Healthcare spending in emerging markets will reach $4 trillion by the year 2022. As these markets continue to grow, consumers with more spending power are focusing their money on items that will make their daily lives better. One area that this extra capital will go is to over-the-counter healthcare products. In 2017, consumer healthcare spending was over $15.9 billion in China, and $15.7 billion in India, and $4.6 billion in Brazil. These are sizable figures when compared to the $22.5 billion spent in the US. This growth is expected across a variety of categories. According to the Consumer Healthcare Products Association (CHPA) the largest growth categories for over-the-counter (OTC) manufacturers include respiratory (+10%), hair growth (+7.4%), external analgesics (+6.8%), and feminine needs (+6.6%).

By 2020, these emerging market consumers will account for a significant portion of the middle class. Consumer healthcare companies have the unique opportunity to introduce products into markets that may not have the funds or the access to these products in the past. In an effort to care for patients on all corners of the globe, consumer healthcare companies should be developing strategies to enter these developing markets.

Challenge #1: Regulatory Requirements

Many markets currently have laws in place which make it difficult for consumers to directly purchase over-the-counter medicines. However, as these markets are becoming more developed, government bodies are recognizing the need to provide their citizens access to these products. Governments and drug regulating organizations are working to create pathways for over-the-counter medications to be more readily available. Nevertheless, with these efforts comes evolving and more stringent regulatory requirements in which consumer healthcare companies must be aware of to ensure compliance.

For example, the Brazilian Food and Drug Administration (ANVISA) just passed legislation in August 2016 titled Rule #98 that made it easier for more products to be introduced into the market. Rule #98 replaced a 13-year-old regulation (Rule #138) that had a limiting effect on what over-the-counter medications could be in the market which raised the prices of the medicines for the consumer. Whereas the Ministry of Healthcare of the Russian Federation passed legislation in 2013 making it legal for over-the-counter medications to be sold in grocery/retail stores, giving consumers more access than when sales were limited to only pharmacies previously.

Companies interested in tapping into these emerging markets must dedicate time and resources to research the regulations of the country or region. Before operationalizing the product launch, consumer healthcare companies should have a solid understanding of the requirements. From there, companies can assess how their new product launch would differ in an emerging market versus an established market.

Challenge #2: Product Portfolio

Consumer’s needs in each market vary based on weather patterns, cultural norms, and societal pressures. Products which are top sellers in the United States or the European Union may be completely out of place in emerging markets. To ensure you are placing the right products in the market, consumer healthcare companies need to have an understanding of the local medical needs of their patients. Understanding the local patient’s needs is critical in identifying the right portfolio mix for a consumer healthcare company to be successful.

One of the best ways to understand the local market is to listen to the voice of the customer. If you have affiliate offices in the regional market, make sure their voice is heard by brand managers so that the company can develop relevant packaging, marketing campaigns, and trade promotion strategies.

Challenge #3: Supply Chain Constraints

One of the major hurdles of supplying goods to an emerging market is the poor infrastructure. Drone technology, for example, as a delivery method is no longer just a concept out of futuristic sci-fi movie; it is now a legitimate alternative for last mile delivery to consumers. Consumer healthcare companies must be looking outside of the box for new processes and technologies to tackle the infrastructure challenge.

While consumers in emerging markets may have disposable income and are becoming more digitally enabled, the lack of infrastructure can limit their ability to access even the most basic goods. Companies must look for innovative solutions to conquer the “last mile delivery” issue. To battle this issue, multiple consumer goods companies and pharmaceutical companies are utilizing drones to provide direct access to the consumer. An example of a company utilizing innovative technologies, drones specifically, is Zipline International. Zipline International uses drones to transport life-saving medicines and treatments to areas of Africa to overcome the lack of proper-infrastructure.

Conclusion

The enormous sales opportunities from emerging markets come with a handful of new challenges to take into consideration for consumer healthcare companies. The future of consumer healthcare is changing. Doing an analysis of your product portfolio, understanding the regulations, and crafting a supply chain that can reach doorsteps across the world is key to acquiring new emerging market consumers. Proactive companies, rather than reactive ones, will have an opportunity to become leaders in new countries and markets. Now is the time to assess and build a roadmap on how to succeed in these growing markets.

Co-author and contributions by Daniel O’Connor and Megan Weldon