period between 2001 and 2013. It was based on acquisition of 21 brands without external funding, the launch of a novel head lice preparation that now accounts for about 40% of the UK market and constant innovation in terms of line extensions of existing brands. A similar story for an SME company was presented by Yvan Vindevogel, who is founder and CEO of Damier Group and Executive Chairman of Vemedia Consumer Health. Like Thornton and Ross, Vemedia grew by a combination of acquisitions and innovation but in this case supported by external funding.
But acquiring and developing brands is not sufficient, value creation in consumer healthcare requires a mixed business model with both FMCG and pharmaceutical capabilities. By implication a company driven by a large FMCG or pharmaceutical parent may not be able to successfully combine these capabilities effectively in a relatively small consumer healthcare division and may explain why SMEs are more adept at innovation.
The level of interest in this conference was very high, with around 150 delegates present. Delegates commented that it provided a facility for consumer healthcare companies to exchange views and to network like they are able to do at similar conferences for pharmaceutical and biotech companies. There will be a second OTC Conference and Networking Event in London on 2nd and 3rd of March 2017. Don’t miss it!
In-depth reports of the conference will be available from OTC Toolbox www.otctoolbox.com