National digestive brands see mixed sales results
The upper gastrointestinal proton pump inhibitors segment saw a 9% decrease — national brands only — in sales in multi-outlets for the latest 12 months compared with the previous year, with losses primarily driven down by large decreases at Procter & Gamble’s Prilosec OTC (-13%) and for GSK Consumer Heathcare’s Prevacid (-15%). Among the H2 segment — which was up 2% versus the previous year, national brands only — McNeil’s Pepcid brand showed strong growth versus the prior year with a 6% increase, while Chattem’s Zantac decreased 1% (Figure 1).
For leading manufacturers in the PPI segment, Pfizer’s Nexium 24HR saw the highest percentage of sales on promotion at 40%. Bayer’s Zegerid saw the lowest percentage of sales on promotion at just 13%. In the H2 segment, both Chattem and McNeil saw similar per-
centages of sales on promotion at 20% and 21% respectively (Figure 2).
Average PPI retailer margins were consistently the highest in the mass, food and drug channels for Bayer, while GSK Consumer Healthcare saw the lowest average margins. In the H2 segment, McNeil saw the highest margins across all channels while Chattem saw the lowest (Figure 3).
For upper GI PPI segment, P&G saw the largest amount of ad support across all three channels. For the H2 segment, Chattem saw the largest number of print circular ads for both food and drug channels, while mass focused primarily on price only (Figure 4).
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Specialty drugs up share of per-capita spend as sales growth slows
Even after the boom that the specialty pharmacy sector saw in 2014 with the introduction of new treatments for hepatitis C, the drug class continues to see its share of per-capita spending grow as manufacturers continue to develop more targeted therapies. The changes that the specialty space is seeing have been documented by the Quintiles IMS Institute, both in its report on the use of medicines in 2016 and its issue briefs on the drivers of drug expenditure and the oncology space.
Between 2014 and 2016, the growth rate of specialty revenue growth has been in decline — from close to 25% in 2014 to around 7% in 2016, which is still higher than it was before the hepatitis C treatment boom in 2014. As specialty growth looks set to plateau, the drug class continues to see its share of per-capita spending increase, with a decline in spending on traditional medicines creating space for more specialty share.
The share of net spend that went to specialty rose from 21.8% in 2007 to 39.6% in 2016. In real-number terms, this means that in 2016 for every $895 in real net manufacturer revenue per capita, $384 of it was for specialty, with the other $511 coming from traditional medicines. Among specialty medications, biologic drugs saw 13% growth in 2016, compared with 10% per year for the previous five years. And though 2016 was the year that biologics saw the most competition from biosimilars, biologics with biosimilars competition only accounted for $3.2 billion of the total $102.3 billion that biologics brought in last year, with biosimilars only accounting for $300 million of that figure.
Also increasing is the share of approved new active substances in the specialty space. Though 2016 saw fewer than half the number of new launches that 2015 and 2014 saw, it reflected the larger trend of new active substances largely being for specialty medicines, with many receiving Orphan Drug designation from the Food and Drug Administration. Two-thirds of the drugs with an Orphan Drug designation last year were for cancer, with the rest looking to treat such rare diseases as hemophilia B and cystic fibrosis. QuintilesIMS projects that between 2017 and 2021, the FDA will approve 40 to 45 new active substances.
In terms of continued revenue growth, the QuintilesIMS institute projects new brand spending growth — largely driven by specialty — to grow by $15 billion and $17 billion every year between 2018 and 2021, with new treatments focusing on oncology, immunology and autoimmune disorders.
The oncology space is among the most active disease states within specialty, with more than 68 different agents launching between 2011 and 2016 for more than 22 indications. And the late-stage research and development pipeline features 631 oncology new treatments, or about a quarter of the 2,346-drug pipeline, with a quarter of the cancer drugs seeking to address blood cancers.
“The pace of development in cancer treatments is accelerating, not just because of the number of new medicines in research, but [because] the combination regimens that may have greater effects than the individual drugs, and because of the continuous development of biomarkers and the potential to more appropriately target the right drug to the right patient with minimal waste and risk of non-response,” QuintilesIMS wrote in its Global Oncology report.
Editor’s note: A new journey
Why here? And Why now?
Two great questions as I begin my journey as the editor in chief of Drug Store News. Why here is an easy one. I am joining one of the premier retail business publications in the land, one that has a long and storied record of closely covering the rapidly changing and pretty complex chain pharmacy industry over the years. DSN has a well-deserved reputation for keeping retailers and suppliers in the know of what is going on now, as well as what may be happening down the line.
It is called staying ahead of the curve, and in the trade publishing industry, few publications have done a better job of that than what Drug Store News has done through its print and cutting-edge digital properties. So I am honored to be here and to join the team.
Why now is a much more difficult question to answer. It is no secret that the retail industry is reeling, hurt by a nasty combination of intense competition, increasing regulations and that 800-pound gorilla in the room that happens to go by the name of Amazon. There has not been a more challenging time for retailers in at least the last 100 years than right now.
But merchants — at least the good ones — are not just going to put up the white flag and go away quietly. As the industry has shown before, necessity is the mother of invention. Amazon and other digital-focused operations are quickly changing the retail landscape, forcing more entrenched and traditional operators to adopt their own unique merchandising strategies to survive in this brutal arena. Retail today is a giant test lab, or at least it should be.
I have no doubt that those that react quickly and effectively to this challenge will survive the onslaught of Amazon et al. They will develop programs and policies that will keep consumers coming through the front door and leaving, with lots of paid merchandise, through the checkstand. Those who do not will end up as part of the growing list of retailers who failed to see the future and the steps needed to get their company there.
Drug stores and other retailers that operate pharmacies are among the best-positioned merchants to fight off the Amazon challenge. Consumers want to directly interact with their pharmacist. They want and need answers to hard questions, and only an educated and readily available healthcare expert can do that. Shoppers also want the products most important to them — including their prescriptions, wellness and beauty items — to be available in a convenient, safe and reasonably priced location. We have a lot to build on.
But it will not be easy. It is going to take a lot of work and a lot of imagination on the parts of the retailers and, yes, their manufacturer partners.
This is a scary time to be a retailer. But, as we go through this transition to the digital age, it also is one of the most exciting times for our industry.
I’m happy to be part of this and super excited to be right in the middle of the action here at Drug Store News.