In recent years, many pharma companies have turned to nutraceuticals in search of new revenue opportunities. They are increasingly tapping into the preventative segment by launching their own nutraceutical products and brands. What has led to this convergence and how are leaders utilizing the opportunity?
There is no industry that remained unaffected by the global economic disruptions over the past years. Some have proven more resilient than others. Among the first, the nutraceutical industry has managed to overcome the crisis without any major consequences.
While most industries have responded to production cost increases, caused by inflation and supply chain issues, by increasing their prices, it was more difficult for the pharmaceutical industry to answer the market situation in the same way due to the regulation of Rx prices. In the search of new opportunities to generate market growth, many pharma giants have turned to nutraceuticals.
Nutraceutical products present an opportunity for pharma companies to introduce a new revenue source relatively quickly. The barrier for entry is low, mainly due to 3 reasons:
According to IQVIA, the typical time to market for a new indication in OTC drugs is 2-4 years, whereas for nutraceuticals the number is significantly lower – only 1-2 years. Furthermore, vitamins and dietary supplements (VDS) are a high-volume and high-growth category, due to their tapping into the rising preventative health trend. Unsurprisingly, the category is already larger than OTC drugs. There is also no price regulation for nutraceutical products.
All of the above reasons are especially true when choosing to launch a private label food supplement. Such products are already developed, tested for stability, and in certain cases also clinically researched. Additionally, they can come with launch data from other markets, which makes the time to market even shorter and the chances of success greater.
When choosing to launch a nutraceutical product, which is clinically supported, using the same promotional channels that pharma companies normally use for OTC drugs is possible.
High-quality clinically studied nutraceuticals, or nutraceuticals based on clinically studied ingredients, can successfully convince healthcare professionals and are thus suitable for promotion to both doctors and pharmacists, as seen in several cases of successful launches of PharmaLinea’s products by medical detailing-focused companies like STADA and Teva.
Furthermore, most pharmaceutical companies have established pharmacy distribution networks and they can conveniently utilize the very same sales channel for new nutraceutical products they may add to their portfolio.
Consumers are increasingly focusing on the preventative segment. This has led to the supplement market surpassing OTC drugs in size and growth. According to Euromonitor, the category of vitamins and dietary supplements first surpassed the OTC drugs market in 2020. It is forecasted to grow by a CAGR of almost 5% in 2022-26, while the OTC segment is expected to grow by a CAGR of slightly above 4,5%.
This shift in consumer focus and demand is one of the causes of the increasing importance of nutraceutical products for pharma. VDS represents an increasingly large share of many pharmaceutical giants’ portfolios. It comes as no surprise that Bayer saw incremental growth in categories such as VDS, eye care, pediatric consumer health, and sleep aids in 2019-22 (Euromonitor). Vitamins & dietary supplements were Bayer’s best-performing consumer healthcare category in 2022, creating a higher absolute growth for the company than OTC drugs. Bayer’s VDS, led by brands like Berocca and Redoxon, accounted for 29% of Bayer’s sales in 2022.
Pharma companies are increasingly acquiring supplement brands. Several companies have also started the process of splitting or divesting their consumer health divisions in order to allow greater focus on high-growth categories previously in the shadows of drug divisions.
Up to 2016, nearly all the leading acquired brands by value in consumer healthcare overall (OTC, VDS, sports nutrition, weight management) were OTC treatments, and from 2016 onwards they all came from the nutraceutical category.
Notable acquisitions include Johnson & Johnson acquiring the supplement brand Zarbee’s in 2018 and GSK investing in a joint venture with Pfizer where the anchor brand of the deal was Pfizer’s Centrum. Bayer went on a buying spree, acquiring the majority stake in the personalized nutrition D2C brand Care/Of in 2020 in the US and then the company made similar moves in Europe by acquiring GloryFeel in October 2021, followed by a minority stake in Natsana in June 2022.
In July 2022, GSK split away its consumer health portfolio under a company called Haleon. Kenvue is about to be divested by Johnson & Johnson in 2023.
This will enable the companies to focus more on OTC and supplement brands, be more agile, invest in more R&D, and promote better to consumers through ATL as well (not only medical detailing). These moves will undoubtedly accelerate innovation in the space and cause more competition.
Interesting recent partnerships are indicating the focus and potential pharma sees in nutraceuticals: in 2023, Haleon and Johnson & Johnson both announced partnerships for supplement development.
Haleon announced they will be collaborating with DSM’s Hologram Sciences. Together they will apply personalised-nutrition solutions from Hologram Sciences to Haleon’s portfolio of wellness products and thus co-develop future supplementation concepts. Johnson & Johnson is partnering with Holobiome to develop next-gen probiotics and prebiotics for infant and maternal health.
Food supplements already present a large share of pharmaceutical companies’ portfolios, and this number is increasing. Market leaders, such as Bayer, Haleon, and Abbot have recently invested in launching nutraceuticals.
For example, in 2023 Bayer launched Lunalaif to promote restful sleep and reduce nocturnal awakenings. Haleon launched a supplement line extension of their product Excedrin in 2022 – Excedrin Head Care, positioned for hydration after occasional head discomfort and sleep. In 2022, Abbot launched SoftDGo – orodispersible vitamin D tablets.
A successful example of pharma utilizing supplements as a revenue opportunity is the launch of >Your< UTI Free Sachets by our partners in a CIS market.
Before launching >Your< UTI Free Sachets, our client’s portfolio consisted of exclusively pharmaceutical products (OTC, Rx, vaccines). Launching our products was a basis for their entry into nutraceuticals, which now represent a welcome addition to their revenue.
To launch the product, our client initiated an extensive campaign of F2F medical detailing as well as events for urologists and GPs. They supported this with sampling and also ATL marketing – TV ads, social media, digital marketing etc. ATL was involved to build the brand image and brand recognition because they were entering a mature market with a competitive product present for over 10 years.
They reached 9.000 sold units/month and 12.000 prescriptions/month already in their 3rd month and the product became the no. 1 selling D-mannose-containing UTI product (37% market share) in just 3 months.
In the 15th month after launch they were selling out 60.000 units/month. Yearly orders surpassed 600.000 units in 2021. Today, it is the no. 1 selling UTI supplement in the market.
UTI supplements can be used for treatment – either solo treatment or co-treatment with antibiotic drugs. With such nutraceutical products, we are targeting an additional demographic group – natural enthusiasts that prefer a natural alternative treatment instead of drugs.
The products can also be used for prevention. For instance women use them preventively in times when they know there is a high chance for a recurrent infection. This gave our client a wide audience to address.
>Your< UTI Free Orosticks
>Your< Back Pain Capsules
>Your< Prediabetiq Capsules
WHY OUR PRODUCTS
