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OTC Pharmaceuticals Market Report 2005
Key Note Publications Ltd, Dec 2005, Pages: 192
It is estimated that, in 2005, the total UK over-the-counter (OTC) pharmaceuticals market will be worth £2.1bn at retail selling prices (rsp), a rise of 3.7% on 2004. Over the past 5 years (2001 to 2005), growth in the market has been somewhat erratic, with annual increases ranging from a high of 7.6% in 2002 to a low of just 0.9% in 2004.
The UK market for OTC pharmaceuticals is heavily dependent on the prescription pharmaceuticals market. Most OTC products were previously prescription-only products and were subject to the high degree of regulation and scrutiny, coupled with the significant investment in both time and money, that creates such substantial barriers to market entry. In addition, the time spent as a prescription product generates significant brand recognition and, in some instances, brand loyalty from customers. As a result, many (although not all) competitors in the OTC pharmaceuticals market are manufacturers of prescription pharmaceuticals, such as GlaxoSmithKline (GSK) and Bayer. Others, such as Reckitt Benckiser and Johnson & Johnson, have more diversified interests.
Since 2003, the Government has been heavily promoting self-medication through a number of initiatives, as well as through legislation, public education and the restructuring of NHS services towards more patient-centred care and facilitating self-care by the patient. In addition, a more streamlined delisting process is facilitating the entry of new products into the OTC market, while a relaxation of regulations is permitting a greater variety of retail outlets to sell such products, with the effect of improving access to the general public.
However, from the industry's perspective, greater competition from new products and different retail outlets — particularly supermarket chains — together with the abolition of resale price maintenance (RPM) in 2001, has led to significant price cutting. In turn, this has created an increasingly price-sensitive market, with profits being significantly squeezed.
A number of factors, including increasing competition and price sensitivity, will serve to limit growth in the OTC pharmaceuticals market, despite positive government encouragement and the entry of many new products. We forecast that future annual growth in the market will rise year on year from 4.5% in 2006 to 6.5% by 2010. However, if the Government were to take certain actions, such as limiting the availability of free prescriptions, market growth could alter significantly.
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