With half of respondents claiming to be overweight, it’s logical that half (48%) are also trying to lose weight. And for more than three-quarters (78%) of these consumers, the way to shed unwanted pounds is through diet. But do consumers understand what they are eating? Not necessarily. The study finds that half (52%) of consumers around the world understand nutritional information panels on food packaging only in part. Four-of-10 consumers understand nutritional labels “mostly” and seven percent say they do not understand them at all.

And what about trust—do consumers believe that claims on product packaging are accurate and truthful? Here too is ambiguity in the minds of consumers. Of 10 different product claims studied, only three received a complete believability rating by more than 20 percent of consumers (calorie content 33%, vitamin content 28% and fat claims 23%), highlighting a need to better educate consumers.

Support for Calorie Counts on Restaurant Menus

Consumers around the world show support for calorie counts on restaurant menus, with half (49%) of global respondents reporting that fast food restaurants should always include calorie information on menus, and 31 percent indicating that fast food restaurants should sometimes do so. Twenty percent of global online consumers think fast food menus should never include calorie data.

Consumers around the world have healthy eating on their minds and consumer packaged goods (CPG) marketers have an opportunity to help. Consumer-friendly nutritional labeling can be a powerful marketing tool as consumers are hungry for easy-to-understand information. Clearly there is a need and an opportunity for more education to help reduce the skepticism that is apparent around all parts of the globe. And there is a need to offer tasty and healthful options to satisfy both the mind and body.

• For more country-by-country insight and a look at healthy eating trends around the world, download Nielsen’s Global Report on Food Labeling Trends.

More consumers in the U.S. are online talking about fresh and unprocessed foods when it comes to healthy eating, and a vocal segment of health enthusiasts are setting trends on the next wave of hot ingredients and spices.

To better understand these emerging trends in nutrition, Nielsen has been analyzing online consumer conversations about food and health and wellness since 2003. Our analysis highlights discussion trends among mainstream consumers and also quantifies buzz among health enthusiasts, a passionate and informed consumer segment that Nielsen monitors across 400+ social networks, key blogs and forums. Listening to what health enthusiasts care about helps us to see what’s next.

As we look at what consumers buy and how they talk about products, we’re able to quantify the online buzz around products and ingredients, as well as product label claims like low fat or high fiber.

One key trend we’ve observed is that health enthusiasts are expanding their palate with fresh citrus fruits and flavors.

• Kumquat buzz among health conscious consumers and search activity* in Q4 2010 were up significantly in part due to inclusion in recipes.
• Satsuma – a seedless fruit of Japanese origin – is on the rise with health enthusiasts touting high levels of vitamin C and fiber. Beyond health, Satsuma oranges promise a “beauty from within” benefit and are used in skin care peels.

*Google Insights

Comparing Health Enthusiasts with the Mainstream

Key observations from online conversations:

• Fresh and unprocessed foods generate the highest volume of all online claim conversation across the mainstream audience.
• Presence of fiber is on the rise with mainstream consumers – up 14% in Q4.
• Preservative-free offerings should be watched closely given increasing mainstream interest (+8%)
• Carb presence and sugar-free offerings are leading topics in terms of total volume for both segments.
• Gluten-free interest is on the rise among Health Enthusiasts
• Mainstream consumers are conscious of sodium offerings likely as a result of recent news on sodium content and manufacturers introduced reduced-sodium offerings.
• Low- and no-sodium offerings are on the rise among health enthusiasts.

Summary: More than ever, U.S. consumers are being asked to manage their diseases and make significant health care decisions on their own. Recent changes in health care policy related to flexible spending accounts (FSAs) and over the counter (OTC) reimbursement could bring about real shifts in how consumers view their health and wellness options. Understanding the impact on consumer choice will be critical for retailers and manufacturers as they assess the potential risks and opportunities.

Background: History of Flexible Spending Accounts for OTC Medications
In September 2003, OTC medicines were made eligible for reimbursement in health care flexible spending accounts. These FSAs are voluntary programs many employers use to allow their employees to set aside money every year through payroll withholdings to pay for certain medical expenses not covered by insurance; this money does not get taxed.

However, the Patient Protection and Affordable Act of 2010, removed OTC medicine eligibility from FSAs, HSAs (health savings accounts), and other similar accounts unless the medicine is prescribed by a physician. These changes went into effect on January 1, 2011.

To better understand the impact of these changes on OTC purchase behavior, Nielsen surveyed the primary shopper from more than 27,000 households in December 2010.

Flexible Spending Account Enrollment Awareness and Usage
Approximately 19 million or 16 percent of U.S. households are aware of enrollment in a Flexible Spending Account through an employer.

Of the enrollees, just over half covered the costs of their OTC medications with FSA funds in the past 12 months ending in December 2010, equating to about 9.8 million households. Other uses of FSA coverage included prescription medications, dental or vision care, co-payments and office visits to a healthcare professional. Elective medical procedures were the least commonly reported as uses for the FSA dollars amongst reported households.

Alternatives to OTC Reimbursement for FSA Consumers
When faced with losing the ability to use FSA funds to cover OTC medication expenses, consumers are likely to be resilient in fulfilling their self medication needs. In fact, 21 percent indicated they would do nothing differently. However 21 percent of consumers responded that they would drastically reduce or discontinue purchasing of OTC medications.

