James Dudley Management

James Dudley Management

Vitamins, Minerals, Supplements and Tonics Face New Challenges in Europe

With 43% of market sales made up by growth brands there are some attractive opportunities in an otherwise gloomy European vitamins, minerals, supplements and tonics markets. Furthermore, a much expected loss of €160 million worth of prescription business, following an across the board de-reimbursement of non-prescription medicines in Germany, has been reduced to about €60 million. Iron, calcium and vitamin D supplements and B vitamins have been largely excluded from de-reimbursement following the implementation of healthcare reform measures in January 2004.

Despite this, overall European sales are forecast to grow by only 2% over the next five years and a major period of adjustment seems inevitable. However, the negative factors responsible for undermining market growth are fairly well confined to specific countries, prescription driven market segments and generic categories.

So says a new eight European country market report, ‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’ from consumer healthcare strategy consultants James Dudley Management.

The report covers Belgium, France, Germany, Italy, Netherlands, Poland, Spain and the UK.

“A period of quite severe adjustment will be difficult to avoid especially for companies with significant exposure to the prescription sector in Germany. Furthermore, regulatory changes will encourage a shift from pharmacy to broader distribution channels and this can be looked at as either an opportunity or a threat depending on where individual companies’ strengths lie”, says James Dudley the principal author of the report.

Taking the eight markets as a whole the current position shows that 43% of market sales are made up by growth brands, 41% by brands with zero or very modest growth and 16% for products with declining sales. (See graph 1)

Exploring the European VMS opportunity on a geographic basis, the most attractive country markets representing 20% of total sales, are Belgium with 3% share, Spain with 4% share and Italy with 13%. Each has shown reasonable historical growth and all three have attractive market trends. (See graphs 2 & 3)

The French market with 17% share has probably stabilised following a period of declining sales in the prescription sector. Recovery will begin to occur, as manufacturers become more consumer-focused.

The mature UK market with 12% market share will continue to show volume growth. However, it can be expected that cheap generics and private label brands as well as price competition in retail channels will dampen value growth. The Dutch market with 2% share will also show growth but within a mature price sensitive market.

The Polish market grew rapidly during the nineteen nineties on the back of high price inflation and the introduction of Western Brands making Poland the fifth largest dietary supplements market in Europe with 9% share. The Polish market has, however, shown weakening sales since the end of 2001 as a result of underlining economic weaknesses within the country.

Germany is the largest VMS & tonics market in Europe with 41% share but has shown sluggish growth trends over the last three years. The abolition of resale price maintenance in Germany in 2004, together with the loss of reimbursement for some categories will have a severe, negative impact on the market. However, Calcium and vitamin D can still be reimbursed for osteoporosis, iron for anaemia and B vitamins for recognised deficiencies.

Growth categories, representing about 31%, of market sales are multivitamins (21% of the total market), B vitamins (7%) and immunostimulants (3%) All three categories have performed well over the last few years mainly as a result of growing consumer OTC demand.

Multivitamins are expected to show reasonable growth to 2008. This sector of the VMS market is driven by big heavily promoted consumer brands especially Centrum (Wyeth).

Even so, some of the OTC market leaders have a limited but declining prescription businesses for their brands. (See table 1)

The market leaders in this category are highly innovative in terms of differentiating their brands and targeting premium consumer segments with line extensions. Branding, innovation and consumer focused marketing will continue to grow multivitamins over the next five years. Yet companies will have to face up to the fact that multivitamins are becoming a multi-channel category and tackling the rivalries between pharmacies and supermarkets will become a problem in some countries. This will become a major issue when the ‘food supplements directive’ comes fully into force sometime before 2008.

Table 1: Leading Multivitamin Brands by Country

Territory

Brand

Territory

Brand

Belgium

Omnibionta (Merck Kgaa)*

Netherlands

Supradyn (Roche)

France

Berocca (Roche)*

Poland

Vitaral (Jelfa)

Germany

Centrum (Wyeth)

Spain

Pharmaton Complex (Fher / Boehringer)*

Italy

Supradyn (Roche)*

United Kingdom

Centrum (Wyeth)

*OTC with prescription sales

Source: © James Dudley Management , ‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’

On the other hand the mineral supplements market is set for a bumpy ride with industry leaders facing up to the fact that their love affair with the prescription sector is on the wane in most countries except Belgium and the UK. This is a category that is predominantly prescription driven especially for calcium, magnesium and iron supplements and one that companies say is difficult to consumerise. This said, Wyeth achieved over €20 million OTC sales with Polase in Italy. (Table 2)

“Only Belgium and the UK saw any growth in prescription calcium supplements and only the former showed a growth in magnesium supplements over the last two years. Accounting for 32% share of the market any significant loss of prescription generated sales of mineral supplements will impact adversely on the overall VMS market”, says James Dudley.

Table 2: Leading Mineral Supplement Brands by Country

Territory

Brand

Territory

Brand

Belgium

Steovit D312

(Nycomed)*

Netherlands

Calcium Novartis

(Novartis)

France

Magné B6 (Sanofi Synthélabo)*

Poland

Aspargin (Filofarm)

Germany

Magnesium Verla

(Verla)*

Spain

Calcium D Novartis

(Novartis) *

Italy

Polase (Wyeth)

United Kingdom

Calcichew D3

(Shire)*

* Brands with more than 40% sales from prescriptions

Source: © James Dudley Management , ‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’

While vitamin C and vitamin E will continue to under perform, B vitamins are expected to continue to show growth. Folic acid and another category, fish oils, can expect to show growth if products can be tailored and effectively communicated to consumers for the new indications emerging for heart protection.

Furthermore, with the market shifting more and more towards non-pharmacy channels there will be a growing trend for private label makers to exploit opportunities provided by the major supermarket operators.

‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’ published in January 2004 by James Dudley Management and is priced at ₤1,950 or US $4,000. For details visit www.james-dudley.co.uk or call ++44(0)1562 747705 or fax ++44(0)1562 750275

Graph 1: The European Dietary Supplements Market Growth Analysis

Source: © James Dudley Management , ‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’

Graph 2: The European Dietary Supplements Market Growth by Country 2003 – 2008 forecast compared to actual Growth 2000 - 2003


Source: © James Dudley Management, ‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’

Graph 3: The European Non-prescription Market % € Share by Category (based on eight European markets)


Source: © James Dudley Management , ‘Vitamins, Minerals Supplements and Tonics in Self-Medication - the 2004 European Edition’

 

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