OTC products – the newly found love

Before going into topic, I just want to share something which directly relates me to this topic. My father is a pharmacist and has 5 branches of medical shops in Maharashtra at different places.

My father stated his first medical store in 1991, 2 years before my birth. In last 25 years, he has opened 5 branches under the name “Sadalage Medicals” over different places. This information is just to let you all know about my connection with the medical store. I have spent my last 23 years watching our medical stores to evolve in offering service to customers. I don’t know the actual reason behind I having an immense respect for pharma business. That may be I grew up with it or because it saves life or may be because I personally experienced its good effect on me.

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As title suggests, here, I am going to talk about the “over the counter” products. Over the counter products, generally known as OTC, are the products are sold without prescription from doctor and are available at medical shops, placed at customer facing counter and side racks. I have seen this category growing at very fast rate. Till 2010, I was in continuous touch with this category. After 2010 I lost touch with it. But whenever I used to visit my native, I used to find new things in this segment. After 2014, I started observing this category very closely. 10 years ago when anybody used to go to buy medicine in medical shop could find lot of medicines and less of OTC products but today when I visit any of the medical shop I find 60% shop is filled with all these OTC products.

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This transformation led me to little analysis of the category. It was best learning experience I have ever had. Let’s look at few of them here-

  1. Margin Game – The average margin per medicine ranges from 2% to 12% depends upon the brand and category. But OTC products’ margin start with 10% minimum and that’s the main reason behind all medical shop started keeping more of OTC products.
  2. Surrogate Marketing – This change is mainly carried out by drug companies. There are many restrictions on advertising drugs, consumption limit etc. To tackle this and build a brand name in drug companies have started their OTC product range. It is kind of surrogate marketing they do for their medicines. For e.g. Himalaya promotes face wash under its name with main motto to increase awareness about their name and relate it to medicine part.
  3. Impulse buy – When a patient or customer visits medical store to buy medicine prescribed by doctor, he/she end up buying OTC products which he/she thinks will be required in future. This behaviour of impulse buying has helped companies to invest in this sector and pharmacist to keep it more to gain business or sales.
  4. Perks/ Promotions offered – Pharmacists nowadays are applying for the license of ‘medical store and general store’. The main reason behind this is the trade promotions offered by companies in OTC products is way better than that of medicines. This has helped to increase the total shelf size for OTC products.
  5. Product life cycle – When you consider a drug, it is a very long process to invent it, patent it, sell it under brand until patent expires etc. But nowadays drug requirement is changing and different diseases are being found which is leading towards mismatch between instant requirements of specific combination of drugs. Lot of companies have stopped patenting their medicine as requirement is changing very frequently. But on other hand OTC product has large life and innovations are taking place at low rate as compared to that of medicines.

Considering all of the factors, I think in coming 5 years you will find medical store to be filled with 70% with OTC products and 30% with medicines.

Happy Observations!

 

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