The physician will likely play a key role under the new rules as consumers search for ways to continue using FSA funds. For example, 46 percent of consumers who used FSA to pay for OTC medications indicated they would request prescriptions for their OTC medications. Physicians will also likely be asked if a prescription product is available to replace OTC medications.

Finally, a large percentage of consumers will seek lower cost OTC options including bigger product sizes, store brands, deals and/or changing stores for better pricing as an alternative.

OTC Category Purchasing
When looking at OTC category purchasing, households that used FSA funds to pay for OTC medications in 2010 spent significantly more on cough & cold remedies and first aid categories than the general population. However, those consumers who will engage a doctor to ask for an Rx for their OTC medication and/or request an Rx replacement spent significantly more across a number of categories including cough & cold, first aid, antacids and laxatives.

OTC Channel Preferences
Consumers who used FSA funds for OTC medications in 2010 spent significantly more OTC dollars in the drug channel than the general population. Households who will look for lower cost OTC options also spent significantly more in the drug channel, while those who would consider changing stores for better OTC prices also spend significantly more in drug and mass merchandisers. Households that may discontinue or drastically reduce OTC use spent significantly more OTC dollars in the drug and club channels.

Moving Forward into 2011
The new health care law will impact many of the 10 million households who used FSA funds to pay for OTC medications in 2010. While a small number of consumers will reduce or discontinue use of OTCs, it is clear that most will be resilient and shift their healthcare utilization patterns to overcome the policy change. Doctors will likely play a key role in this shift as these consumers seek to make their medication costs FSA eligible by asking for a prescription for their OTC and/or requesting a prescription product as a replacement. In addition, retailers and manufacturers must pay particular attention to those consumers who may seek lower cost options (size, store brand, deal etc…) and/or change their store preference for lower cost OTC medications. Recognition of these shifts along with changing health care utilization patterns should drive marketing strategies (professional promotion, assortment strategies, pricing tactics) to meet these consumers’ needs.

Universal Appeal
Virtually all online survey respondents in Latin America (96%) and Asia Pacific (92%) said they purchased H&B products, along with 90% of people around the world who made up the global average. But what prompts consumers to stock their cabinets with make-up, fragrances and personal care items?

For 44% of global respondents, it was the lure of the product’s promise. A pragmatic 69% of respondents said they were influenced by price, while 58% said they bought as a result of a personal recommendation. Magazine articles, Internet buzz and traditional ads all factored into the purchase equation as well.

Product samples helped about half of consumers along the buying path, as did the suggestion of a partner. But aside from price, the reason most consumers (65%) offered up for buying health and beauty products was the influence of their preferred brand.

Half of Asia Pacific respondents indicated that the Internet was a purchasing influence—the highest percent of any region. These consumers were also swayed by magazine articles (45%) and advertising campaigns (44%) more than other region. Conversely, European and North American beauty product choices were the least influenced by print and television ads, magazine editorial or the Internet and were most influenced by price; 82% of North Americans and 70% of Europeans agreed that price was a key determining factor.

Latin Americans said they were most persuaded by their preferred brand (72%) and free samples (60%). Middle Eastern survey takers reported the most balanced responses, giving fairly equal weight across all influencers. They were, however, least influenced by the product’s promise (36%) and most by their preferred brand (63%).

Channel Choices
Far and away, supermarkets were the format of choice for 60% of global respondents, with the drugstore/chemist/pharmacy a distant second destination at 39%, specialty stores in third place at 33% and the Internet trailing at 22%.

Asia Pacific shoppers scored the highest of any region (33%) to say they shop the Internet for health and beauty products—more than double Europeans (15%), Latin Americans (14%), North Americans (11%) and Middle Easterners (9%). Specialty stores were the destination of choice for 40% of Latin American and Asia Pacific shoppers and 95% of Middle Eastern shoppers say they buy health and beauty products from just two channels—supermarkets (56%) and drugstores (39%).

Mass vs. Premium: Looking Good Enough
A question for the ages: can mass market cosmetics successfully sell against more expensive, premium brands in such an image-intensive category tied to personal vanity and ego? Yes, although the degree of success varies by product type. Global results for hair products showed that 81% of online respondents think mass market hair products are a viable alternative, while 75% find mass market skincare products acceptable, and 72% believed mass market cosmetics were suitable.

North American respondents were the most positive about mass-market health and beauty products, viewing them as good substitutes, while Middle Eastern and Asia Pacific survey takers were the least enamored with the off-market products.

Region Round-Up
In almost all Latin American countries included in this survey, sales for personal care products reported volume increases during the latest rolling year ending June 2010 versus year ago: Chile +7.2%, Argentina +4.7%, Brazil +3.4%, Mexico +3.4% and Colombia +3.3%. Only Venezuela showed a negative trend, declining 2.5%.

