Discover the hidden OTC Gems of the Indian pharma market

Sreedevi Yallamrazu

The Indian pharmaceutical market is likely to undergo some major reforms with the proposed policy to regulate the prices of 348 essential drugs gets the green signal. This will add to the woes of marketers who are already battling on many fronts such as the patent cliff and rising input costs. New business models may have to be envisaged to ensure that the growth momentum is high. Further, challenges in global territories are forcing local marketers to peep into their own backyard once again for growth opportunities.

In this scenario, the adage ‘old is gold’ couldn’t be more relevant. Consumers repeat purchase a brand, once it has been prescribed by a doctor or recommend by a chemist and its efficacy has been tried and tested. Heritage brands also enjoy the doctors’ trust, even if they may have moved to higher ground with superior products. Many a time, such ‘OTX’ brands lack promotional focus, barring retail push if at all any, though they hold high potential to meet implicit needs of consumers. At CubeX, we call such brands ‘Hidden OTC Gems’. And indeed it is important to leverage the equity of these brands by promotionally switching them OTC at the right time in a planned manner. Heritage prescription brands can open new doors that marketers may be seeking, sans the risks involved in new business prospects. The evolving consumer base, supported by the testimony of loyal consumers, can significantly add volumes to offset the slash in prices, if the new pricing policy takes shape.

In the latest report from CubeX, “Discover the Hidden OTC Gems of the Indian Pharma Market” (Version 1 & 2) almost 30 brands have been analysed for their OTC potential.

Discover the ‘Hidden OTC Gems’

Mass advertised brands constitute merely 38 per cent of the sales of the total Indian OTC market (valued at $2 billion). The remaining 62 per cent of the market ($1.2 billion) comprises non-advertised brands and thus the untapped opportunity is huge (refer to chart 1). The leading categories in terms of non-advertised brands are Vitamins, Minerals and Supplements (VMS), followed by gastrointestinals with 40 per cent and 22 per cent contribution respectively (refer to chart 2). The propensity to self-medicate after the initial prescription is quite high in both these categories.

The CubeX OTC Brand Evaluation Scorecard

Cubex has developed a master tool through their vast experience, The CubeX OTC Brand Evaluation Scorecard, which helps in evaluating the potential of brands to enter or switch to the OTC market. Each brand is rated on the basis of five distinct parameters to arrive at a weighted score to determine its OTC potential. The proximity of the brand to the ideal scores can be depicted with the OTC Proximity Graph (refer to graph 1). The five parameters have been described below.

Brand strength

One of the aspects for a brand’s success in the OTC market lies in its strength to stand out among a plethora of choices that consumers can reach. Brands like Becosules may not stand out in terms of innovative or multiple variants like Shelcal, but they do have inherent brand strength, going by their legacy and popularity among doctors, chemists as well as consumers.

Many prescription brands like Candid may not enjoy first mover advantage in the Indian OTC market, since brands like ItchGuard are well-penetrated in the consumers’ mind. On the flip side, Candid can claim to be the ‘doctor recommended anti-fungal.’

Need potential

A critical aspect for a brand is its ability to bridge unmet needs or showcase a strong point that creates a need for it. Consumers’ needs can be of varied kind – from quick and long lasting relief to psycho-somatic relief. Constipation is one such ‘ailment’. Doctors will vouch that passing three motions in a day or passing once in three days is just as fine. Because the notion of passing motions daily constitutes ‘good health and hygiene’ is so deeply ingrained, the need for laxatives is high. Surprisingly, there are hardly any products, except few traditional remedies, communicating directly to consumers.

Similarly, the needs of men and women tend to differ significantly in common concerns like headache, fatigue and even in case of fungal infections. Since most anti-itch creams are largely male-centric in their promotion, it creates an apparent need for an ‘anti-fungal for women’ for specific use.

Market attractiveness

Evidently, a growing market can present brand building opportunities through innovative positioning, packaging, communication and similar other avenues. Certain sub-categories such as topical analgesics are virtually saturated with mass advertised brands contributing close to 80 per cent of the sales. Moreover, general pains and sprains have been addressed by most of the brands and the spray format is becoming a commonplace. Thus, any new brand entering this segment will need to have a distinct positioning.

Competitive clutter

In case of competition, it must be acknowledged that the evolving consumer is exposed to a variety of products and formats that can serve a single need. For example, the need for iron supplementation is well-understood by many women. However, not all of them are likely to reach for Dexorange. Functional foods like Kellogg’s Iron Shakti, which are fortified with iron and mass advertised to consumers, can also fulfill the need. Brands like Women’s Horlicks, Revital Woman, Supractiv Complete Woman, too have iron as one of the ingredients, along with other essential multivitamins and minerals. Consumers may question the need to look for alternate sources, when they can get all the micronutrients from a single source. Underlining the greater need for iron supplementation in the ‘right dosage’ would help in increasing brand acceptance.

Regulatory fit

Brands like ViBact can expect a smooth ride, if taken OTC, from the regulatory perspective. Bacterial spores do not fall in the list of prescription drugs, are not price regulated and claims for gastric health benefits are not objectionable. Additionally, under a food license, it can be sold at non-pharmacy outlets as well.

Vitamin B complex brands may not be so lucky with the DPCO, but the silver lining is that brand extensions with prophylactic doses or natural supplements can be launched as food supplements.

Rx to OTC – the way to go!

“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.” Steve Jobs made this statement way back in 1989 in an interview with Inc. magazine but it holds relevance even today.

Revital, Volini, Otrivin to name a few, are classic examples of OTC switches in our Indian pharma context. These brands are leveraging their popularity among consumers and retailers while retaining their hold on doctors with well-devised strategies and are growing at a robust double digit rate (on an average 20-30 per cent as per Nicholas Hall’s DB6 2012 database). They are progressing to be the block-busters of the OTC market.

Rx to OTC promotional switch can be a milestone in the brand’s history as it provides opportunities for brand building and lifecycle management by catering to the latent needs of consumers, under the aegis of a trusted brand name. It can give traditional pharma companies a quick head start into the consumer health and wellness domain and also provide targets for synergistic brand acquisitions for those looking to strengthen their presence in the OTC market.

(CubeX is the Strategic Consulting and Business Intelligence division of Sorento Healthcare Communications with expertise in the Consumer Healthcare and Wellness domain. To know more about reports from CubeX, you can write to [email protected])