1. Consumer Health
Keeping pace with the burgeoning Asia-Pacific OTC Market
By Katherine Te, Senior Manager, Offering Management Asia Pacific

2. In recent years, worldwide sales of over-the-counter (OTC) drugs—medicines sold without the aid of a
prescription or the governance of a physician—have surged. Self-diagnosis and self–medication have
created momentum, as has the greater availability of healthcare information, thanks to media ranging
from print to TV. Additionally, OTC drugs typically carry fewer side effects and warnings than prescription
medicines, tend to be more affordable, and can help to manage acute symptoms such as pain and cough—
all of which have been key factors in the market’s growth.
Once a secondary line of business for many
multinational pharmaceutical companies, OTC
drugs now stand in the spotlight. Nowhere is
this more true than in Asia Pacific, where for
the third consecutive year OTC sales in the
region (excluding Japan) have significantly
outpaced the global OTC market growth. In
fact, according to the September 2012 IMS OTC
Global Analysis, MAT (Moving Annual Total), the
market grew by 16% over 2011—a remarkable
14 percentage points higher than the global
OTC market growth rate.
Furthermore, as of September 2012, OTC sales
in the Asia-Pacific region account for 21% of
global OTC sales.
“OTC drugs are the talk of the industry here
in Asia Pacific,” confirms Katherine Te, Senior
Manager for Consumer Health, Asia Pacific.
“General pain relief products, expectorants, skin
treatments, adult multivitamins, asthma products and anti-allergens, cold and flu remedies, anti-diarrheals and calcium supplements have all
experienced consistent double-digit growth since 2010; and many companies have been reengineering their business models to capitalize on
the trend. They’re also recognizing the opportunity inherent in non-reimbursed markets, especially within young healthcare infrastructures.”
While local companies have always focused resources on this business space, what’s new and game-changing is the increasing number
of multinational companies (MNCs) such as GlaxoSmithKline, Johnson & Johnson, Pfizer and Sanofi, who are now actively exploring this
market. Leveraging both their own market knowledge, and a general consumer preference for well-known brands, these firms are extremely
well-positioned to capture the opportunity here.
UNDERSTANDING THE MARKET
Developed OTC Markets
An excellent way to gain insight into this market
is to look closely at developed OTC markets—
those markets in which OTC advertising
and self-medication are established norms.
Australia, Japan, Singapore and the Philippines
all fall into this category and are distinguished
by the following characteristics:
• Self-medication is established as a norm in
the consumer mindset, and is reinforced by
advertising messages.
• Products are highly accessible and consumers
are clear in their preference at point-of-sale.
GLOBAL OTC
OTC MARKET TRENDS (PAST 3 YEARS) IN % BASED ON USD
2010
0
5
10
15
20
25
2011 2012
9 10 2
22 21 16APAC EXCL. JAPAN
GLOBAL OTC APAC EXCL. JAPAN
GRAPH 1 Source: IMS OTC Global Analysis, MAT September 2012
GRAPH 2 Source: IMS OTC Global Analysis, September MAT 2012
SHARE OF SALES VS. SHARE OF GROWTH IN % BASED ON USD
SHARE OF SALES
21 100
79 0
SHARE OF GROWTH
120
100
80
60
40
20
0
APAC EXCL. JAPAN
REST OF WORLD
REST OF WORLD APAC EXCL. JAPAN
21
100

3. In Australia, for example, access to OTC products
is quite liberal, with point-of-sale channels
ranging from the traditional pharmacy to
supermarkets.
In these developed markets, the goal should
be to increase the depth of coverage within
existing channels (via greater share of
shelf or optimized inventory levels) while
simultaneously tapping a new user base.
This can be done in the following ways:
• Communicate brand information to as wide
a base as possible, including doctors and
pharmacists in addition to consumers.
• Pay particular attention to geographical
differences and trends in distribution and
availability.
• Build a distribution model that is able to
capitalize on expanded point-of-sale opportunities and ensure constant stability in stock levels.
• Saturate traditional media before experimenting with new media, unless otherwise dictated by consumer/market dynamics. The tendency
to experiment with new media too soon is a common pitfall. It can wreak havoc on the overall marketing mix, especially if the other core
elements such as channel-specific messaging and product availability have not yet been established.
Developing OTC Markets
The landscape, however, is significantly different in developing OTC markets, where both consumer habits and the trade regulatory
environment are still works-in-progress. Here, self-medication exists but it is heavily constrained by advertising regulations and government
reimbursement practices. Interestingly, governments are becoming increasingly aware of the variable rates of education among their populations
and so they have committed to putting more regulatory safeguards into place to protect their citizens against misleading messaging.
India, China, Vietnam, Indonesia, Thailand, Malaysia and South Korea all fit this profile. Each is further characterized by big populations,
increasingly savvy consumer awareness, greater purchasing power, new product introductions and wider accessibility to products in
pharmacies and drugstores.
In South Korea in particular, changes in government regulations related to the sales channels, not to mention an increased desire by
pharmaceutical companies to invest in OTC, have begun to exert a significant influence on consumer behaviors and local market growth.
Another significant characteristic of developing OTC markets is the prevalence, and preference, for traditional medicines over western
medicines. Some local companies have been quick to address this dynamic by launching products that use familiar, traditional
ingredients in a more modern delivery mechanism, such as herbal supplement pills to treat common pains or coughs. In the Philippines
for example, the cough brand ASCOF® is derived from the herb Vitex Negundo, or Lagundi, which is a local cure-all remedy. ASCOF® was
ultimately able to secure leading a position in the cough category by capitalizing on its popularity as a natural home remedy.
Within the Asia-Pacific region, the top 5 OTC markets —China, India, South Korea, Indonesia and Australia— are growing collectively at 18%
as of MAT September 2012. In these markets, the top 10 OTC categories have grown by double digits vs last year. The rest of the Asia-Pacific
region also represents attractive opportunities, collectively growing at a rate of 9%, still above the global growth rates.
GAINING SUPREMACY IN THE OTC MARKET
Potential success factors across the Asia-Pacific OTC market differ not just from country to country, but also from category to category.
The decision to enter a specific category should thus be tempered by the local environment, as some categories perform better in one country
compared to another. Even aesthetic adjustments are necessary; brand messaging can certainly determine a product’s success, and packaging
can play an essential role in consumer trials and continued preference. Adapting global positioning to fit local nuances is, therefore, a
prerequisite for OTC companies hoping to make the most of the OTC drug trend across this diverse region.
GRAPH 3 Source: OTC Global Analysis, September MAT 2012
REST OF APAC
0 105 15 20
0
5
9
7
1
4
16APAC Market excl. Japan
Rest of APAC
Other OTC
VMS-Others
Pain Relief-Gen Systemic
Other Skin Treatment
Multivitamin-Adult
CH-IN-SK-ID-AU
18
35
16
12
0 2010 30 40
15
14
16APAC Market excl. Japan
Selected 5 Markets
Other OTC
VMS-Others
Pain Relief-Gen Systemic
Expectorants
Other Skin Treatment
CATEGORY GROWTH OF TOP OTC MARKETS
GROWTH IN % 2012 VS 2011