In the U.S., dollar growth for the health and beauty department for the year ending July 2010 is flat (0.3%) and units have declined 2% as the economy is driving consumers to make tradeoffs and buy less. However, sales in the June and July 2010 period are improving as retailers are raising prices to enhance margins. In Canada, rising prices have fueled an increase in health and beauty (excluding baby and OTC) dollar sales of 3.2%, which outpaced the total market (+2.6%) while units were flat.

In Asia, consumers started to switch back into purchasing personal care, healthy and more premium products in the second half of 2009. This trend is expected to continue with the improving consumer confidence in the region.

The never-ending quest for beauty and perfection bodes well for the H&B sector. In countries that have emerged from the recession with vigor, the sector is likely to thrive. Meanwhile, in those regions where the recovery is still shaky—or in doubt altogether—health and beauty product manufacturers and retailers need to know exactly what’s important to those consumers: value for money and high quality products that enable them to look good, despite life’s pressures.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with consumption data by market.

Eating healthy is a goal for most people, but often times a difficult one to regularly achieve. Work and family responsibilities often make time scarce, and it is easier to go out to restaurants or prepare ready-made meals at home. The recent recession also prompted many to search for value, and sometimes healthy options such as organic produce and other environmental considerations took a back seat as they are oftentimes considered more expensive than “standard” products.

The Nielsen Company gauged the world’s view of healthy eating, organics and other related issues earlier this year as part of a global online survey, polling more than 27,000 consumers in 55 markets from Asia Pacific, Europe, Middle East/Africa (consisting of countries from Saudi Arabia, Pakistan, United Arab Emirates, Egypt and South Africa), North America and Latin America. The views were diverse, but at the very least, most people want to do right when it comes to the foods they consume.

Healthy Eating Uptake Faces Barriers
Financial concerns (33%) proved to be a major, but not the primary, obstacle to healthy eating around the world. The biggest barrier was a perceived time crunch for survey respondents, with 35% of consumers agreeing to the statement that “I don’t always eat healthily because I haven’t got time”. Availability (26%), confusion about which foods are healthy (24%), substandard taste (25%) and the desire to treat oneself (41%) were the other main considerations preventing healthy eating.

Latin Americans were the most likely to cite time constraints as an issue—5% more than the global norm. Higher cost deterred North American consumers from healthy food choices, with an 11% higher score on this factor than the global average. Ready availability of, and confusion about healthy food was an issue for about one-third of consumers in the regions of Middle East/Africa/Pakistan and Asia Pacific. North Americans were the most likely to avoid healthy foods because of a belief that they don’t taste as good. Europeans and North Americans both scored highest at 44% and 45% respectively for opting for tasty, non-healthy treats in place of more healthy choices.

Organic Growth Takes Root
Organic foods, which feature production methods that reject synthetic materials and compounds, have gained a fair amount of media attention in recent years, and with good reason: they are popular with 40% of survey respondents, particularly shoppers in Asia Pacific where 47% said they buy organic, Latin America at 45% and Middle East/Africa/Pakistan at 43%. North America falls well below the global average, with only 24% of consumers saying they actively buy organic. Thirty-five percent of Europeans say they actively buy organic products.

People prefer organics for a host of reasons, including: the belief that they are healthier, pesticide-free, more nutritious, environmentally-friendly, taste better, not genetically-modified (GMO), supportive of small farmers and rural communities, the right thing to do ethically, and a vote against modern farming methods.

Asia Pacific shoppers lead the world in saying they buy organic because of the health and nutrition factors, while consumers in the Middle East/Africa/Pakistan region say they opt for organics as they taste better. But North American consumers lead the way on virtually every other criteria such as avoiding toxins, caring for the environment, keeping GMOs out of their diet, encouraging small farms, acting on principle, and rejecting current farming techniques.

Sustainable Shopping
Exploring the environmental attributes consumers consider when grocery shopping, the study determined that the most important criteria with global shoppers was the availability of locally made products (33%), stores that participate in fair trade practices (28%) and a selection of organic products (25%). Other green attributes on the grocery selection radar screen included green or ethical products (24%), products in recycled packaging (23%), farmers market products (21%), short shipping distances (18%), items with little or no packaging (17%), and products not tested on animals (14%).

What’s clear from this survey is that consumers’ hearts are in the right place: they generally want to eat more nutritiously and purchase foods that are grown, raised and produced in responsible ways. That said, when finances are tight, consumers tend to turn to those products that offer the most value, whether they are healthy and environmentally responsible or not.

Regional View Points

Asia Pacific
Consumers in Asia Pacific lead the world when it comes to intention to purchase organics (47% compared to global average of 40%). Compared to the global average, Asia Pacific consumers who actively buy organics are most likely to do so because they view organics as healthier (82% vs. global average of 76%) and more nutritious (57% vs. 51%). Consumers in this region who will not go organic are most likely to cite higher costs and taste preferences. The availability of fair trade products at the grocery store was important to 40% of respondents, which was the highest of any region.

Europe
Europeans know what’s healthy and what’s not, but are most likely to pick a non-healthy treat over a healthy alternative. Europeans were the least likely to purchase organics because they are more nutritious compared with other regions. Certain ethical supermarket shopping attributes resonated most strongly with Europeans compared to other regions: locally-made products, distance from point-of-origin, limited product packaging and no animal testing all rated high on the scale of factors that were important when shopping.

