Bringing together key industry opinion leaders, global advisory groups, leading manufacturers and product innovators and Ceuta’s global network partners, the annual two-day event explores growth opportunities in the health and personal care sectors.
Here we outline some of the key insights that business leaders shared at the 2019 event.
KEITH GARRITY, DIRECTOR OF INTERNATIONAL BUSINESS DEVELOPMENT, CEUTA HEALTHCARE
BE PREPARED FOR THE FUTURE
- Key considerations:
- Creating future sustainable growth.
- The ever-evolving consumer.
- Navigating a complex global market.
- The opportunity for Manufacturers:
- Manufacturing companies are increasingly embracing brand fostering solutions, by focusing on their core range and outsourcing their non-core portfolio.
- Instead of seeing these brands drift downwards – outsourcing to an experienced provider will increase the life cycle, reputation & profitability of the brand and retain support from the pharmacist / retailer.
- In some case it delivers a solution to the healthcare manufacturer of not divesting their none core brands only to build out a competitors portfolio.
- More brands are coming on to the market for sale as the industry consolidate.
- Acquirers need a trusted and proven outsourcing partner to take full market responsibility of the brand, strategy and its development.
- Companies prefer to have continuity, compliance and a standard template for reporting / business plans & local market strategy etc through a trusted International partner.
- The solution for Manufacturers – Brand Fostering:
- Identify a suitable partner with Brand Fostering expertise special skillset & local market IP.
- Brand Fostering partner will build out a local market strategy by market + KPI’s.
- Total continuity and templates by each market and clear communication and frequent reporting bespoke to client’s brief’
- Manufacturers outsourcing partner takes full market responsibility of the brand, strategy and its development.
- Top 10 Reasons Companies Outsource
1. Reduce and control operating costs
2. Improve company focus
3. Gain access to world-class capabilities
4. Free internal resources for other purposes
5. Resources are not available internally
6. Accelerate reengineering benefits
7. Function difficult to manage/out of control
8. Make capital funds available
9. Share risks
10. Cash infusion
- Top 10 Factors in Vendor Selection
1. Commitment to quality
4. Flexible contract terms
5. Scope of resources
6. Additional value-added capability
7. Cultural match
8. Existing relationship
- Top 10 Factors for Successful Outsourcing
1. Understanding company goals and objectives
2. A strategic vision and plan
3. Selecting the right vendor
4. Ongoing management of the relationships
5. A properly structured contract
6. Open communication with affected individual/groups
7. Senior executive support and involvement
8. Careful attention to personnel issues
9. Near term financial justification
10. Use of outside expertise
HANN-JU HO, SENIOR ECONOMIST, LLOYDS BANK
PRODUCTIVITY MATTERS FOR FUTURE PROSPERITY
- Productivity growth in advanced economies since the global financial crisis a decade ago has been disappointing (less than 1% per annum in G7 measured by output per hour worked, compared with 2% growth per annum between 1970 and 2007).
- There are only two ways for an economy to grow: a bigger labour force or a more productive one.
- The UK economy can no longer depend on an abundant supply of labour. In all likelihood, economic growth in the next decade and beyond will have to be less reliant on workforce growth and more reliant on productivity growth.
- As technology costs fall, more and more firms across different industry sectors – ranging from agriculture, manufacturing, retail and services – are expected to adopt new technologies.
- According to Lloyds Bank Business Barometer survey, 40% of UK firms with turnover above £100m say that new technologies such as artificial intelligence and big data will revolutionise the way they do business in the next five years.
- Policy makers need to be mindful that some jobs, or parts of jobs, will be replaced by technology. The Bank of England, for example, estimates that the proportion of jobs at high risk of automation is around 10%.
- There is now greater impetus than before that fiscal policy will have to play a bigger role in supporting growth.
ANTHONY SILVERMAN, PRIVATE EQUITY
M&A: PURPOSE MATTERS
- A new approach to purpose:
- Growing academic evidence of need to move beyond just economic synergies.
- Part of broader debate moving beyond purpose dominated by maximising shareholder returns (P1) to one which optimises value across multiple stakeholders (P2).
- Reputation is a key lead indicator that can drive (or destroy) value.
