How to solve the Consumer Healthcare (OTC) sales puzzle

"Consumer Healthcare (OTC) Sales is neither like Pharma nor like FMCG , its OTC and one needs to be the best of three worlds to succeed in OTC Sales" 

In order to understand the above statement let’s start with the definition of OTC, as put in Wikipedia “Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a prescription from a healthcare professional, as compared to prescription drugs, which may be sold only to consumers possessing a valid prescription” – but this article is not limited to defining OTC (which we all know), this article is to emphasise on how to sell OTC products correctly.

The traditional medicines segment is the leading segment in the Indian OTC market, contributing to about 30 percent to the total market. 

Currently in India, OTC drugs are sold through five different types of distribution outlets, namely—department stores, independent retailers, pharmacies/drugstores, specialist retailers and supermarkets/hypermarkets. With the advent of increasing penetration of organised retailing and pharmacy stores, shelf space for OTC products is also expected to increase manifold. At the same time, healthcare sector in India is going through a major transformation and per capita healthcare spend is expected to increase significantly.

Many pharma companies are shifting products going off-patent to the OTC segment to fight generic competitors. Large and medium-sized pharma companies leverage their well established distribution network and strong brand name to bring the same products in the OTC form to consumers at much lower costs and thus combat competition from generic players.

The route which is adopted by many is as follows...

• go through the product list of the Pharma generic drugs
• tick the ones generating repeat sales without fresh prescriptions
• pick up the top tier products from the ticked ones
• align it with the marketable OTC categories
• re-package them in an eye catchy packaging
• draw up a communication plan for them
• release them in the distribution channel

But this approach is neither doing justice to the brand nor the sales. OTC selling is believed by some as similar to Pharma selling, some believe it is just like FMCG distribution and some feel that wholesale will do all the trick. But the reality is OTC is neither Pharma nor FMCG, it’s a category in it’s own right called OTC (Consumer Heathcare). Hence it should be approached differently (as Shiv Khera says “...don’t do different things, they do things differently”).

OTC / Consumer Healthcare products are a mix of LIFESTYLE, NEED & HABIT and hence as a product apart from its efficacy it should also address the said aspects of a consumer buying process.

The early birds who adopted an OTC-focussed strategy in the Indian pharma market are already reaping rich rewards. Ranbaxy (now Sun Pharma) was one of the first domestic companies to foray into the OTC segment in 2002, through a separate business division called Global Consumer Healthcare. Other successful OTC products include Sugar Free from Zydus Cadila, hypertension drug Aten, the emergency contraceptive i-Pill, launched by Cipla in August 2007, became one of its best selling products, in fact, Piramal Healthcare considered i-Pill such an attractive buy that it coughed up three times its sales in order to grow its OTC business. 

Here is a typical sales org structure in an OTC setup:

The opportunity exists, but marketing of OTC products requires a different set of skills. Apart from the product USP and White Space indexing (where it can earn a premium too), the main thrust lies of the sales force to ensure success of an OTC product / a new product launch. Many have labeled OTC to be sold / treated as FMCG while others have stuck on to deal with it as Pharma but the key here is to have a mix. OTC sales requires the aggression of a FMCG (width + depth in retail), the detailing of a Pharma & the persistence of Consumer Durables industry selling. When these 3 are mixed together that’s when an OTC SALES PERSON IS BORN.

There are two other key factors: the role of distribution and trade channels. Distribution is of critical importance because while advertising will help to create a demand for the product, distribution ensures that the consumer interacts with the brand and may take a purchase decision for the healthcare brand. Engaging with the trade will be extremely important because these business partners can make a huge difference to the success or failure of a brand as they are not just DISTRIBUTORS but DETAILERS of the brand to the RETAILERS.

Therefore it is crucial that OTC / Consumer Healthcare companies invest their money and resources in the right places which are:

1. Product Development (R&D)
2. Packaging (which signifies aspirations in lifestyle)
3. Sales team training & development

Having done the above and knowing the consumers segmentation brands can reach them in a more targeted manner by minimum media wastage and thus profitability.

OTC / Consumer Healthcare brands definitely have the potential to grow at a very rapid pace but it will require both innovative marketing practices and a new ‘ART of SELLING’.

"Consumer Healthcare (OTC) Sales is neither like Pharma nor like FMCG , its OTC and one needs to be the best of three worlds to succeed in OTC Sales"