J&J’s Mesquita predicts market shift
This article was originally published in OTC Bulletin & The Rose Sheet
“The OTC market of the future may not necessarily be the OTC of the past,” predicted Johnson & Johnson (J&J) Consumer head, Jorge Mesquita, at the Barclays Global Consumer Staples Conference.
Addressing the audience in Boston, US, Mesquita said increased demand globally from consumers for innovative wellness products, spurred on by a growing interest in self-care, was set to redefine the boundaries of the OTC medicines market.
“Consumers want more solutions than just drugs to help meet their [healthcare] needs,” Mesquita insisted. “They’re not waiting to get sick to get a remedy, they’re trying to care for themselves.”
When illness did strike, consumers were reaching for a “tool kit” of solutions to help them care for their families, and particularly their children, Mesquita noted. “They don’t necessarily want to give their kids medicines straight away at the first sign of a cough.”
As evidence of this attitude shift, Mesquita pointed to a “growing trend” towards topical products, digitally-enabled devices, and natural solutions. The OTC market of the future, he claimed, would combine these new, growing categories with “proprietary, transformational drugs”.
The growing desire for more natural healthcare solutions spurred J&J’s recent acquisition of vitamins, minerals and supplements (VMS) player Zarbee’s (OTC bulletin, 10 August 2018, page 5). Salt Lake City-based Zarbee’s has marketed Zarbee’s Naturals-brand VMS products since its launch in 2008, with the range comprising non-drug alternative remedies for children and adults for indications such as cough and cold, sore throat, immune support, sleep, digestive health and general wellness.
“We think Zarbee’s is going to be a great complement to our portfolio, as it’s enjoyed terrific growth,” Mesquita explained. “And we see this natural space in OTC as one that has universal appeal.”
While the boundaries were shifting, Mesquita said J&J believed the OTC market would continue to grow at a “very attractive pace” in the coming years, given demographic trends, ageing populations and rising obesity levels, in combination with consumers “taking a much more proactive stance about caring for their health”.
J&J’s OTC sales advanced by 3.7% to US$4.13 billion (€3.6 billion) in 2017, accounting for 30% of total Consumer sales which moved ahead by 2.2% to US$13.6 billion (OTC bulletin, 2 February 2018, page 6).
As one of J&J’s two largest Consumer franchises – along with Beauty – OTC would be a “primary” area of focus for further mergers and acquisitions, Mesquita revealed.
J&J was currently “cautiously screening the world for the right assets to advance our strategic priorities”, he explained, with both global deals and regional deals under consideration.
While the firm would weigh up both smaller and transformational deals, Mesquita pointed to J&J’s track record of acquiring companies that “were still in a formative phase, with huge upside potential”.