A consumer revolution is changing the future and fortunes of consumer healthcare companies
Digitally-enabled, health conscious consumers are demanding more from the health and wellness industry which will grow the Consumer Health market by more than $200 billion over the next five years.1 The growth is primarily driven in the preventive health and wellness categories such as vitamins, nutrition, weight management and fortified foods and beverages, fueled by demand from health focused consumers and the growing wealth in emerging markets. With multiple industries converging and transforming the Consumer Health market, traditional Consumer Healthcare companies face a call to action to bring a new pace of innovation, collaboration and understanding of the digital consumer. Whitney Baldwin discusses in this article.
A consumer revolution is occurring in healthcare. The $502 billion consumer healthcare market is expected to grow by nearly 50 percent to $737 billion in the next five years. Digitally-savvy consumers are taking control. They are seeking solutions that enable them to take charge of their own health, helping them become informed stakeholders. Consumers want better, easier, “self-serve” ways to manage and improve their health outcomes. And an increasing number of health management options – ranging from new vitamins and supplements to in-home diagnostics and mobile health apps for smart devices – are helping them gain easy and less expensive access to health management information and products.
Most traditional consumer health companies have not taken advantage of this shift in consumer demand. But a few high performing consumer goods companies are heeding the call to action — bringing their consumer insight and advanced marketing capabilities to challenge the “traditional” players in addressing the new health-oriented customer. In addition, select pharmaceutical companies are joining forces with entities from outside their industry.
Leading consumer goods companies have publicly made notable moves to take a dominant role in consumer health and some have expanded their portfolios by making acquisitions in China and Brazil. Mead Johnson Nutrition, for example, emphasized high-growth categories such as infant and adult nutrition and extended its footprint in emerging markets, where its premium infant formulas appeal to prosperous consumers.
The competition in this market has significantly expanded, partly because traditional life sciences and consumer goods leaders have held a product and brand approach, not focusing on consumer needs.
Some traditional life sciences companies have begun to transition to the market being driven by the health-conscious consumers. For instance, in February 2012, Pfizer acquired Alacer, Kings Mountain, NC, a vitamins and dietary supplements firm, which markets the vitamin C product Emergen-C.
Even mobile telecommunications and high tech companies are jumping on the consumer health bandwagon, addressing the needs of connected consumers. For example, Google launched Calico in September 2013, a new health and well-being venture focused on understanding aging and related diseases by processing big data. Nike’s FuelBand tracks activity and uploads through an iPhone app, for recording the amount and intensity of their daily activities. In addition, Samsung S Health personal wellness app collects exercise and diet data to help users maintain a healthy lifestyle. As news reports show, the company is partnering with health insurer Cigna to further develop this technology.
However, to make gains in the consumer health sector, both life sciences and other products focused companies must quickly adapt to the changing needs of consumers by reshuffling their product offerings. Executives need to strategically rethink commercial capabilities and operating models.
Specifically, traditional pharmaceutical companies, with science-based products, must rethink their scientific and clinical orientation to understand and consistently respond to new market segments and geographies at greater speed. They also must develop the customer-centric skills that consumer goods companies offer.
Manufacturers of consumer goods must establish R&D, clinical and regulatory capabilities to support product health claims, and achieve and maintain compliance in promotion and manufacturing. Some consumer goods companies already have these capabilities, and should apply them more extensively.
Both pharmaceutical and consumer goods companies must evolve to a digitally-enabled operating model to get the attention of web-savvy consumers who demand information. They expect seamless channel service and drive competition through a more open and transparent world.
We have identified distinctive capabilities that companies will need to achieve high performance and outperform their competitors by demonstrating these capabilities more consistently and by integrating them into the fabric of their organizations. They are:
• Learn about consumers through deeper, advanced analytics, which is integrated across the enterprise.
o Transition from retrospective to predictive analytics to generate better, actionable customer insights.
• Undertake a one-on-one marketing approach through technology that creates a seamless customer experience.
o Apply improved insights and span multiple digital and tangible touch-points, facilitating personalized communication at the consumer’s convenience. Internet retailing of consumer health products is taking share from traditional channels like pharmacies, so traditional players need to find a response
• Deliver seamless channel experiences.
o Help consumers access the brands they want anytime, anywhere, supported by customer-driven, nimble supply chains.
• Evolve to more dynamic operating models that serve emerging markets.
o Utilize flexible, cost-effective “super global, super local” supply chains.
• Win in high-value categories and high potential markets.
o High performers invest in M&A in growth categories and emerging markets, and dispose of non-core businesses to prioritize core brands.
We believe consumers will continue to embrace health and wellness, seeking new products targeted to their immediate needs, driving growth in the consumer health sector. This growth will not slow.
The high performers are advancing their business models to reflect and take advantage of how consumers are changing their behavior in the market place. But all companies looking to capture a slice of the growing consumer health pie will need to scrutinize their portfolios, strengthen consumer-specific capabilities, and refine their operating models to ensure that all are working in concert to harness the opportunities offered by these evolving consumer needs.
1. Euromonitor International, August 2004
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About the author:
Whitney Baldwin is a senior manager in Accenture’s Life Sciences practice. Whitney has over 25 years of experience in pharmaceutical and consumer health sectors, including experience at industry-leading pharmaceutical companies in commercial/brand roles prior to joining Accenture. At Accenture, he is the lead for the Consumer Health sector, and has worked on a variety of consulting engagements helping pharmaceutical and consumer health companies achieve higher performance based on his strong industry/functional expertise.
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