‘For sale’ sign could soon hang over Pfizer’s consumer healthcare business
NEW YORK — Pfizer on Tuesday might be putting its $3.4 billion consumer healthcare business on the sales block, noting that all scenarios would be considered during a strategic review of its options, which include a full or partial separation of the business from Pfizer through a spin-off, sale or other transaction.
Of course, Pfizer may ultimately determine to retain the business, the company added.
“Pfizer Consumer Healthcare is a leading player in the largest OTC categories, with iconic brands, robust retail partnerships, global reach and strong fundamentals,” stated Ian Read, Pfizer chairman and CEO. “By exploring strategic options, we can evaluate how best to fuel the future success and expansion of Consumer Healthcare while simultaneously unlocking potential value for our shareholders.”
One key question that would accompany a decision to sell the business would be whether the list of likely suitors would come from the echelon of top-10 OTC manufacturers.
According to Kline Group, based on 2016 sales Bayer (8.2% market share), Johnson & Johnson (7.5%) and GSK Consumer Healthcare (6.5%) were all bigger than Pfizer (6.2%), which stood at No. 4 on that list, followed by Procter & Gamble (4.5%), Sanofi (4.4%), Reckitt Benckiser (4%), Prestige Brands (1.9%), Church & Dwight (1.2%) and Carlyle Group (1%). The marketshare figures are attributable to Kline & Company’s latest "Nonprescription Drugs USA" study.
Many of the companies that fall below Pfizer on that top 10 list got to where they are today through acquisition. That would inlclude Reckitt Benckiser, which ranked ninth in OTC sales in 2010 but by 2016 leapfrogged into becoming the seventh-largest competitor after acquiring the Schiff and Airborne businesses.
Sanofi acquired Chattem in 2010 and then used that platform to switch OTC blockbusters Allegra and Nasacort. Sanofi also acquired the OTC rights to the erectile dysfunction remedy Cialis. If they were to successfully switch that remedy, Pfizer's Viagra would be ready for the OTC market by 2020. And last year, Sanofi executed an asset swap and acquired the consumer health business of Boehringer Ingelheim.
Prestige Brands and Church & Dwight, neither of which appeared in the top 10 OTC companies in 2010, ranked eighth and ninth, respectively, six years later in 2016.
Prestige Brands has grown by way of acquisitions, adding 17 OTC brands from GSK Consumer Healthcare. Also, its acquisition of Insight Pharmaceuticals brought the Monistat feminine product franchise and, earlier this year, the company added Summer's Eve, Fleet and Pedia-Lax to its product portfolio through the acquisition of C.B. Fleet.
Meanwhile, Church & Dwight has growth significantly following its acquisition of the Vitafusion line of vitamins.
And in the "for what it's worth" department, it was only a month ago that KKR's Nature's Bounty onboarded 30-year consumer healthcare vet Paul Sturman, who until recently captained Pfizer's OTC business.
Pfizer Consumer Healthcare markets two of the 10 best-selling consumer healthcare brands globally — Centrum and Advil. In addition, the business has 10 brands that each exceeded $100 million in 2016 sales, and several local brands that are top-ranked in their respective markets, the company reported.
Pfizer's major categories and product lines include:
- Dietary Supplements: Centrum, Caltrate and Emergen-C;
- Pain Management: Advil and Thermacare;
- Gastrointestinal: Nexium 24 Hour and Preparation H;
- Respiratory: Robitussin and Advil Cold and Sinus; and
- Personal Care: ChapStick and Anbesol
“Consumers are taking more ownership of their health and wellness through OTC products, preventative treatments and alternative health paths,” said Albert Bourla, group president, Pfizer Innovative Health. “Pfizer Consumer Healthcare is playing an important role in changing the world’s well-being. Our colleagues are passionate about empowering consumers around the world to improve their health and wellness through our trusted brands, innovation, and thought leadership.”
Pfizer has engaged Centerview Partners, Guggenheim Securities and Morgan Stanley & Co. as financial advisors for the strategic review process. Pfizer expects that any decision regarding strategic alternatives for Pfizer Consumer Healthcare would be made during 2018. The company does not plan to make any further statements about the strategic review process until a decision has been reached or upon the completion of the strategic review.
CityMD survey uncovers germiest places during flu season
NEW YORK — As flu season kicks off and the probability of catching the flu is a real concern, a majority of Americans admit to taking actions that may contribute to the spread of this highly contagious virus.
According to a new survey, roughly three out of five Americans who have had the flu or flu-like symptoms (61%) admitted to being out and about the last time they felt sick, putting others at risk, likely without them knowing.
"The fact that many people with the flu or flu-like symptoms are leaving home to go to the store, work or the ATM and are not taking precautions is creating environments that can infect others and spread what is a very underestimated disease," stated David Shih, EVP strategy, health and innovation at CityMD. "This is why getting the flu shot is so important. You never know where you can contract flu germs. And please, if you feel sick, wash your hands often."
Where did they go? Unfortunately, they went all over town, according to the survey.
Germiest Places During Flu Season
When asked where they went the last time they felt sick, those who left the house indicated:
- Drug store/pharmacy – 69%;
- Grocery store – 43%;
- Workplace – 39%;
- Friend/family member's house – 20%;
- Restaurant/deli – 16%;
- ATM – 14%;
- Public transportation – 10%;
- Gym – 8%;
- School/daycare – 7%; and
- Party – 5%.
As many as 75% of parents with children under 18 who have had the flu or flu-like symptoms left home the last time they felt sick. Millennials (ages 18-34) who have had the flu or flu-like symptoms were much more likely than those 35 and older to have ventured out the last time they felt sick (76% vs. 56%).
The CityMD survey also found that some Americans who have had the flu or flu-like symptoms did not take standard precautionary measures to prevent the spread of germs the last time they felt sick. More than half (51%) did not use hand sanitizer after they coughed/sneezed, 57% did not use disinfectant wipes on surfaces they touched and roughly one in four (26%) did not wash their hands after coughing/sneezing.
The online survey was conducted among over 1,800 Americans ages 18 and older who have had the flu or flu-like symptoms by Harris Poll on behalf of CityMD, a network of more than 75 urgent care centers in the New York City Tristate area and Seattle, Wash.
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.
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.
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.