4. In theory, many elements of a successful strategy
may seem obvious, and as such they are often
taken for granted. Paying attention to each of these
strategic initiatives, however, is absolutely critical
to cultivating a meaningful and profitable presence:
• Effective brand-awareness campaigns.
• Variation of pack size, so that consumers can
be introduced to a product through trial-sized
portions.
• Smart utilization of all media—TV, print, radio,
and digital—to engage consumers.
• Dominant shelf presence and availability
coupled with promotional efforts aimed at both
trade partners and consumers.
• Smart pipeline management that continually
reinvigorates brands with new flavor variants and/
or similar product extensions.
• Effective communications with physicians and pharmacists, who play a key role in securing brand value, especially for new products.
Indeed there is no one-size-fits-all strategy, no single formula for success, and the subtle differences are often the most essential ones.
Consider the branding of vitamins. In Europe and the Americas, positioning tends to focus on providing quality of life throug balanced
nutrition; in Asia, however, the same brand might best be positioned as one capable of improving performance or giving more energy in
pursuit of a better quality of life. And so flexibility and ingenuity are key in purposefully adapting global strategies to local conditions.
Successfully tapping into developed OTC markets in particular also requires a certain level of creativity in expansion strategies and the
willingness to look at new distribution channels to secure greater access and awareness. “We’re talking about supermarkets, convenience
stores, health-food stores, gyms, and innovative co-promotion deals” explains Te. “And we’re talking about tactics that may have a longer
payback horizon but will eventually help sustain the brand image and stave off market-share erosion by new players.”
With the rising popularity of social media, OTC companies are also encouraged to explore an alternative medium to reach their target audience in
a more cost-effective way compared to traditional media. Medicines ranging from cough suppressants to vitamin supplements can utilize social
media to engage their customers and gain valuable insights on what drives their purchasing behavior. Xenical®, for example, offers a forum on
Facebook to connect with both existing and potential users. They have also used this medium effectively to announce promotional efforts and
gain feedback about consumer preferences and concerns. However as mentioned, such a move must be carefully aligned with the rest of the brand
communications strategy, and should follow a saturation of traditional media, where return can be more accurately forecasted.
Finally, OTC companies in developed OTC industries in Asia-Pacific markets should also consider driving preference among existing
customers through the introduction of new, conveniently sized packs, designed to encourage out-of-pocket product trials.
Consider Strepsils®, a line of throat lozenges, which are marketed in packs of just two in the Philippines and are therefore
ideally suited for individual, as-needed purchases. However, though smaller pack sizes are often a smart choice, consumer expectations —and
willingness to experiment— vary by country and pack sizes should differ accordingly.
OTC AS A SUSTAINABLE GROWTH AREA
There’s no doubt that the OTC market will continue to thrive within the Asia-Pacific region. As has been demonstrated in other parts of the world,
as consumers become more educated they are increasingly motivated to find answers and treatments for themselves, and are highly aware of
cost and convenience benefits.
It is important to remember, however, that OTC portfolios in Asia Pacific cannot—and should not— be managed as traditional pharma products.
This is a dynamic market based on seasonal and often acute ailments; consumer behavior varies on a weekly or even daily basis as immediate
needs change. Access and availability are also key drivers of success, as the product must be available during that narrow window of time when
the consumer is in need. And ultimately companies must constantly benchmark their brand’s success against both internal and external measures
so that they can continue to adapt and grow.
“The OTC market is poised to enter into a dynamic growth era” concludes Te. “The opportunity to profit from this segment has never been clearer.”
GRAPH 4 Source: IMS analysis
GROWTH OPPORTUNITIES FOR DIFFERENT MARKET MODELS
Developing
OTC markets
Increase depth
of coverage
within existing
channels
Create new
market space
via thought
leadership
Adapt and
localize best in
class strategies
Established
OTC markets
Increase
access via new
channels
Maximize share
of wallet
via new packs
Expand scope
via new line
extensions
apac.info@imshealth.com
www.imshealth.com/viewpoints/apac

5. REAL WORLD
INSIGHTS CAN HELP
YOU MAKE BETTER
DECISIONS.
AND WE ARE HERE
TO ENLIGHTEN YOU.
Learn More >>