Raphe Pharma (9)

OTC and Merck Consumer Health look to be quite promising.

Our journey to sustainable growth at Merck, as a consumer-centric, multi-functional, and holistic innovation process and marketing approach, depends on a consumer-centric, multi-functional, and holistic innovation process and marketing approach. We look forward to taking this forward in 2015 and beyond.

Consumers are gravitating to wellbeing and avoiding sickness in a big way these days. As a consequence, the OTC industry is experiencing a lot of change. The OTC sector is expanding much faster than prescription drugs, and this is driving major transformation. Prescription drugs are losing ground to OTC brands as healthcare companies concentrate on these types of merchandise. The OTC industry is worth more than $100 billion today, and it will grow at a rate of 4% over the next 10 years. Allergen, wellness, gastrointestinal, analgesics, dermatologicals, and cold and cough medicine are just a few of the sectors that are enjoying strong growth. Companies like these are managing profits of over 20% on their products.

The top companies control nearly a quarter of the OTC market. M&A activity has had an impact on the commercial environment, as is the case with the recent joint venture between GSK and Novartis. Due to the fragmented nature of the sector, it is likely that M&A activity will be prevalent in 2015. FMCG companies that have traditionally focused more on the OTC segment are currently stepping up their efforts to enter the sector. Reckitt Benckiser, for example, is refocusing its efforts on ‘health, hygiene, and home’ in response to customer demand.

The changing landscape has provided Merck Consumer Health with the opportunity to steadily increase our market share and position, three key factors being responsible.

We are excited about the upcoming 350th anniversary celebrations of the Merck Group, which gives us the flexibility to respond to market pressures, but is not affected by them. In 2018, we will celebrate our history as a company.

In addition, we have prioritised building our market position through a well-defined business strategy. We have achieved $1bn in sales, while operating in fast-growing emerging markets and delivering consistent top and bottom line growth, with profit and margins comparable to leading competitors in the industry.

Consumer Health has established its market position by building on the market expertise of other Merck businesses.

To drive growth and change in the Consumer Health business, Merck has used the incorporation of new brands, the transfer of Merck Serono’s operations, to grow operations. Merck Serono’s new products have contributed to this success. Our strategy has been to establish a minimum market share of 3 percent and a minimum of 3 leading consumer brands in every market in which we compete. As a brand business, Consumer Health is driven by Neurobion, Dolo-Neurobion, Bion, Seven Seas, Nasivin, and Femibion products. In 2014, Neurobion, Seven Seas, and Femibion grew the most, and Consumer Health was Merck’s fastest-growing business.

Bion, Nasivin, and Seven Seas Perfect 7 are key brands which Merck Consumer Health has produced in the last year to expand organic sales. Merck Consumer Health is expecting short- to mid-term organic growth through innovations to its existing key brands, particularly the new Nasivin Mentholfresh launch in Germany, Bion Equilibre launch in France, and the debut of Seven Seas Perfect 7 in the UK. Geographic expansion will focus on key products in key markets, such as Bion in Brazil. In the longer term, Merck Consumer Health may integrate new products. Merck Consumer Health aims to cross the billion-dollar income barrier through the systematic growth of its current product portfolio.

At Merck, the Consumer Health business is aiming for sustainable growth by utilising a multi-functional, holistic and consumer-centric innovation process and marketing strategy. We are looking forward to continuing this in 2015 and beyond.

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