Latin America
Latin Americans demonstrated little confusion about what foods are healthy, but admitted that time constraints made it difficult to always do so. Consumers in this region showed the highest concern (38%) about the availability of ethically produced or grown products when grocery shopping, scoring 14 points higher than the global average. They also exhibited a high level of concern for products in recyclable packaging (38%)—15 points more than the global average.

Middle East/Africa/Pakistan
Time and expense associated with healthy eating pose the lowest barriers to this region in which consumers find themselves short on healthy eating options (31%) and are confused as to which foods are really healthy (30%). As a result, they are the least likely of any other regions to select organics because they are healthy, to avoid toxins and bypass genetically modified organisms. However, consumers in this region are the most likely to select organics because they taste better (59% vs. global average of 45%).  They are also the most likely of consumers in any other region (29%) to select products that come from farmer’s markets when grocery shopping.

North America
Aware of healthy eating options, expense was the primary reason they did not eat healthy, along with an unwillingness to sacrifice taste. Environmental and social considerations whet the North American appetite for organics, making it the region most likely to buy organics to avoid toxins (71%), promote environmentally-friendly organic farms (59%), help small farmers (58%), avoid genetically-modified products (45%), do the right thing (38%) and vote against modern farming methods (23%).

In the U.S., annual dollar sales for products with label claims such as organic, natural, presence of fat, vitamins, fiber, caffeine, gluten, etc. range from a high of $46.6 billion for products with fat claims to a low of $56.6 million for foods with plant sterol claims. Organic sales dropped significantly as a result of the economic downturn. In 2006, 2007 and into the third quarter of 2008, organics’ growth rates were strong, averaging between 18% and 30%+. After the September 15, 2008 financial crisis, growth rates for organics dropped dramatically. But there are signs of life in the last several periods, with growth rates nearing 10% in the four-weeks ending July 2010.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with the measurement of organic consumption by market.

Robert Buckeldee, Managing Director, OTC/Pharmacy Services, Nielsen Europe

SUMMARY: The over-the-counter (OTC) medicines category remains highly attractive with significant growth potential from both developing markets and established European and North American markets. However, the economic downturn has affected usage in several ways, which is troubling for both governmental agencies and manufacturers of the OTC products.

The global market for over-the-counter (OTC) non-prescription medicines remains buoyant, with growth in value sales in 2009 estimated at 4.7%, bringing the value of the category to over $95 bn (source: Nicholas Hall Company).  Much of this growth has been driven by developing markets, with double-digit growth recorded in Brazil, Russia, India and China (BRIC).  Many established mature markets for OTC medicines recorded very modest levels of growth.

As wealth and economic prosperity filters down through the layers in the BRIC markets and consumers find they have more disposable income, categories like OTC medicines will benefit from consumers helping themselves to treat minor ailments and prevent illness.

But as economic woes continue to circle around North America and Western Europe, and governments need to tighten the belt of public spending to help manage record debt levels, spending on healthcare within these developed economies will also come under intense scrutiny.  Only recently, the government in Greece has withdrawn state reimbursement from non-prescription medicines and they will not be the last to make radical changes to their healthcare financing.

The market for OTC medicines in developed Western Europe markets should start to see significant growth over time as consumers are encouraged to take proactive involvement in managing minor ailments and make less reliance on the state for help.

Hands-On Health Care
Against this backdrop, it is important to gauge consumer sentiment towards OTC medicines since the height of global economic uncertainty.  One year ago in March 2009, Nielsen asked consumers around the world whether the global economic crisis would impact their usage of the OTC medicines category.  Close to 50% of consumers globally indicated behavior would change, with one-quarter stating they would use the products less frequently and one-fifth saying they were more likely to use natural and traditional remedies.

Move the clock forward one year after the global economic crisis has affected day-to-day life and the same questions elicit key changes.  Most notably, only one-third (34%) of consumers now indicate the global economic crisis will affect their usage of non-prescription medicines in the year ahead.  A year of experience of the “new world order” has made more consumers realize that self-care is too important to put at risk.

Of those who indicate they will change OTC usage, there are subtle shifts in intentions compared to last year.  The 2010 results show a greater percentage of consumers now plan to visit the doctor more, buy cheaper products, and stop buying the products completely.

Protecting Equity
There are some key regional variations behind these changes.  The notion of visiting the doctor more frequently, and by extension being prescribed medicine rather than buying OTC products, is troubling for governments who need to manage healthcare budgets.

A recent study published by the PAGB in the U.K. —the trade association for manufacturers of over-the-counter medicines and food supplements—estimated that 57 million general practice consultations take place each year to treat minor ailments at a cost of £2bn to the National Health Service (NHS).  Governments need to take positive action to ensure consumers to visit the pharmacy as the first point of care for minor ailments and encourage them to buy OTC medicines.

Of concern to manufacturers of OTC products is the increase of consumers intending to purchase cheaper products or to stop buying them altogether.  Buying cheaper products feeds into an established trend and the growth of store brands and generic products within OTC medicines is proof that consumers increasingly understand the power of the active ingredient, as opposed to the brand.  The issue of dropping out of the category was relatively strong in the U.S., India and South Africa.  Market trends later in the year will determine if this intention is followed-up by action.

