PARSIPPANY, N.J. — Consumers are gravitating toward "natural" over-the-counter remedies, according to a new Kline report, "Natural OTCs 2011: Impact of Non-Drug Products on the U.S. OTC Market," released Wednesday.
While the U.S. traditional nonprescription drugs industry registered an average compound annual growth rate of 2.5% between 2005 and 2010, the market for natural OTC remedies has grown at a CAGR of 5.9% per year from 2009 to 2011, according to the research study.
With close to 40% of consumers currently using more natural OTCs than in the previous year, the natural trend — already well established in the personal care industry — has set roots in the OTC market as consumers gravitate towards natural products across the board. This correlates with the finding that 47% of U.S. consumers believed natural OTCs to be as effective as traditional OTCs.
With the growing popularity of natural remedies and the large number of retailers that embrace the market segment, the market is set to maintain healthy growth rates over the next five years and is forecast to reach nearly $750 million by 2016. By contrast, the traditional OTC market is forecast to grow as little as 3% per year. However, there is room for both types of OTCs on the market as 53% of consumers surveyed note that they use both natural and traditional OTCs to treat themselves or family members when sick.
Within this fertile environment, large branded and savvy OTC marketers might consider augmenting their traditional OTC portfolios with natural OTC brands where appropriate. "Procter & Gamble’s Align, GlaxoSmithKline’s Breathe Right and Bayer Groups' Phillips’ Colon Health are telling examples of how seriously the natural OTC trend is being taken and tapped," Kline said. "Opportunities appear ripe for large and small OTC companies alike to market natural OTC brands which could offer mutually beneficial business propositions."
However, business opportunities vary across product categories, noted Laura Mahecha, industry manager at Kline's healthcare practice. "For instance, while cough-and-cold preparations are expected to grow at a rate of only 5% to reach $320.9 billion in 2016, it is anticipated that sleeping aids will grow by about 18% per year to reach $54 million in 2016 from $23.5 million reported in 2011," she said. “Growth in natural OTCs will be dependent on whether consumers continue to find them effective and safe.” Kline’s survey on the usage and perception of natural OTC revealed that presently more than 45% of the respondents find natural OTCs effective and more than 40% consider natural OTCs to be safer or have fewer side effects than traditional OTCs.