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CONSUMER HEALTH IN PERU

Euromonitor International
November 2018
CONSUMER HEALTH IN PERU PASSPORT I

LIST OF CONTENTS AND TABLES

Consumer Health in Peru ...........................................................................................................................1


ANALYSIS.............................................................................................................................................................1
Executive Summary ........................................................................................................................................1
Consumer health registers growth even though the economy has not yet recovered .........................1
Greater health concerns for Peruvians ...................................................................................................1
Companies are facing competition from private label ...........................................................................1
E-commerce represents an opportunity to grasp...................................................................................2
Innovation and education will be the key growth drivers ......................................................................2
Appendix .........................................................................................................................................................3
OTC registration and classification ..........................................................................................................3
Vitamins and dietary supplements registration and classification .........................................................3
Self-medication/self-care and preventive medicine...............................................................................4
Switches ...................................................................................................................................................4
Definitions.......................................................................................................................................................4
Sources............................................................................................................................................................5
Summary Research Sources ...........................................................................................................5
DATAGRAPHICS ..................................................................................................................................................6
Market Sizes....................................................................................................................................................6
Sales of Consumer Health......................................................................................................................6
Sales Performance of Consumer Health................................................................................................6
Sales of Consumer Health by Category..................................................................................................7
Distribution .....................................................................................................................................................8
Channel Distribution for Consumer Health ...........................................................................................8
Competitive Landscape ..................................................................................................................................9
Company Shares of Consumer Health ...................................................................................................9
Company Share Performance in Consumer Health ...............................................................................9
Retail Sales Performance by Company ................................................................................................10
Market Concentration of Consumer Health by Company ...................................................................10
Brand Shares of Consumer Health.......................................................................................................11
Brand Share Performance in Consumer Health...................................................................................11
Retail Sales Performance by Brand......................................................................................................12
Market Concentration of Consumer Health by Brand.........................................................................12
Private Label in Consumer Health .......................................................................................................13
Private Label in Consumer Health .......................................................................................................13
CONTEXT...........................................................................................................................................................14
International Contex.....................................................................................................................................14
Consumer Health Retail Sales by Region .............................................................................................14
Consumer Health in Peru.....................................................................................................................14

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CONSUMER HEALTH IN PERU PASSPORT II

FMCG Index...................................................................................................................................................14
Consumer Health vs Selected FMCG Industries ..................................................................................14
Socioeconomic Context ................................................................................................................................15
Population Growth Index ....................................................................................................................15
Peru vs Other Geographies..................................................................................................................15

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CONSUMER HEALTH IN PERU PASSPORT 1

CONSUMER HEALTH IN PERU


ANALYSIS

Executive Summary

Consumer health registers growth even though the economy has not yet recovered
Although the country's economy has not yet recovered from climatic phenomena and
political problems, the consumer health market sales in Peru increased above the GDP
growth rate. The Global Competitiveness Report 2017-2018 prepared by the World
Economic Forum (WEF) revealed that Peru improved in four of the 12 pillars in the last year:
Infrastructure, Health and Basic Education, Technological Preparation and Innovation.

Peru allocates 5.5% of its GDP to health spending. A low percentage compared with
neighbouring countries within the Pacific Alliance such as Chile and Colombia. In 2018, the
Peruvian budget increased by 20% in comparison to 2017. Over-the-counter medications
(OTC) are in greatest demand among Peruvians because they help alleviate symptoms of
common illnesses such as flu, cold, headaches, stomach problems, muscle aches, allergies
and acidity, supported also by the high level of self-medication. According to a study
conducted by the National Society of Industries (SNI), with figures from the National
Institute of Statistics and Informatics (INEI), 62.4% of the demand for medicines is for
household consumption.

Greater health concerns for Peruvians


Obesity levels are already a public health problem in Peru. Sales of sports nutrition
products have increased due to consumers’ concerns about health and wellbeing. The
Ministry of Health has warned that the percentage of obese adults in Peru is only eight
points away from the world obesity record recorded by Oceania, the US and Mexico.
Moreover, The Peruvian Association for the Study of Obesity and Atherosclerosis warned
that the number of obese adolescents in the country increased from 3% to 19% in the last
three decades in some departments. This problem is more serious in urban areas, where
lifestyles are more sedentary and generally include unbalanced diets. Thus there are
greater health concerns amongst Peruvians, and this has caused them to consume more
healthcare products, to improve their diet, to exercise and try to lead a more relaxing
lifestyle.

