Building A Top-10 Global OTC Player – Q&A With HRA Pharma CEO David Wright
Exclusive: HBW Insight speaks to HRA Pharma CEO David Wright about the company's plans to become a top-10 global OTC player. Wright reveals that HRA is about to enter Latin America, beginning with Mexico and Brazil, and is currently looking at at least two significant acquisitions to ramp up its expansion plans in the coming months.
France’s HRA Pharma is on a mission to become a top-10 global consumer healthcare company by 2023.
In the last few months, the company has announced four major initiatives to take its core brands Compeed and the emergency contraceptive EllaOne to new markets in Africa, Asia and the Middle East, complementing its existing base in Europe and the US.
In this exclusive interview with HBW Insight, CEO David Wright reveals that the company also has its eyes on Latin America, starting with Mexico and Brazil, potentially expanding HRA’s geographical reach to every continent in the world.
Before the outbreak of the coronavirus, HRA was also in the middle of a new deal to ramp up its growth plans, Wright reports, a deal that it will, alongside other acquisitions, take forward as soon as possible.
One of the fastest growth businesses in the OTC world, according to Wright, in this Q&A we get a unique insight into HRA’s dynamic growth strategy.
Likewise, we will do the same in Latin America. We’ve got a partner in the region that I know very well, who is going to help us be a lot more proactive in markets like Mexico and Brazil, so watch this space from that perspective.
Obviously, the US was a white space for us two years ago. Up until now, we’ve been working on switch projects, but we have had no physical presence in the country. (Also see "Oral Contraceptive OTC Proposal Moves Closer With Start Of Actual Use Study" - HBW Insight, 21 Jun, 2018.) From this perspective, Mederma was a good acquisition for us, and we will start initiating our investment there, beginning with rolling out Compeed nationally this year. We will also be investing in Canada, a country that will be much more aggressively supported in the future.
Then as you’ve seen, we’ve opened up Africa, with South Africa being the first country to see investment, and of course the Middle East. (Also see "South Africa Next As HRA Pharma Marches On With Global Expansion" - HBW Insight, 4 Mar, 2020.); (Also see "HRA Pharma Expands Footprint With Middle East Move" - HBW Insight, 19 Dec, 2019.)
The second pillar of our strategy is organic growth. Our innovation pipeline is strong and we’ll be introducing innovation as and when we can, over the next couple of years. However, clearly to get to the top-10, we’re going to have to look at acquisitions. We are looking at a potential acquisition right now, but we’ve had to put on the breaks because of COVID-19. I don’t think there’ll be many deals happening at the moment, but we’re in close contact with two players that we could hopefully make a move with by the end of the year, which will add considerably to our revenue development and help us to reach our top-10 ambition.
Since I came to HRA Pharma three years ago, the company has changed dramatically, not just in terms of headcount and the shift from Rx to OTC, but also in terms of the experience we’ve brought in. I would say we’ve got a very strong team now both at management level and throughout the different layers we have within the business.
The difference with HRA is that we give our partners our core brands, like Compeed. In Europe, for example, Compeed is a massive brand, you’re talking about a consumer brand generating annual sales of €300m ($372m) across the region. Normally companies would keep a brand like that in-house and utilize their own sales teams to manage it. But we don’t. This changes our relationship with our partners. By giving them big category leading brands in Europe, we become very important to them and in exchange we get a lot of focus on our brands. We also bring them along to all our brand strategy days and conferences. We treat them as if they are part of the HRA family, we don’t treat them any differently, albeit they are separate organizations.
We’re not looking at acquiring a big portfolio, simplicity is important in that regard. For example, Compeed was a great opportunity for us, because it was a really strong asset that enabled us to leverage our presence in Europe while also benefiting our other OTC brands like EllaOne, by leveraging greater economies of scale.
We don’t want to build complexity; we want to have brands that we can grow. If we end up with six or seven brands with a very good geographical distribution, and turn these into OTC “blockbusters”, I would hope that this would enable us to reach our goal of becoming a top-10 OTC player.