Within OTC medicines, supply feeds demand for store brands and generics, not the opposite.  So it is no surprise that the intention to buy cheaper products manifests itself in countries where chains are prevalent or where generics already have a strong foothold.  While market shares for store brand or generic products are generally lower than more mainstream branded grocery categories, the trend is rising and manufacturers need to invest in brand equity to protect sales.

Divergent Growth Strategies for East & West
The OTC medicines category remains highly attractive with significant growth potential from both developing markets and established European and North American markets.  Consumers understand that they can use OTC medicines without breaking the bank of their personal finances.

In developing markets, it is up to manufacturers to sell the benefits of their products to new consumers.  In Europe and North America, strategies will need to involve a more complex partnership with government agencies, healthcare professionals, pharmacists and retailers to encourage consumers to treat minor ailments without resorting to aid from state infrastructure and public finances.

Robert Buckeldee, Service Model Director, Europe
Jim Mansfield, Customer Development
Nicholas Hall, CEO, Nicholas Hall

SUMMARY: Transitioning a medicine from prescription-only to over-the-counter status is big business—and yields significant benefits for almost all involved. But manufacturers looking at new opportunities for growth need to start planning well in advance of such a launch and look beyond traditional markets.

In recent years, a number of prescription drugs have gone over-the-counter (OTC), which has been a boon to consumers who can now obtain medications for allergies or stop-smoking aids without having to deal with the time—and sometimes red tape—of doctors and insurance companies. It’s also benefited the companies that manufacture these products. While the recession has impacted the over-the-counter drug industry, the consumer focus on healthcare and the continued increase of Rx-to-OTC switches has enabled sustained growth, and shows few signs of abating.

Global OTC markets are forecast to outpace GDP by 21% or 0.9% percentage points in 2010, according to Nicholas Hall & Company. The OTC industry continues to outpace global GDP, reporting growth from 2007 through 2009 ahead of GDP 0.2%, 1.1%, and 5.3%, respectively. The significant 2009 growth was 5.3% points ahead of GDP which supports the consumer focus on healthcare and self-medication.

New Areas of Growth
Identifying which countries to execute a global strategy is critical for OTC manufacturers looking for new growth opportunities. In the U.S.—the largest OTC market—growth is forecast to be lower than in other countries, due largely to the fact that this market is mature. The emerging BRIC countries (Brazil, Russia, India and China) have and continue to experience double digit OTC growth.

Switching Opportunities
Over-the-counter manufacturers looking to expand should consider the Rx-to-OTC opportunity. Nielsen conducted a historical macro analysis of 26 prescription and over-the-counter categories in the U.S. and found that in 12 currently marketed categories, a number of potential prescription brands and technologies have yet to switch from Rx to OTC. Assuming a historical OTC share of 20% of the prescription and OTC dollars in these 12 categories, a potential five-year forecasted opportunity of $44 billion exists.

Of the 12 categories, the top five comprise a significant share of the $44 billion:

1. Respiratory or Asthma
2. Antacids
3. Insomnia
4. Analgesics
5. Acne

The remaining seven categories include feminine hygiene, smoking cessation, athlete’s foot, cough-cold-allergy, diet-obesity, hair growth and laxatives. These values were adjusted with current share already achieved for the OTC products within combined prescription and OTC dollars.

Script to Self Watch-Outs
Looking forward at potential Rx-to-OTC switches in categories that are prescription only, nine categories were identified: cholesterol reducers, hypertensive agents, diabetes insulin-non-insulin treatments, anti-infectives, oral contraceptives, osteoporosis, anti-fungals, overactive bladder-incontinence and sexual function-erectile dysfunction. Before these categories are moved from prescription to OTC, three key issues (besides regulation) need to be addressed. However, the dollar opportunity is considerable—valued at $45 billion in the U.S.

First, infrastructure to track consumers’ purchases is warranted for some products. The good news is that the beginnings of an infrastructure for tracking are already developed and being used. Today, pharmacies who sell a product containing pseudoephedrine—the “D” for some cough-cold-allergy products—are required to track the consumers information. The process requires the pharmacy to enter a consumer’s driver’s license or other identification number into the computerized system, which is then reported to governmental agencies to tally purchases.

Second, the role of the pharmacist must expand as many consumers will engage a healthcare professional at the shelf or behind the counter for counseling on a variety of safety, efficacy, dosing and administration questions. Education of and counseling for lab, blood pressure, and other diagnostic tests is also vital. While consumers in some countries already view their pharmacist as a key source of healthcare information and advice, it will be paramount to anticipate the expanded role of the pharmacist to fully understand this dynamic when considering OTC launches.

Third, the healthcare system must evolve to the degree that self-medication is revolutionized. Important catalysts to advance the momentum include managed care to pay for OTC therapy via adjudications (electronic claims at pharmacy via formulary status), desire for the political administration to consider that OTC medications decrease healthcare costs, and lastly expanded use of in-store clinics and/or pharmacy clinics.