The enormous biodiversity in agricultural products in the country has made Peruvians
prefer natural and healthy products. Moreover, Peruvian mothers are increasingly aware of
the importance of providing their children with a healthy, natural and balanced diet,
avoiding chemicals and excess fat. There are also state policies related to healthy
lunchboxes for schoolchildren as well as the National Program of School Feeding (Qali
Warma), which provides elementary and primary school students with breakfasts in order
to improve their daily diet and eating habits.

Companies are facing competition from private label


The modern pharmacy channel in Peru basically comprises InkaFarma, Mifarma and
Boticas & Salud, representing more than half of the total consumer health market; the rest

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CONSUMER HEALTH IN PERU PASSPORT 2

is made up of independent pharmacies. Pharmacy chains, in particular InkaFarma and


Mifarma, are pushing the sales of their own private label lines to the detriment of
international brands. Moreover, they sell much less expensive products overall.
Furthermore, domestic players also produce nutritional products for other pharmacy chains
such as InkaFarma, but at a much lower cost, impacting the final price. This situation will
benefit low socioeconomic segments since they will have access to products that they did
not have before. Pharmacy chains also are conducting a policy of inventory reduction,
which is affecting sales of international companies. International companies are confronting
this challenge with publicity because they have bigger budgets with which to do it than
private label owners do. Innovation is another strategy the large companies use to counter
this situation, and they are also looking for ways to expand their distribution through new
channels like supermarkets, traditional channels and/or e-commerce.

Pharmaceutical Chemical College of Peru has announced its proposal of “community


pharmacies”, to help maintain lower prices, and a campaign to avoid buying in
establishments where prices are expensive. To this would be added agreements with the
government to allow community pharmacies to participate in the state purchase processes
and to sell drugs in places where the large pharmaceutical chains are not present. If these
proposals are approved this represents a potential threat to pharmacies.

E-commerce represents an opportunity to grasp


In the Peruvian market, e-commerce recorded strong growth in 2018, with online
purchases increasing by double digits. The people who buy and sell through a digital
platform see it as an advantage that offers time savings, convenience, speed (in some
cases) and promotions. What characterises these types of users is that they are much more
informed about product offers and services.

Internet retailing has growth potential, especially in the sports nutrition category, in
which the main companies are implementing online platforms that offer e-commerce to
consumers who like to engage in multiplatform ways of purchasing. Players in other
categories also are interested in e-commerce because it is a way to compete with the
powerful pharmacies chains. More than half of the Peruvian population is connected to the
digital world, and as internet use increases, the internet retailing channel will grow.
Supermarkets and traditional channels are other ways to compete with pharmacies chains,
as well as higher penetration of independent pharmacies through strong distribution
networks.

Innovation and education will be the key growth drivers


In the future consumer health will continue growing but to what extent will depend on
product innovation and education of consumers about prevention so that they value the
benefits that products offer to help ensure their long-term health and wellbeing. Big
companies are trying to launch new products with innovations to compete with low-priced
products; they are not interested in engaging in price wars. They are also conducting
prevention campaigns to increase the demand for consumer health products.

Government, through the Ministry of Health, is working on a prevention campaign that


focusses on skin care, eye care, dental health and healthy eating. The campaign is called
“Live healthy, live well, take care of your health" and it has been conducted in various

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CONSUMER HEALTH IN PERU PASSPORT 3

public spaces in Lima and the interior of the country in order to promote healthy lifestyles
and prevent disease.

