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Digitally enabled, health conscious consumers are demanding more from the health and wellness industry—which will grow the consumer health market by more than $200 billion over the next five years.
Consumer healthcare is a $502 billion market that will grow by almost 50 percent to $737 billion over the next five years. This growth will be driven primarily by preventive health and wellness categories such as vitamins, nutrition, weight management and fortified foods and beverages—fueled by demand from health focused consumers and the growing wealth of emerging market consumers.
Accenture’s High Performance Business research in consumer health reveals that the gap is widening between the high-performance businesses and their peers. High performers are rapidly adapting to customer needs through acquisitions and alliances that include consumer health products, investing in emerging markets and digitally transforming their operating models.
With multiple industries converging and transforming the market, traditional consumer healthcare companies face a call to action to bring a new pace of innovation, collaboration and understanding of the digital consumer.
View our infographic to get an overview of the key findings from our research.
Accenture’s study of the consumer healthcare industry is in its fourth year, and it analyzes the long-term performance of “pure play” consumer healthcare companies (with a portfolio focused entirely on the segment)—as well as the consumer healthcare focused divisions of larger pharmaceutical or consumer goods companies.
Our 2013 update is based on fiscal year end 2012 financials and evaluates 17 of the largest consumer healthcare companies in the world over a five-year period. Collectively, these companies had $81 billion in 2012 aggregate revenue—representing 35 percent of the traditional consumer healthcare market. The results have been compared with our 2010 study (based on fiscal year end 2009 financials) to identify relative movements in the performance rankings.
The analysis pro forma adjusts for the impact of major mergers and acquisitions (M&A) deals, and removes the impact of exceptional operating costs to reveal an accurate picture of ongoing business operations. A detailed analysis of historic financial performance averaged over three- and five-year time frames takes into account overall growth and return on investment (ROI), as well as consistency over time.
Changing consumer behaviors, spurred in part by demographics, evolving healthcare policies and the digital revolution, are the major forces driving growth:
There is a consumer revolution in healthcare. However, most traditional consumer health companies have not taken advantage of this shift in consumer needs. Consumers want faster, easier, self-service ways to manage and improve their health—a trend that will continue to increase. By 2017, it is estimated that 1.7 billion smartphones and tablets will have an m-health app installed.
Companies outside the traditional consumer health industry are entering the market to fulfill the unmet needs of the health oriented consumer. Companies from mobile technology to electronics and high tech are entering into the consumer health market to respond to the connected consumer who wants to better manage their health.
High-performance businesses are converging and collaborating to capitalize on the expanding consumer healthcare opportunity. The last two years have seen acquisitions, joint ventures and partnerships between and among industry players accelerate, particularly in the nutrition segment.
As high-performance businesses recognize the potential of the expanded consumer health market and are adapting their strategies to capitalize on it, a gap is opening up between high performers and their peers. This year’s research revealed two high performers, as it did in 2010, but with a change at the top and a widening gap between the high performers and their peers.
To win in consumer health, companies—whether rooted in life sciences or consumer products—will need to reorient their businesses, quickly adapting capabilities to the changing needs of the new consumer. For both traditional pharma and consumer goods companies, this will require significant rethinking of a company’s commercial capabilities and operating models. There are five distinctive capabilities enabling the high performers to outperform their peers.
There are five, distinctive capabilities enabling the high-performance businesses to outperform their peers:
Getting to know the customer and consumer through deeper, advanced analytics that are integrated across the organization. This will mean moving from retrospective to predictive analytics to generate better, actionable customer insights.
Engaging in one-to-one marketing through innovation that delivers a seamless customer experience. This capability needs to be underpinned by better insights and span multiple digital and tangible touch-points—enabling personalized communication when, where and how the consumer desires.
Delivering seamless channel experiences, so consumers can access the brands they want anytime, anywhere—supported by customer-driven, nimble supply chains.
Evolving to more dynamic operating models that serve emerging markets, with flexible, cost-effective “super global-super local” supply chains.
Focusing on winning in high-value categories and high potential markets. High performers are continuing to invest in M&A in growth categories and emerging markets, and dispose of non-core businesses to prioritize core brands.
March 24, 2014
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