- Mergers & Acquisitions (M&A) remains ambiguous:
- Widely “known” to be value destructive – but why do shareholders vote in favour of M&A?
- Research shows mega-deals outperform the market cap of acquiror and the value of deal compared to the size of acquiror.
- But, there is also growing evidence that shows, post-2009 focus on corporate governance and CSR has resulted in greater value creation.
- Time for purposeful M&A:
- Should success of a deal be viewed beyond just financial metrics (mkt cap / EBITDA etc)?
- How does the transaction fulfil the purpose of acquiror or target, or ideally both?
- What is the evidence that the transaction is a logical progression of existing strategy?
- What are the reputations among key stakeholders of the companies and is there parity?
- The alternatives aren’t so compelling:
- IPO market is challenged
- $280 trillion of outstanding debt, billions coming due annually.
- Risk of a credit crunch?
- Weaker than expected corporate earnings could impair ability of borrowers to service / repay debts but prevailing yields and spreads on corporate debt remain at historic lows.
- Tightening of capital availability.
- An uncertain outlook:
- There are strong signs that many companies are changing the way they approach their purpose.
- That will impact M&A.
- Much of the M&A activity will continue to come from PE as public markets look less attractive.
- But, this poses risks: $280 tn of outstanding corporate debt vs $2.9 tn of dry powder.
- Feverish spending will lead to consequent rising debt, with capital needing to find a home.
- Busy time for M&A and PE, but how long will the dance last?
ANDY TISMAN, SENIOR DIRECTOR & GLOBAL LEAD, CONSUMER HEALTH STRATEGY & THOUGHT LEADERSHIP, IQVIA
GLOBAL CONSUMER HEALTH 2020: MARKET TRENDS AND EVOLUTION
- The healthcare environment is dynamic and challenging, with changing global trends including:
- Smart and evolved consumers
- Economy and new geographies
- Data explosion
- Regulatory changes
- The global OTC market is experiencing a continuing slowdown.
- Developing markets continue to drive the majority of global growth, accounting for 83% of the growth.
- Innovation remains key in the OTC market, however price increase is driving the growth.
- Economic factors and mild cold season have contributed to the slowdown, with CCR and pain relief especially depressed.
- Short-term growth remains behind long-term for most regions; EMEA, APAC and North America perform below previous year. At sub-region level, apart from developing regions of LatAm and South Asia, most others experienced a slowdown. South Asia (driven by India), CEE, LatAm & Africa have the highest expenditure increase.
- Consumers are evolving and want more than simple treatments, with a focus on wellness and prevention; they’re more engaged and want solutions that work best for them. With increasing health literacy and access to technology, consumers are becoming more “health-smart” and proactive towards self care.
- Aspirational categories are recording 4x higher growth vs traditional symptom relief, especially in developed markets – the fastest growing companies have a bigger aspirational presence.
- Brands need to expand the scope of innovation to meet evolving consumer expectations.
- Digital health tools will be a key driver in developing new consumer-centric scientific evidence and in the expanding the product eco-system.
- Rx-to-OTC Switches remain significant innovation drivers.
- eCommerce pharmacy is becoming more important within the overall pharmacy market and is growing more quickly.
DAVID GRAY, CEO & FOUNDING PARTNER, CREATIVE LEAP
HOW TO WIN IN THE CHANGING WORLD OF HEALTH & WELLBEING
- In wellbeing categories, the growth in ‘free-from’, super-ingredients, vegan products etc. reflect an intense interest in investing in being well. In self-medication whilst growth is only ‘steady’ in most categories, even some of the really established categories still have a gap between suffering and treating, which means there are still prizes for brands to win.
- We need to get back to the difficult process of brand building. The aim must be to build an asset that establishes what we refer to as a Meaningful Difference versus its competitive set. This means embracing:
- Relevance: the core of meaning
- Distinctiveness: the creative component
- Credibility: the moment of trust
- The symbiotic relationship between these 3 elements is never easily unlocked. We believe it needs specialist expertise. After 20 years working in consumer healthcare, skincare and wellbeing, we can say with confidence that when a brand unlocks its Meaningful Difference two things have consistently happened: sales go up and longer-term brand health is improved… and that is purpose enough for us!
BEN LONGMAN, MANAGING DIRECTOR, TRENDTYPE
HOW TO WIN IN AFRICAN MARKETS
Read the full article here.