Appendix

OTC registration and classification


 OTC products are regulated by DIGEMID, a government organisation under the
authority of the Health Ministry. The directorial resolution, RD-182-2007-DG-
DIGEMID/MINSA, approved by the Health Ministry, indicates the specific conditions
under which OTC products can be marketed.
 There are guidelines and regulations relating to the advertising and promotion of over-
the-counter (OTC) drugs in the Supreme decree DS No 010-97 Regulations for the
Registration, Control and Sanitary Surveillance of Pharmaceutical and Related Products
and Supreme decree DS No 016 of 2011. In Peru, there is no national code of conduct
on advertising and promotion of medicines.
 In terms of packaging, products can be sold in blisters, rigid containers and any
packaging that allows the product to be maintained in good condition. All products
must include information on ingredients, manufacturers and importer or distributor in
Peru. Medication must include a list of adverse effects in Spanish with other relevant
information inside the package, including dosage and an indication as to whether the
product is sold by prescription or as an OTC product.
 To market products or devices, the containers must have the corresponding labelling
approved by the National Authority of Pharmaceutical Products, Medical Devices and
Medical Products (ANM), in accordance with the provisions established in the
Regulation.
 OTC products can be sold through pharmacies, drugstores, supermarkets and
independent small grocers. In the case of pharmacies and drugstores, the outlets need
to have an operations licence issued by the local government and a sanitary
authorisation issued by the Ministry of Health. Meanwhile, in the case of supermarket
and independent small grocers a specific area for the products is required. In the case
of independent small stores, it is more usual to find antipruritic and analgesics.

Vitamins and dietary supplements registration and classification


 In Peru, OTC products are divided into three groups: branded drugs, generics and diet
and sweetener products, with vitamins and dietary supplement products found in the
last group. The regulations for vitamins and dietary supplements are the same as for
any other OTC product.
 There are no regulatory issues with combination products or the use of new
ingredients. In Peru, vitamins are considered as drugs in the following cases: products
containing vitamin A in doses >10,000 IU/day, vitamin D in doses >800 IU/day, or
products containing manganese (Mn), phosphorous (P), chromium (Cr), selenium (Se),
molybdenum (Mo) or zinc (Zn) in doses exceeding NEANO1 and NMEAO2 maximum
requirements. Products containing amino acids, carbohydrates, lipids, vitamins or
mineral supplements are also registered as drugs. In all cases, rules are subject to
current regulations concerning other OTC products and pharmaceutical drugs.
 Vitamins and dietary supplements are advertised and promoted under the same
regulations as OTC products. Social media is the most used method of promotion as the

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CONSUMER HEALTH IN PERU PASSPORT 4

products support health and this media is less expensive than television with a
considerable target audience.
 In terms of packaging, most vitamins and dietary supplements are presented in tablets
and capsules, contained in plastic or glass containers, with labels including ingredients,
dosage, manufacturer and the importer or distributor. Some vitamins and dietary
supplements, such as aloe and green tea extracts, are in liquid form presented in plastic
bottles.
 Distribution channels are regulated in the same way as OTC products. Distribution is
mainly through pharmacy chains, drugstores, supermarkets, direct selling and internet
retailing.

Self-medication/self-care and preventive medicine


 It is common in Peru for consumers to ask for advice in pharmacies about which
products to buy to ease ailments such as colds, allergies or for pain relief. Consumers
from all income levels self-medicate. Some have already tried OTC products and return
to the same medication whenever the symptoms reappear. In other cases, consumers
ask for advice from the professionals in pharmacies and purchase whatever they
recommend. The low levels of regulation that exist covering sales of medication in Peru
mean that some pharmacies sell prescription medicines as OTC products, whilst the
lack of a good health service system in the country means that consumers cannot gain
access to doctors easily or quickly.
 There are risks involved in self-medication, and secondary effects can appear in
consumers in different ways for different individuals. Without a doctor’s advice, the
ingestion of pills could cause problems such as gastritis, allergies, resistance to certain
types of medication and, in some extreme cases, death. Despite the efforts of the
Ministry of Health and the information delivered to consumers in all income segments,
Peruvians continue to self-medicate and this is unlikely to change over the short term;
there is therefore little pressure on pharmacies to avoid selling prescription
medications or even give advice about medication without the supervision of a health
professional.

Switches
In 2018 there were no registered switches from Rx to OTC or BTC (pharmacy) to OTC
switches, nor any reverse switches of OTC to Rx (prescription) or BTC (pharmacy) to
prescription (Rx).