Time Consuming and Complicated
The duration of moving an entire category from the prescription space to over-the-counter has shown to take approximately two decades. Additional findings suggest a market capitalization on a particular category—in essence, almost a maximum ceiling of spending by consumers or the healthcare system for a disease or condition. This ceiling can be increased through innovation and managed care catalysts or lowered by the trend of generics and private label.

The sequential process of moving from Rx to OTC is complicated and the aspects of prescription brand, generic, managed care, innovation, technology, dosing, and forms need to be considered in addition to private label and competitive response for over-the-counter products. Understanding and anticipating the place of a brand in the sequential Rx-to-OTC process can result in significant or diminished success.

Switch and Save
While an $89-billion opportunity in the U.S. is a tantalizing prospect for the over-the-counter industry, what does this mean for the healthcare system, employers, the government as a payee, and consumers? To understand the potential cost savings, Nielsen studied ten of the 12 categories that made the Rx-to-OTC switch and found that average prescription costs decreased 7% between 2007 and 2009.

Applying the 7% costs savings to prescription drug cost forecasts in 2014 as reported by the U.S. Centers for Medicare & Medicaid Services, the prescription drug savings would be $12.92 billion. Consumers would save $2.35 billion, employers vis-à-vis private health insurers would save $4.87 billion, and the government including federal, state, local, Medicare, and Medicaid would save $5.70 billion.

Clearly, the transition of medicines from prescription-only to OTC presents tremendous opportunities. For consumers, it offers easier access to important treatments and lower costs. For manufacturers, it provides new growth opportunities. And for the healthcare system as a whole, it can save significant amounts of money. However, the process from Rx-to-OTC is a long one, and the most significant immediate growth opportunities exist in developing countries, which have very different dynamics than those found in the more mature markets of the U.S. and Europe. Fully understanding these factors will ultimately determine the success of a product launch.

Spending the most doesn’t necessarily equate to efficiency in viewer recollection, however.  In fact, new research released by Nielsen IAG found that the top four most memorable TV commercials which launched in 2009 included brands that did not spend the most on their respective campaigns in 2009. The two most recalled ads for Flomax promoted awareness of BPH treatment, followed by the HPV vaccine Gardasil and newcomer, anti-depressant Pristiq – were not among the year’s largest spenders for TV advertising by a long-shot.

2009 Most Recalled Prescription Drug/Vaccine Ads

“As with any category of advertising on TV today challenged with the need to cut-through the clutter and drive awareness and ultimately, persuade target viewers to take action, creativity and clarity are essential ingredients for effective and efficient ad development and deployment.  Pharmaceutical drug ads are not exempt from this challenge,” said Fariba Zamaniyan, Senior Vice President within the healthcare practice of Nielsen IAG.

While TV spending for prescription drug advertising has declined over the years, a number of factors contributed to that decline: fewer drug launches, the economic downturn and the increasing scrutiny by the FDA for prescription drug ads to increase the clarity of the delivery of product claim information in the ads. Stricter guidelines have forced an increase in ad length for many prescription advertisers which has resulted in extended ad lengths and ultimately, higher costs. In fact, the number of Rx ads that are greater than 60 seconds in length has nearly tripled since from 2006 to 2009.

“Longer ad lengths has further compounded the pressure marketers in this space already feel to build break-through advertising,” said Ms. Zamaniyan.  “However, longer length ads do not drop the bar when it comes to achieving goals.  Several ads in the top 10 most recalled new ads of 2009 include ad lengths greater than 60 seconds which further demonstrates that compelling and unique creative executions will help you stand out from the rest even if the ad is more than one-minute long.”

Steve French, Managing Partner, Natural Marketing Institute &
Todd Hale, Senior Vice President, Consumer & Shopper Insights, The Nielsen Company

SUMMARY: Consumers recognize the connection between diet and health, and for the most part, act on that knowledge. Perhaps a by-product of their quest for wellness, health-aware consumers are careful with their bodies and their budgets, making fewer impulse buys, using shopping lists, savoring the shopping outing and efficiently walking the aisles with a connoisseurs’ knowledge of merchandising and planograms.

Americans have gotten the message loud and clear: a healthy diet is an essential element in any wellness program. Nielsen researchers found that people practice what they preach, with most shoppers buying foods that are good for the waistline and wallet.

Natural Marketing Institute (NMI) conducts an annual health and wellness survey to determine what consumers consider healthy. Shopper insights showed consumer interest in minimally processed foods, a short list of recognizable label ingredients, less of the “bad stuff” like trans fats or MSG, and more of the “good stuff” like fiber, antioxidants, vitamins/minerals, calcium, Omega 3s, whole grains, heart-healthy ingredients and Vitamin D.

