EMEA and LATAM outperform global growth

Examining the performance of different regions reveals a diverse picture. EMEA and LATAM have outperformed the global average in latest MAT, with EMEA achieving +8.6% growth driven by CEE +12-13% growth in Central and Eastern Europe and +9-10% growth in the Middle East and Africa region (see Figure 2). LATAM growth has largely been driven by price increases linked to overall higher inflation across core markets like Brazil and Mexico.

By contrast, North America has experienced a slowdown, impacted by lower consumer spending, resulting in a -1.4% value growth and even more significant decline in volume (-4%). APAC has shown softness in the latest MAT due to slow-down in consumption across China over the past two years, well before any impact from recent tariffs.

Continued robust growth across all categories

In terms of category performance, Digestive Remedies, Skin Care, and Vitamins, Minerals, and Supplements (VMS) – as defined by IQVIA Consumer Health – have continued to perform well since the post-COVID recovery period.

Digestive Remedies have led the way with a growth rate of +6.2% (see Figure 3), driven by growth across probiotics, laxatives and other sub-categories. We believe a key driver of this is increased consumer focus on prevention, eating healthy, cooking at home, and a growing belief that the ‘gut’ plays a key role in overall health.

VMS has also shown recovery in recent quarters after slumping from the post-COVID high of +16-18% growth in 2022. However, as consumers face spending constraints, they have reduced their discretionary spends on vitamins and supplements, with this impact seen most clearly in the decline across North America.

Minor categories such as Calming & Sleeping, Mood Enhancing, and Eye Care continue to do well but are down from their highs in 2022 and 2023.

Teva and Stada outperform global market growth

The highly competitive landscape of the OTC market is highlighted by the performance of the top 10 companies in the space. Teva and Stada have outperformed the global OTC market growth, with Teva achieving a growth rate of +9.8% (see Figure 4), well above the market average of +4.6% in the latest MAT. Both Teva and Stada have benefited from the geographical split of their portfolio being predominantly in Europe with little to no exposure in the US and China. All of the top 6 firms have at least 30-45% of their business in the US, and the slow-down across what is the world’s most important OTC market has impacted their overall performance. We expect this to be a temporary phenomenon, and deliver demand will recover across the US in the coming quarters.

Conclusion

We expect the global OTC market to continue growing at a CAGR of 6.4% for the next 5 years with all categories contributing to this growth and cough/cold seasonality returning to historical norms. To continue growing share and maintain leadership we recommend OTC firms and investors:

1. Innovate across core brands: Focus on innovating within your core categories and invest in deeper consumer understanding, brand extension into new sub-categories supported by digital communication. Several of the top 10 firms have been calling out their must-win brands and that is where we see 70-80% of R&D and marketing investments going forward.
2. Invest in core markets and regions: As shareholders seek for both growth and profitability, we see opportunity to grow and expand within core markets with increased innovation, smart pricing, e-commerce investments, and tailoring products to evolving consumer needs. A few emerging markets offer significant future opportunity, and they should be considered on a case-by-case basis – Saudi Arabia, India, Brazil, etc - without compromising on investments in core markets.
3. Portfolio simplification: Seek to review your portfolio across categories and brands. See where you ‘wish to play’ and ‘how to win’ and then hive off non-core assets to unlock value that can then be invested in core brands and core markets (as mentioned above).
4. Go digital and e-commerce: OTC consumers have changed significantly in the last 5 years and they are now omni-channel and omni-media. This requires companies to evolve and meet them where they consume content, where they search, and where they buy. E-commerce and e-pharmacies will be 18-20% of the OTC market in the next 5 years and companies and brands will need to be there as well. This is the TikTok generation, and their attention span is now 7 seconds.

In summary, industry leaders must remain agile and innovative to address key growth opportunities and implement strategic actions as outlined above. By focusing on consumer engagement, product innovation, and core portfolio priorities, stakeholders can drive sustained growth and enhance market share. Looking ahead, we remain confident that the OTC market holds promising opportunities for those who are willing to adapt, innovate, and invest!

For more insights on the state of today’s OTC market contact out team at consumer.health@iqvia.com or click the CONTACT US button on this page.