Definitions
 The total market size given for consumer health is the sum of OTC, sports nutrition,
vitamins and dietary supplements and weight management and wellbeing.
 The sum of these categories is greater than actual market size because allergy care is a
duplicate of categories found in cough, cold and allergy remedies, dermatologicals and
eye care; paediatric consumer health is an aggregate of paediatric categories in OTC
and vitamins and dietary supplements; and herbal/traditional products is an aggregate
of herbal/traditional categories in OTC and vitamins and dietary supplements.
 2017 data is provisional and based on part-year estimates.

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CONSUMER HEALTH IN PERU PASSPORT 5

Sources
Sources used during the research included the following:
Summary Research Sources

Official Sources Complementos Nutricionales del Perú SAC


DIGEMID
Indecopi (Instituto Nacional de Defensa de la Propiedad Intelectual)
Ministerio de Salud de Perú
Sierra Exportadora
SUNAT
Trade Associations ADIFAN - Asociacion de Industrias Farmaceuticas Nacionales
Asociacion Nacional de Cadenas de Boticas - ANACAB
Asociacion Nacional de Laboratorios Farmaceuticos
Revista Packaging Latinoamericana
Trade Press Agencia Andina de Noticias
Business Magazine
Correo Newspaper
CPN Radio
Dia 1 El comercio
Diario El Comercio
Diario El Peruano
Diario Expreso
Diario Gestión
Diario La Primera
Diario La Republica
Diario Peru21
Diaro Correo
El Comercio
EPENSA
Expreso
Gestión
La República
Maximize - El Comercio
Peru Retail
Peru21
Revista K@iros
Revista Semana Económica
Rpp noticias
Semana Economica
South American Business Information

Source: Euromonitor International

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CONSUMER HEALTH IN PERU PASSPORT 6

DATAGRAPHICS

Market Sizes
Sales of Consumer Health
Retail Value RSP - PEN million - Current - 2004-2023

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Sales Performance of Consumer Health


% Y-O-Y Retail Value RSP Growth 2004-2023

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 7

Sales of Consumer Health by Category


Retail Value RSP - PEN million - Current - 2018 Growth Performance

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 8

Distribution
Channel Distribution for Consumer Health
Retail Value RSP 2018 and Percentage Point Growth - 2013-2018

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 9

Competitive Landscape
Company Shares of Consumer Health
% Share (NBO) - Retail Value RSP - 2018

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Company Share Performance in Consumer Health


% Share (NBO) - Retail Value RSP - 2009-2018

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CONSUMER HEALTH IN PERU PASSPORT 10

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Retail Sales Performance by Company


Retail Value RSP (NBO) - PEN million 2018 - % CAGR 2013-2018

2,500

OTHERS
2,000

1,500

1,000

500

PRIVATE LABEL
0
-5% 0% 5% 10% 15% 20%

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Market Concentration of Consumer Health by Company


% Share (NBO) - Retail Value RSP - 2009-2018

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 11

Brand Shares of Consumer Health


% Share (LBN) - Retail Value RSP - 2018

Ens ure 8.3% Bra nd % S ha re

He rba life Nutrition 5.8% Ens ure 8.3

P a na dol 3.5% He rba life Nutrition 5.8


P a na dol 3.5
Ha lls 1.5%
Ha lls 1.5
Ce ntrum 1.2%
Ce ntrum 1.2
He rba life P e rs ona lis e d P ... 1.2%
He rba life P e rs ona lis e d P rote in P owde r 1.2
Ma gnus 1.1%
Ma gnus 1.1
Doloma x 1.1%
Doloma x 1.1
Termo té 0.9%
Termo té 0.9
Dolofla m 0.9%
Dolofla m 0.9
Vick 0.9%
Vick 0.9
BioP ro 0.9% BioP ro 0.9
Hipoglós 0.9% Hipoglós 0.9
Clore ts 0.9% Clore ts 0.9
Omniplus 0.8% Omniplus 0.8

