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Press Release

Rise in Self-medication to Create Opportunities for the Global Over-the-Counter Drug Market Through 2020, Reports Technavio

Technavio Research
Posted on: 25 Aug 16

Technavio analysts forecast the global over-the-counter (OTC) drug marketwill post revenue of about USD 162 billion by 2020 during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global OTC drugmarketfor 2016-2020. The report segments the market on the basis of therapy into the following five categories which are respiratory drugs, dietary supplements, pain medications, gastrointestinal drugs, and others. The respiratory drugs and others segment dominate the market with 34% and 27% respectively.

Research shows that 81% of the population use OTC medications as the first response to health issues. Among the emerging countries, India is expected to be among the top 10 OTC markets during the forecast period. Government initiatives such as the "Make in India" program will increase the number of manufacturing facilities throughout India and will increase the export of OTC drugs to developed countries such as the US, Japan, and Germany.

The over-the-counter (OTC) market is growing at a faster rate in emerging countries such as China, South Africa, India, Vietnam, and Indonesia as compared to developed countries fueled by favorable demographic trends, higher out-of-pocket expenditure, and growing focus of multi-national companies (MNCs) to expand their business in these markets.

Technavio healthcare and life sciences analysts highlight the following four factors that are contributing to the growth of the global OTC drug market:

  • Switching of medications from prescription to OTC
  • Lenient regulatory framework and distribution channel
  • Cost-effective OTC drugs
  • Rise in self-medication

Switching of medications from prescription to OTC

The switch of medications from prescription to OTC helps reduce healthcare costs from the government and also increases the accessibility of these drugs for the consumers. This switch of medications from prescription to OTC is overseen by government agencies such as the Federal Trade Commission. The FDA's Nonprescription Drug Safe Use Regulatory Expansion (NSURE) initiative, announced in February 2012, is likely to promote the switch of other prescription drugs to OTC. The use of technology by the FDA, such as the use of mobile health (mHealth) applications, is expected to broaden the availability of OTC medications.

Moreover, there is a trend to shift some drugs from prescription to an OTC category as part of product lifecycle management. The drugs' patent expiries tend to decline the sales of these drugs in the market, owing to the entry of generics. However, the switch to the OTC category coupled with rigorous marketing is expected to increase the sales of these products. For instance, Pfizer plans to convert its prescription drug Lipitor (atorvastatin) to an OTC drug to overcome its faded sales because of patent expiry.

“In addition, new technologies such as electronic information kiosks in pharmacies may help in switching medicines, which are currently considered inappropriate for self-treatment, to the OTC category. It is also expected that the store-brand OTC products continue to gain market share,” says Barath Palada, a lead analyst at Technavio for cardiovascular and metabolic disorders.

Lenient regulatory framework and distribution channel

Regulations imposed by the government and regulatory bodies in emerging economies on the OTC drug approval process are lenient compared with that of prescription drugs. Market barriers are low in these countries, allowing the entry of vendors. Increased healthcare costs also result in patients opting for OTC drugs rather than consulting a physician. The number of organized pharmaceutical retail stores has been increasing in the emerging countries, and the distribution channels are becoming more efficient.

Hypermarkets, supermarkets, and grocery stores are being increasingly targeted by drug manufacturers for the sales of their drugs to increase their revenues. It enables the growing focus on customer service and increases the contribution in terms of offering discounted products and free home delivery in a defined geographical location.

Cost-effective OTC drugs

Branded drugs are patented and are priced higher because of R&D and other costs associated with them. However, OTC drugs are not patented and production and manufacturing costs are less in comparison to patented drugs. Therefore, the market price of these drugs is less, allowing easy access for patients. Research studies have indicated that OTC non-branded generics cost nearly three times less compared to their respective branded drugs. For instance, for gastric problems, Nexium 24HR or Prilosec OTC can be taken, instead of Nexium and Prilosec for as little as USD 9 per month.

This increases the consumption of drugs and decreases the incidence of withdrawal from treatment regimens due to the low cost of these drugs. This is expected to positively impact the growth of the OTC drugs market.

Rise in self-medication

The growing healthcare costs and an increase in the older population demand the need for better accessibility and affordability of healthcare services. Self-medication with non-prescription drugs plays an important role in this and helps in improving the accessibility and cost-benefits of healthcare services. Apart from this, the increase in self-care and self-medication is influenced by factors such as lifestyle, socioeconomic factors, and easy accessibility of drugs.

Also, the limited reimbursement policies for prescription drugs will lead to individuals opting for more OTC medicines. Some OTC medications are also provided reimbursements with the help of the Health Savings Account (HSA), the WageWorks Flexible Spending Account (FSA), and the Health Reimbursement Arrangement (HRA). However, these drugs require a prescription for their reimbursement.

Prescription medicines are often associated with loss of time and money in terms of physician visits and loss of working hours. It has been estimated that, in the US, spending of USD 1 on OTC medicines saves up to USD 6 to USD 7 in savings due to fewer physician visits and spending on more expensive care. Research studies indicate that, around nine out of 10 individuals consider self-care and self-medication to be important to prevent and manage minor ailments and chronic diseases. Thus, the increased acceptance of self-medication is expected to foster the growth of the OTC drugs market during the forecast period.

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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Last updated on: 25/08/2016

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