The drivers behind the growth of the global over-the-counter market are examined, including strategies to harness that growth. Also includes country profiles of the over-the-counter markets in China, the Philippines, and Australia.

1. A global view of the expanding OTC market Richard Lawrance – IMS Consumer Health

4. OTC Pharma Asia 2011 The global OTC market is now worth US$102bn, and continues the recent trend of outgrowing Pharma. Source: IMS Audits plus estimates Total Pharma = $878bn Total OTC = $102bn

5. While Pharma growth experiences a number of constraints, OTC benefits from a range of growth drivers. OTC Pharma Asia 2011 Top Corps contribution to growth falling rapidly Low number and quality output from R&D Generics dominating large therapy areas Demand constrained by payers Key players building strong brand identities Payers keen to promote self medication Emerging markets have the critical mass to influence growth Companies seek to exploit switch opportunities Increasing access through new channels PHARMA OTC

6. The developing regions of Asia Pacific, Latin America and Central & Eastern Europe drive World OTC growth. OTC Pharma Asia 2011 Global 3 Year Average Growth 6.8% Global Latest Year Growth 5.8% Source: IMS OTC Review Plus Q2 2010 Asia Pacific accounts for 17% of OTC sales but 32% of growth

7. Base business continues to grow in the developing regions of CEE and Asia Pacific. OTC Pharma Asia 2011 Source: IMS Elements of Growth Q2 2005-2010 Base Value Change Price Change New Products Line Extensions Total Change Elements of Growth by Region Cumulative growth %

8. Sanofi-aventis are the only top 10 corporation to exceed market growth rates. OTC Pharma Asia 2011 Source: IMS OTC Review Plus Q2 2010 Value Share Value Growth > Market Value Growth < Market Total OTC +5.8%

9. Cough/Cold achieves the lowest growth of the key categories, after a poor season in 2009/10 OTC Pharma Asia 2011 Source: IMS OTC Review Plus Q2 2010 Global OTC – Key Categories Value Share (%) Value Growth (%)

11. China dominates the region, and drives much of the growth. OTC Pharma Asia 2011 Source: IMS OTC Review Plus Q2 2010. China: Hospital and Retail (22 Cities) panels combined

12. Western MNCs have a significant presence in the region’s top 10, but none manage to match the region’s growth rate. OTC Pharma Asia 2011 Source: IMS OTC Review Plus Q2 2010 Value Share Value Growth > Market Value Growth < Market Total OTC +16.3%

13. Traditional medicines remain popular and drive much of the region’s growth. OTC Pharma Asia 2011 Source: IMS OTC Review Plus Q2 2010 Asia Pacific OTC – Key Categories Value Share (%) Value Growth (%)

14. China

15. At a national level, the retail sector has become the dominant channel. Within retail, pharmacy chains are growing in importance. OTC Pharma Asia 2011 Retail OTC Market Breakdown by Channel Definitions: Chain is defended according to name, manager claim, TSKF list and registration information from SFDA Indep-big:>200m 2 Indep-med:100-200m 2 Indep-small:<100m 2 RMB million 51% 33% 11% 5% Source: IMS projection based on retail price for urban market Urban OTC Market $12 Bn Retail Market Hospital Market 72.5% 27.5%

16. IMS now reports OTC performance across hospital and retail pharmacies. The Hospital sector enjoys slightly higher growth. OTC Pharma Asia 2011 +25% +28% +23% +18% OTC Sales by Channel $m Source: IMS CHPA & China Pharmatrend 22 Cities

17. Again, we see top manufacturers failing to match market growth rates. OTC Pharma Asia 2011 Source: IMS Pharmatrend – 22 Cities Q2 2010 Value Share Value Growth > Market Value Growth < Market Total OTC +20%

18. Chinese OTC is dominated by the same broad categories as Global OTC. OTC Pharma Asia 2011 Market Share of key category in OTC sector MAT Q2 2010 Source: IMS Pharmatrend – 22 Cities Q2 2010 Where a TCM is marketed for use with a specific illness its sales will be included in that category As ‘Western’ influences increase, high growth is expected in Nutritional and Lifestyle categories. GR % (10Q2 vs. 09Q2) 23.0% 26.0% 14.3% 13.0% 9.9% 9.6% 5.3% 83.2% 24.8% 197.7% 5.7% -9.6% 30.3% 123.9% 23.4% 26.7%

19. Primary research gives valuable insight to the Chinese consumer behaviour and purchasing decisions. OTC Pharma Asia 2011 Source: IMS Consumer Health & Wellness Study 2010

21. Philippines

22. The Philippines also suffer a slowdown in growth, but still performs favourably in comparison to an Rx market decline of 4.2% OTC Pharma Asia 2011 Value Sales ($m) Unit Sales (m) Source: IMS OTC Review Plus, MAT Q2 2010 3 Yr CAGR 5.1% 3 Yr CAGR 3.3% Total OTC Sales & Growth 6.6% 8.0% 0.7% 2.2% 5.4% 2.4%

23. United Labs dominate the market at nearly 5 times the size of their nearest competitor. OTC Pharma Asia 2011 Source: IMS OTC Review Plus, MAT Q2 2010 1 Yr Growth 28.1% 3 Yr Growth 33.0%

24. Vitamins, Minerals and Supplements play a particularly important role in the Philippines. OTC Pharma Asia 2011 Source: IMS OTC Review Plus, MAT Q2 2010 Philippines OTC – Key Categories Value Share (%) Value Growth (%)

26. Australia

27. Growth is slowing slightly in Australia, but value consistently outperforms volume sales. OTC Pharma Asia 2011 Value Sales ($m) Unit Sales (m) Source: IMS OTC Review Plus, MAT Q2 2010 3 Yr CAGR 10.8% 3 Yr CAGR 6.5% Total OTC Sales & Growth 15.8% 11.0% 5.8% 10.2% 7.4% 2.0%

28. The key players are characterised by a slowdown in growth. OTC is a focus for both traditional pharma and consumer health companies. OTC Pharma Asia 2011 Source: IMS OTC Review Plus, MAT Q2 2010

29. A more balanced picture in terms of category importance. VMS drive strong growth. OTC Pharma Asia 2011 Source: IMS OTC Review Plus, MAT Q2 2010 Australia OTC – Key Categories Value Share (%) Value Growth (%)

33. Excellence in pharmacy is the key to success in OTC – combining skills from pharma and FMCG to delight the consumer OTC Pharma Asia 2011 Pharma perspective Innovation through R&D Maximising commercial partnerships with wholesalers Differentiated Customer calls: Individual message for each store with suitable frequency Recommendation: How important is the pharmacist’s role and how to optimise within the marketing mix FMCG perspective Consistent Message: Building a strong brand identity in a multi-media and multi-channel environment Consumer engagement: Effective communication throughout the marketing mix Innovation through building brands: Consumer-led innovation Key Account Management: Clear role for each brand within each category within each retailer. Consumer perspective

34. The OTC market presents opportunities that require different orientation from traditional pharma OTC Pharma Asia 2011 Act fast Window of opportunity to invest and gain competitive advantage still exists in APAC Differentiate Differentiation needs to be in the mind of the consumer. Proactive focus on Rx to OTC switch and brand extensions Tailor Execute Excellence in execution requires investment in research, data and analytics Understand Every market is very different and requires detailed understanding of model, stakeholders, consumers and success factors Portfolio choices need to be aligned to the consumer mindset and tailored to each retail channel (pharmacy, drugstore, hospital, supermarket)