P owe r Ma ke r 0.8% P owe r Ma ke r 0.8

Me nthola tum 0.8% Me nthola tum 0.8

Ge ne rics 5.6% Ge ne rics 5.6

P riva te la be l 1.4% Priva te la be l 1.4


Others 61.7
Othe rs 61.7%

Incre a s ing s ha re De cre a s ing s ha re No cha nge

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Brand Share Performance in Consumer Health


% Share (LBN) - Retail Value RSP - 2009-2018

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CONSUMER HEALTH IN PERU PASSPORT 12

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Retail Sales Performance by Brand


Retail Value RSP (LBN) - PEN million 2018 - % CAGR 2013-2018

3,000

OTHERS
2,500

2,000

1,500

1,000

500
ENSURE
GENERICS
PANADOL
0
-5% 0% 5% 10% 15% 20%

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Market Concentration of Consumer Health by Brand


% Share (LBN) - Retail Value RSP - 2009-2018

Bra nds 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Top 3 Bra nds 21.7 20.8 19.6 19.4 18.7 19.1 19.1 19.1 18.5 17.5
Priva te la be l 0.5 0.6 0.7 0.9 1.0 1.1 1.1 1.2 1.2 1.4
Others 77.8 78.6 79.7 79.7 80.2 79.8 79.8 79.8 80.2 81.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 13

Private Label in Consumer Health


% Share - Retail Value RSP - 2009-2018

Ca te gorie s 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
OTC 1.5 1.7 1.8 2.2 2.5 2.6 2.8 2.9 3.1 3.6
Alle rgy Ca re 3.2 3.2 3.0 3.0 2.9 2.8 2.8 2.8 2.8 2.5
P a e dia tric Co n s u me r 0.4 0.3 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.2
He a lth
Co n s u me r He a lth 0.5 0.6 0.7 0.9 1.0 1.1 1.1 1.2 1.2 1.4

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

Private Label in Consumer Health


PEN million - Retail Value RSP - 2009-2018

Ca te gorie s 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
OTC 6.5 8.4 12.0 18.6 24.8 28.7 33.1 38.2 43.5 53.8
Alle rgy Ca re 0.4 0.5 0.5 0.6 0.6 0.7 0.7 0.7 0.7 0.7
P a e dia tric Co n s u me r 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.4
He a lth
Co n s u me r He a lth 6.5 8.4 12.0 18.6 24.8 28.7 33.1 38.2 43.5 53.8

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 14

CONTEXT

International Contex
Consumer Health Retail Sales by Region Consumer Health in Peru
USD million - Constant - 2018 Retail Value RSP - USD million - Constant - 2004-2023

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

FMCG Index
Consumer Health vs Selected FMCG Industries

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

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CONSUMER HEALTH IN PERU PASSPORT 15

Socioeconomic Context
Population Growth Index Peru vs Other Geographies
Population Growth Index 2001-2030 Rank out of 210

Households with a Disposable Income Households with a Disposable Income Number of Internet Subscribers Number of Mobile Internet
Over USD25,000 - Peru Over USD25,000 - Lima Subscribers
Actua ls - '000 - 2017 Actua ls - '000 - 2017 Actua ls - '000 - 2017 Actua ls - '000 - 2017
1,565 1,029.9 22,993.3 20,647
6 1 s t pe rce ntile 95th pe rce ntile 82nd pe rce ntile 8 1 s t pe rce ntile

His toric Growth His toric Growth His toric Growth His toric Growth
2012-2017 CAGR 2012-2017 CAGR 2012-2017 CAGR 2012-2017 CAGR
6.5% 9.5% 59.5% 93.2%
67th pe rce ntile 87th pe rce ntile 77th pe rce ntile 89th pe rce ntile

Fore ca s t Growth Fore ca s t Growth Fore ca s t Growth Fore ca s t Growth


2017-2022 CAGR 2017-2022 CAGR 2017-2022 CAGR 2017-2022 CAGR
5.7% 6% 5.6% 5.6%
7 1 s t pe rce ntile 77th pe rce ntile 33rd pe rce ntile 27th pe rce ntile

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks,
trade interviews, trade sources

© Euromonitor International