I discussed the trends in OTC drugs in Part 1 and in consumer health education in Part 2 of this series. This article and the last piece of the series is a view of the future of OTC drugs in terms of industry growth trends.
Only a few years ago, more than 50% of OTC drug industry was concentrated in the U.S. and Europe mainly because regulatory bodies there were faster in adopting and approving changes in the over-the-counter drug developments. Many pharmaceuticals saw this strong growth and converted some of their prescription drugs to OTCs. Today, the growth in the OTC drugs in developed markets is less about conversions in drug status and more about innovation. The OTC drug sector is very competitive and despite the limited number of active ingredients in the market, there is a lot of room for innovation in terms of forms of drugs (e.g. liquid, tablets, etc.), dosage, and usage occasions. Additionally, most consumer goods companies as well as pharmaceuticals invest in research for development of new formulas to cure minor ailments and potentially get approval for more active ingredients in OTC drugs.
Another major growth driver in the industry is expansion into emerging markets. As regulatory environment gets more suitable for OTC drugs, many global companies bring their products to emerging markets. The major difficulty and opportunity in these countries is getting wide distribution. Even though the opportunity is quite obvious in terms of potential sales increase, most emerging countries don’t have drug store chains or regulations that let OTC drug sales in supermarkets. As a result, many OTC giants of Europe and the U.S. feel the need to adapt their strategies to a less centralized pharmacy store system, which makes gaining widespread distribution becomes a long and expensive process. Nevertheless, many companies are committed to realize the growth opportunity in emerging markets by promoting self-medication, increasing brand equities, and customizing price and promotional strategies.
The core driver of OTC drug sector growth is consumer awareness and demand for self-medication. As the population is aging in developed markets, more people are looking for less expensive and cumbersome ways of solving health problems. Additionally, thanks to the increased usage of healthcare data tracking and analysis systems in consumer technology like Apple’s Health App and many fitness watches, more people will be able to self-diagnose their minor ailments. Both of these trends in how consumers position healthcare in their lives indicate that people want less of hospitals, doctors, and prescriptions for the issues they can solve on their on – which is an open invitation for OTC drug manufacturers to satisfy this demand.
In conclusion, OTC drugs and consumer health sectors have been growing rapidly in the past years and they still have strong growth potential globally. Aging population, tech-savvy consumers in developed markets, and increased awareness in emerging markets create exciting development opportunities in the OTC drug sector. Consumers will also benefit from this trend by spending less for treatment of minor ailments and tracking their health better in the long term. OTC drugs sector is definitely worth watching in the upcoming years!