COVID VMS Boom Driving Shift To Self-Care As The Netherlands Bucks 2020 Sales Trends
Source : 'HBW Insight'
Overall, the coronavirus pandemic has not been kind to the European consumer healthcare industry.
Stockpiling during the first COVID-19 wave last Spring, combined with enduring lockdown measures as second and third waves hit at the end of last year, has meant shrinking 2020 sales in Europe’s largest OTC markets.
In Germany, for example, total sales of non-prescription medicines fell by 4.7% to €6.78bn ($8.27bn) last year, according to the German Medicines Manufacturers’ Association, the BAH. By volume, the impact was even worse, the association noted, with the market contracting by 7.3% to 701m packs.
Similarly, 2020 value sales of non-prescription drugs in Italy slumped by 6.6% to €2.3bn, the country’s self-care industry association, ASSOSALUTE, reported, while volume sales declined even quicker, falling 8.8% to 245m packs. ("Italys OTC Market Records Worst Performance In 15 Years" "HBW Insight" )
The Netherlands, however, bucked this trend. The Dutch OTC market – which includes non-prescription medicines, self-care medical devices and food supplements – grew by 4.6% to €836m in 2020, according to data from IQVIA Consumer Health.
To understand this Dutch exceptionalism, you have to look at the structure of the country’s OTC market, explained Bernard Mauritz, director of the Netherlands’ self-care industry association, Neprofarm, in an exclusive interview with HBW Insight.
With vitamins, minerals and supplements representing the country’s largest OTC category, the Dutch market benefitted more than any other from the shift towards wellness and prevention seen across the region during the pandemic, he said.
VMS sales leaped up by 24.7% to €178m in 2020, making up for a 6.6% drop in turnover in the respiratory product category, which took a hit from the almost non-existent cough and cold season at the end of the year.
Mauritz pointed to the promotion of vitamin D by Dutch scientists to prevent or reduce the severity of COVID infection as a contributing factor to this VMS boom, as well as local consumer trends towards herbal supplements to strengthen immunity.
With regards to the lacklustre performance of respiratory medicines, Mauritz said that social distancing measures were preventing not only the spread of COVID-19, but also the common cold and flu, which meant that consumers weren’t buying as many products to treat these conditions.
Another factor, linked to the prevalence of VMS in the Netherlands, is the country’s OTC distribution structure.
Unlike in other European countries, most OTC medicines – roughly three quarters – are sold in drugstores. This sales channel has been steadily expanding for a number of years and grew by 4.3% in value terms last year.
Independent drugstores did particularly well during COVID, growing by 21.3% to deliver €103m worth of OTC transactions in 2020.
The fastest growing sales channel, however, is supermarkets. While only 15% of OTCs were sold in supermarkets last year – still almost double that of pharmacy – the channel grew by 8.2% to €125m in the twelve months.
“Distribution is gradually shifting from drugstores to supermarkets,” explained Mauritz. ("Dutch OTC Market in 2019 VMS Delisting Accelerates Shift Towards SelfCare" "HBW Insight" )
This shift would have been more pronounced had it not been for a ban on OTC sales – specifically those in the Uitsluitend Apotheek en Drogist (Pharmacy and Druggist only) UAD category – in supermarkets that came in last year, he added.
The issue concerned the biggest Dutch supermarket chain, Albert Heijn, which has since 2018 been selling UAD medicines in many of its bricks-and-mortar stores.
Since 2018, the chain has been using tablets to offer consultation on OTC medicines sales, using this to by-pass rules concerning UAD sales.
“There have been several court cases about this,” Mauritz said. “In November 2020, the Council of States ruled against the supermarket chain, deciding in favour of a literal reading of the law, which requires the presence of a druggist or an assistant druggist.”
While this has prevented the chain from selling UAD medicines since then – it can still sell Algemene Verkoop (General Sale) category medicines – Mauritz expects Albert Heijn to start training its staff to be qualified druggists, so that sales can resume.
However, this will “take some time,” he pointed out. Meanwhile, the Dutch Minister for Medical Care and Sport, Tamara van Ark, has indicated that she would like to change the law, allowing digital consultation.
“It’s old fashioned to require someone to be physically available to give advice when you can offer digital consultations,” Mauritz said.
“In the case of sensitive conditions, hemorrhoids, for instance, I would prefer to receive advice in a more private environment, like via digital media,” he added.
Long-term, Mauritz said the shift towards supermarkets would continue. “People want to buy their medicines in supermarkets, because people prefer to go to only one shop and buy as much as possible there.”
In general, like in other European countries, the coronavirus has accelerated the shift towards self-care in the Netherlands, Mauritz reflected.
Alongside a desire to buy more medicines in drugstores and supermarkets, he said the pressure on primary care services has encouraged doctors, who are traditionally skeptical of self-care, to recommend OTCs over prescription drugs.
“Neprofarm did a study among general practitioners that showed that they have been advising patients to buy OTCs instead of prescribing,” Mauritz continued. “They also have done many digital consultations during COVID, so they are getting used to advising their patients in different ways.”
“Meanwhile, consumers are also getting more information themselves on all types of diseases, which showed doctors that people are able to take more responsibility for their own health care than they expected before,” he added.
However, there is still a long way to go, and the country’s reimbursement system – which covers OTCs for chronic conditions, including certain laxatives, calcium tablets, antiallergics, antidiarrheals and stomach cleaners – remains a major barrier to self-care in the Netherlands, Mauritz argued.
In 2019, for example, the government tried to expand the self-care sector by de-reimbursing vitamin D, on the basis that these products were easily available without prescription in pharmacies, drugstores and supermarkets.
While this then led to doctors prescribing higher, weekly dose vitamin D products, Mauritz said that the Dutch Institute for Public Health is now advising the government on how weekly dose products could also be de-reimbursed.
“So, there is a movement in the right direction, but, again, it takes a lot of time,” he reflected. “The attitude and behavior of doctors has to change. And this will take a generation.”
The Dutch reimbursement system also holds back innovation in the form of Rx-to-OTC switch, Mauritz explained. “Because as soon as the product is no longer prescription-only, it is de-reimbursed almost automatically.”
This not only disincentives both doctors and consumers from OTC alternatives, he said, but also companies, thanks to strong generic competition from white-label alternatives.
“This is another particularity of the Dutch system,” Mauritz suggested. “Thanks to the domination of the market by drugstores, there are many own label brands,” he pointed out.
If a company does initiate an Rx-to-OTC switch – the Netherlands has a product-based reclassification system which means that marketing authorization holders must begin the procedure – drugstore retail chains like Kruidvat “will immediately look for a generic company to produce a version of that successful switch for them,” he noted.
“So, our member companies do not even get the time to break-even when they're switching their products, which makes them reluctant to do so,” Mauritz revealed.
Nevertheless, things are moving in the right direction, he insisted. While the shift to supermarket distribution has stopped for now, he predicted this would be solved “quite soon,” enabling consumers to continue taking more responsibility for their own healthcare.
While devastating, COVID has expedited this general move to self-care in the Netherlands. “It showed that people can do a lot on their own account. And that's the message we would like to keep conveying,” Mauritz concluded.
By David Ridley