ELLIE ADAMS, QIVA
CHINA: HOW TO MAKE IT WORK
- Brands need to understand cultural and societal nuance by carrying out category and consumer analysis, and not making assumptions, to understand the underlying reality in China.
- Local partner appointments are key to success.
- You need to understand China’s distribution system, taking into account:
- Geographical and cultural variations
- A multi-layered distribution system
- Inefficient supply chains
- Differences in consumption demands & habits
- Channel conflicts
- Small & scattered regional distribution
- Assumptions are frequently made in distribution strategy development and execution (in market).
- “The question facing manufacturers & brand-owners is not one of whether or not to work with distributors, but how to collaborate better in order to deliver greater value to both parties.”
- Brand operators can win by incorporating:
- Offline channels: direct retail and agents
- Online channels: web, B2B and B2C
- Use trust as social currency: China has 650M social media users, with a social commerce market worth more than $300 Bn (USD); more than 60% base purchasing decisions on recommendations of friends & family. Content is king!
- Sustain and expand through:
- Product innovation & category expansion.
- Protecting and growing your niche.
STEFAN KULIK, BEMYEYE
LEAN GO-TO-MARKET: HOW CROWDSOURCING AND AI CAN MAKE YOUR RETAIL EXECUTION PERFECT IN EVERY PHARMACY
- Brand recommendation is one of the most important factor in OTC Pharma, with 67% of purchase decisions driven by pharmacists’ recommendation. But despite this, many OTC Pharma brands are still failing to implement effective strategies. Clients’ options to fix this have been limited by the existing solutions’ inefficiency.
- Crowdsourcing + AI is the most efficient and effective solution:
- Crowdsourced data collection: More than 2M crowd data gatherers visit more pharmacies than anybody else in the market.
- Near real time data processing using a combination of AI and Human-In-The-Loop technologies.
- Delivery via Retail Execution Cockpit (visibility & analysis for HQ and management) and Field Compass (Field force focused on priority issues & freed from costly audit time)
JENNIFER WANG, EUROPEAN HEAD OF FOOD & HEALTH, ALIBABA
DECODING CHINA, BRIDGING THE WORLD
- China is the world’s biggest online market, with 802M internet users compared with 743M in Europe, and 327M in the US.
- The country also has the world’s fastest-moving consumers, with many going straight to the smartphone.
- A day in the life of a connected consumer includes: checking news & social channels; checking the traffic; ordering and paying for cabs; messaging friends; streaming videos & browsing blogs; browsing Taobao & Tmail; paying rent & topping up mobile; browsing travel deals; paying at shopping malls & dining out. This means spending $30.BN in 24 hours.
- How to sell Health & Wellbeing brands on Tmall:
- The most popular categories on Tmall Global are Beauty & Personal Care; Health Supplements; Mother & Baby.
- 71% of health supplement buyers on Tmall Global are under 40.
- Working with influencers is effective for creating a buzz.
- Questions to ask before you start:
- How can I manage a Tmall partner (eCommerce knowledge & daily activities)?
- How will I present my products (omni-channel strategy & marketing plan)?
- What’s my China strategy (investments & thinking long-term)?
- Who are my core customers (consumer profiles & preferences)?
- Who are my competitors (brand positioning & price range)?
- What is my hero product (selling point & market opportunity)?
- How will I manage the business (timings of assortment, logistics, promotions)?
- How to open a Tmall store:
- The Brand is responsible for: brand positioning; marketing strategies; product assortment; pricing strategies; and distribution strategies.
- The Tmall Partner is responsible for: store design & maintenance; product suggestions & selection; day-to-day operations; customer services; logistics & warehouse optimisation; and merchandise analysis.
- Alibaba’s ecosystem supports: real-time consumer data; analytical tools; promotional events; payment infrastructure; and logistics data infrastructure.
- Tips for success:
- Have a dedicated team so you can react fast.
- Study the market and new consumers: invest in a marketing campaign.
- Build a solid partnership with an experienced Tmall Partner – they are your China team.
- Think long-term – it’s a big country to tackle.
- Made in Russia has a value – but can’t be the only one.
- Study logistics, legal and customer duties – protect yourself smartly.