Healthy Segments
When it comes to health beliefs and practices, NMI found that people fit into one of five distinct segments that inform their shopping and buying decisions:

• “WELL BEINGS”® (19%)—the most health-proactive group; market leaders and influencers whose actions are driven by values. They eat more organics, consume modest amounts of supplements and pursue many different health modalities.
• “FOOD ACTIVES”® (18%)—more mainstream in their health pursuits, this group strives for moderation in their lifestyle and prefers food that is inherently healthy vs. organics or supplements. Seeking a life balance includes balancing the budget for this price-sensitive segment.
• “MAGIC BULLETS“® (24%)—consumers who hope supplements, Rx and pills will help them reach health goals. More into health management than prevention. Least likely to cook at home or exercise.
• “FENCE SITTERS”® (17%)—stressed out, but seeking control. They dabble in the latest exercise kick and actively pursue weight loss goals. Receptive to eco-friendly appeals and reliant on social media.
• “EAT, DRINK & BE MERRYS”® (22%)—younger shoppers who crave taste and pinch pennies. No concerns here about prevention, making them the least health-active group.

Big Spenders
According to Nielsen, healthier segments (”WELL BEINGS,” “FOOD ACTIVES,” and “MAGIC BULLETS”) appear more thoughtful about food, beginning with the shopping experience. In addition to shopping more often online than less wellness-oriented groups, they log more shopping trips per household each year, spend more in total annually and have a tendency to buy more on deal.

Preferred channels include grocery stores, which offer the widest variety of fresh and organic products; drug stores, where they can find a cure for what ails them plus supplements to round out their diet; and warehouse club stores known for outstanding value but limited offerings on the food and drug fronts. Health-oriented shoppers are least likely to patronize supercenters, mass merchandisers, convenience/gas stores and dollar stores.

Grocery spending patterns reflect an emphasis on formats that have made a name based on their produce and fresh departments, tasty samples, customer service and client education ranging from proprietary health labeling systems to in-store seminars and demonstrations.

Hidden Vices
Despite a commitment to health and wellness, the occasional indulgence sneaks in. Even health-aware shoppers like an alcoholic beverage now and then, with “WELL BEINGS” and “MAGIC BULLETS” outspending other segments at liquor stores.

While this quirk may be explained away by the cardiovascular benefits of red wine or simply a propensity to entertain, the penchant for smoking is puzzling (perhaps a vice of a spouse or other family member who is not as engaged in leading a healthy lifestyle). “FOOD ACTIVES” and “MAGIC BULLETS” trail only the “EAT, DRINK & BE MERRYS” in tobacco store spending.

Buying Right
Category spending patterns underscore the consistency between the health beliefs that define each segment and spending practices. The three most health-committed segments (”WELL BEINGS,” “FOOD ACTIVES” and “MAGIC BULLETS”) outspend others in categories with foods known for health properties including nuts, yogurt, fresh produce and vitamins.

Equally consistent with healthy attitudes, the three most health-aware groups under-spend relative to other segments in calorie-dense, lower-nutrient foods and beverages such as carbonated beverages, beer and frozen pizza and snacks.

Savvy Shoppers
Part of being health-aware is conscious consumption, and health-active segments are educated shoppers who report enjoying the shopping experience and really knowing the layout of their stores. They don’t need to waste time going up and down the aisles aimlessly browsing. Instead, they use store circulars to identify bargains, bring along or download coupons on their computers or cell phones, and try to stick to their shopping list on most trips. Health-smart segments rely on cookbooks, the Internet and TV cooking shows for meal planning inspiration.

These patterns stand in stark contrast to “FENCE SITTERS” and “EAT, DRINK & BE MERRYS” who abhor shopping lists and coupons and are big on impulse buys, reporting unplanned purchases on most shopping trips.

Eating Well
WELL BEINGS believe in wellness and eating well, from storefront to tabletop. This segment spends more time than any other in meal preparation (more than 30 minutes on average) and craves variety, alternating between a menu of more than 16 dinner recipes vs. the 10 of most other segments. “WELL BEINGS” think ahead about meal planning to achieve their nutrition and budget goals, rather than take their dining inspiration from aisle prompts.

“EAT, DRINK & BE MERRYS” sit at the opposite end of the health and wellness spectrum from “WELL BEINGS” in almost every dimension of cooking: preparing scratch meals, using the most ingredients, barbecuing, baking/microwaving frozen foods, reheating leftovers and serving store-bought meals.

Coping strategies
Even in tough economic times, “WELL BEINGS” have adopted coping strategies that allow them to remain true to their wellness predilections. They focus on more basic ingredients, buy produce in season, make coffee at home, consumer desserts less often, prepare large batches for the week and serve healthier meals.

Thought leaders and trend setters, “WELL BEINGS” represent a high-value segment with big spending habits, particularly in better-for-you categories. The right product assortment and messaging can engage these consumers, while coupons will close the deal. Given their tendency to plan ahead and shop the Internet, providing printable on-line shopping lists with prominent store branding is an inexpensive marketing tool and added value convenience.

Winning Ways
Look to the wine category as a way to win over “WELL BEINGS” and extend it with strategic pairings throughout the store. Consider in-store and on-line cooking classes and demonstrations to move featured products and motivate them to return to your store.

Promotional ideas that would resonate with these shoppers include special offers on store-branded cookware and utensils, recipe storage containers, proprietary on-line recipes, an extensive cookbook and cooking magazine section in the store and even a fresh food buying rewards program. Where “WELL BEINGS” lead a healthy lifestyle, other segments also represent opportunities, By further understanding segment shopping habits, you can capture consumers for life!

