10 Truths of OTC No. 2: OTC isn’t actually in the pharmacy business

Truth 2: OTC isn't actually in the pharmacy business

The first piece of this series looked at the OTC sector’s delicate health. With switch blockbusters stripped out, growth is flat at best, or even declining. There are several reasons for this, which will be examined in the coming weeks.

The first, and most important reason, is OTC’s failure to deeply understand that the success of any branded product rests on providing consumers with a clear, compelling reason to buy it. Even if it’s better on every objective performance benchmark, it’s all for nothing if consumers don’t believe it.

That’s because a brand is far more than its name or logo. It’s what people know and feel about the brand based on every interaction they have with it. It’s about perception, a constantly moving target.

This is a given in the wider consumer goods industry, spurring on innovation and creativity between branded products and private labels. But OTC doesn’t seem to acknowledge an essential truth – OTC is in the consumer business, not the pharma business. It’s not selling drugs, it is selling brands.

We regularly attend global OTC conferences and most delegates are downright surprised to see us there. Brand design is considered an afterthought, or even irrelevancy, to OTC "business as usual." Businesses invent traditional products first, then try to make consumers buy them. Brand design, packaging, and communications fall way down a strictly linear commercial pipeline.

OTC’s regulatory aspects and safety standards are undeniably challenging to brand building, but it’s not optional. Consumers are increasingly disloyal, demanding, knowledgeable and in love with the exciting and new. Novelty is the  No. 1 purchase driver for new products in the USA, according to Nielsen’s 2015 research study "Looking to achieve new product success?'.

And that’s also true of OTC. Kline Group’s annual Nonprescription Drugs USA report finds niche players like Hisamitsu Pharmaceutical’s Salonpas and Matrixx’s Zicam posting 10%-20% YoY growth, with big brands flat or losing ground. No brand is immune to this, even historically dominant molecule-led ones with fantastic efficacy claims.

This trend is underpinned by the fact that pills and potions are falling out of favor. Consumers are now concerned about what they put inside their bodies, and an aging demographic taking more medications is at greater risk of adverse drug interactions. As a result, novel self-medication formats are proliferating.

Recent analgesic innovations include Livia which is iPulse Medical’s menstrual pain reliever, and Cirrus Healthcare’s barometric earplug and app MigraineX. Beyond pain, Philip’s Blue Light device targets psoriasis without messy creams. VivoSensMedical’s vaginal biosensor OvulaRing determines when women are most fertile. Wearables THIM and Snore Circle improve sleep quality. And new products launch virtually every week, almost none of them from big "pharma" companies.

Thinking with a pharma mindset might have worked in the 20th century, but 21st century consumers demand products that put them at the heart of everything the brand says and does. Strong, organic market growth requires OTC businesses moving to a brand-first approach – delivering consumer-centric innovations married to compelling, human "reasons to believe."

Over the last 20 years, DewGibbons + Partners has helped design some of the world’s most iconic and successful OTC brands, resulting in a deep appreciation of the visual and physical cues — and regulatory limitations — in the self-care and OTC marketplace. The need to challenge those cues and limits is becoming far more frequent.

The inexorable rise of digital technology and an attitudinal shift towards wellness and prevention finds consumers starting to think very differently about how they manage their health. Many traditional OTC businesses have been very slow to adapt to this, if at all, when compared to consumer product brands.

Nick Vaus and Sara Jones, of DewGibbons + Partners, recently took a step back to look at what works for customers, healthcare practitioners and retailers against a backdrop of wider economic, cultural and digital trends. The result is the "10 Uncomfortable Truths that OTC has to deal with to survive and thrive in the 21st century."

Each week, for the ensuing 10 weeks, Drug Store News will publish one "Uncomfortable Truth" in the DSN Health & Wellness e-newsletter that is disseminated on Tuesday.

The first truth was recognizing there’s a problem in the first place.

Next week's truth concerns the double-edged sword of technology, both a threat and opportunity to OTC purveyors.

 




Sara Jones
Partner and client services director, DewGibbons + Partners
Sara runs DewGibbons + Partners alongside NickVaus, and heads up the client services team, leading branding and communications programmes for household names in OTC and health care. She’s always had a bit of a secret passion for OTC branding. Her Grandma was a pharmacist in London’s West End, leaving her with an abiding curiosity about active ingredients and how medicines work. She’s (in)famous for reading patient information leaflets cover to cover. Email her, follow her on Twitter or connect on LinkedIn.


Nick Vaus
Partner and creative director, DewGibbons + Partners
As well as running the agency with Sara Jones, Nick leads the studio in providing solutions that are innovative, creative, economic, and effective. Powered by Beautiful Thinking – a unique combination of right and left brain thinking that seamlessly binds together strategy, design and brand communications – he ensures that his clients’ businesses, brands and consumers are at the heart of each and every brief. Email him, follow him on Twitter,  or connect on LinkedIn.

 

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