SUMMARY: No matter where consumers live, healthcare is important. But where they live often determines how minor ailments are treated. While Europeans put their trust in the neighborhood pharmacist, North Americans rely more on the advice of doctors. In countries where healthcare infrastructures and economies are evolving, opportunities exist to lessen the considerable burden consumers currently put on doctors and help governments reduce their healthcare expenditure.

The sore throat and cough that accompany the onset of a cold usually sends the typical American to his local drug store to purchase a preferred over-the-counter remedy, chosen because of past experience with the product. Rarely—if ever—is the pharmacist consulted, and almost never is a doctor called for such a common malady. But in Europe, consumers have been taught that pharmacists are an important source of health care information and they are likely to be consulted almost as frequently as a doctor, according to a new global study by The Nielsen Company.

Surveying more than 27,000 consumers in 54 countries, Nielsen has benchmarked the incidence of 17 common minor ailments—all of which can be treated with non-prescription medicines—as well as how consumers typically deal with them. Globally, respondents suffered from an average of almost four (3.9) such ailments in the last 12 months. The most common ailments: headaches, endured by 44% of respondents, followed by cold (38%) and cough (34%). A hearty 13% suffered from none of the 17 conditions listed.

Latin Americans are most prone to suffering from minor ailments (4.73 out of 17) while consumers in Asia Pacific are least prone (3.48 suffered). On a country basis, the Dutch suffered least from these ailments, with an average of 2.47 followed by the Japanese and the Chinese. At the other end of the spectrum, consumers in South Africa have the highest levels of incidence at 5.47 followed by Philippines and New Zealand.

Consult the Doctor or Pharmacist?
Having established the level of incidence by country for each of the 17 ailments, Nielsen’s study explored whether the consumer would seek advice from either a doctor or a pharmacist in helping them with their ailment. Respondents were presented with four options:

1. Every time I suffer
2. Only when I experience symptoms I have not had before
3. Only when the symptoms are more severe than normal
4. Never

Consumer responses varied significantly across the ailments, and between doctor and pharmacist. Analysis of those who said they would never seek the advice of a doctor or pharmacist highlights the gap that still exists with consumers with respect to seeing the pharmacist as a point of care, rather than a retailer of products. For all the ailments (except hangover), a higher proportion of consumers said they would never seek advice from a pharmacist relative to the proportion who would never seek advice from a doctor. This gap, however, is generally lower in Europe, where the pharmacist has been promoted as a key part of the primary healthcare system in a number of countries, and generally higher in Latin America where the doctor remains embedded in the mindset of consumers as the place to go for advice.

Across the categories, a high percentage of flu sufferers will always seek advice from doctor and pharmacist, but generally speaking, consumers mostly seek advice for these minor ailments from a doctor and/or a pharmacist only when symptoms are more severe than they would normally experience. This finding indicates that for the vast majority of consumers suffering from these minor ailments, there is a willingness to work through the ailment without professional advice, either through routine self-medication with non-prescription medicines or other traditional remedies, or by letting the body self-correct. This finding further reinforces the need for manufacturers to drive brand equity within the self-medication sector, and build loyalty with their suffering consumers.

A more detailed analysis of two most common ailments shows strong regional differences. The headache ailment is the most commonly suffered globally, and it follows that the analgesics category is the largest in sales globally with over $9.5 billion of sales in 2008, according to OTC industry expert Nicholas Hall & Company. The cough ailment is the third most commonly suffered, but consumers are much more likely to engage with either a doctor or pharmacist for this ailment than with a headache.

On the global level, 34% of headache sufferers will never seek advice from a doctor about the ailment, compared to 44% who will never seek advice from a pharmacist—a 10 point gap in favor of the doctor. Similarly for coughers, there is a 13 point gap in favor of the doctor. When these gaps are viewed regionally, the gap narrows considerably in Europe to only 2% and 4% respectively. And the gap broadens significantly in Latin America to 24% and 26% respectively.

The many campaigns run by European governments and healthcare providers to position the pharmacist as a point of primary care are paying off, and consumers are more engaged with the pharmacist than in other parts of the world.

Interestingly, North America is similar to Latin America in terms of the doctor/pharmacist gap, but this can be attributed to the wide availability of non-prescription medicines that can be purchased without any pharmacist intervention. The role of the pharmacist in relation to minor ailments has been lessened through this process.

The Take-Away
Pharmacists in North America tend to be viewed as retailers, while in Europe they are viewed as a go-to for minor ailments. These views are fairly solid in consumers’ mindsets in their respective regions. But the real opportunity lies in Latin America, where evolving healthcare infrastructures and economies provide a chance to educate consumers to use the pharmacist as a point of primary care and advice. This will lessen the considerable burden consumers currently put on doctors in the region for advice about minor ailments and by extension help governments reduce their healthcare expenditure.

Consumers tend to want to treat minor ailments on their own, and the pharmacist can play an important role in helping consumers do that by helping them understand which medication might be best for what ails them. Additionally, manufacturers of OTC products need to understand the dynamics in each region and tailor marketing efforts to fully capitalize on growth opportunities. In the U.S., that may mean marketing direct to consumers; in Europe, marketing towards pharmacists may be more effective.