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Increased Competition for Consumer Health Dollars: Pharma Companies vs. CPG Industry.

With the value of the global healthcare marketplace projected to exceed $8.5 trillion by the year 2020, it should come as no surprise that there is increased competition for consumer health dollars. The barriers that previously existed between sectors of the healthcare industry that separated consumer-packaged goods from prescription and business-to-business entities have begun to fall away, opening up new markets for companies on all sides to grab for their own share.

These trends have had a significant impact not just on healthcare product logistics, but on how the healthcare industry operates, and as such have also had a tremendous influence on the expectations of consumers around the world.

The way that consumers expect products to become available, and the ease with which they expect to obtain them, is changing drastically. They demand fewer barriers and easier access to a wide range of healthcare products and are taking a much more hands-on approach to the management of their own health.

Companies that recognize these trends and invest accordingly will inevitably be better situated to achieve success in a very competitive landscape, but why are these changes occurring at all? What’s been happening in the world of consumer-packaged goods and pharmaceuticals that is driving this trend? The answer is multi-faceted and is being driven as much by the consumers themselves as it is by the companies that are vying for their dollars. Let’s take a look at a few of the factors that are behind these changes.

Greater Range of Products Transitioning to OTC

One of the main reasons for these shifts in the healthcare industry is simply the natural evolution of products as they progress through their lifecycles. Many products that are currently available over-the-counter (OTC) at pharmacies and healthcare retailers across the country were not always so readily available to the public. Most of them began their existence as heavily-regulated prescription products and had a defined process that had to be followed in order for consumers to obtain them.

Of course, as many of these products matured and gained a larger base of customers who were using them, they gradually became less restricted and accessibility became easier. This in turn drove greater demand, which circled back around and resulted in even greater access. Eventually, many of these products reached a point where they were common enough, safe enough, and popular enough to justify an OTC method of reaching customers.

Offering more and more products to consumers over-the-counter has many advantages for customers and manufacturers alike. The ease of access allows a wider range of customers to access the products and tends to have the effect of lowering costs as volumes increase. In a nutshell, customers benefit from easier access and lower costs, while manufacturers benefit from a bigger marketplace and increased efficiencies.

What is Driving Consumers to Pursue Self-Management for Healthcare?

The reasons why consumers are so eager to see a greater range of prescription products move to over-the-counter availability are numerous. One factor that has been having an effect on patient behaviour in Canada is the increasing shortage of general practitioners and family doctors.

Although Canada is producing a record-number of medical school graduates, a shrinking percentage of these doctors are willing to invest in their own practice or take over from other doctors who are retiring. Most new doctors are preferring to work exclusively through hospitals or take on specialty fields, both of which have greater immediate financial benefits for them. Coupled with an archaic billing system that hinders physicians from efficiently getting reimbursed for services offered to their patients, it’s not hard to see why the number of family practices in Canada is decreasing.

This all results in greater difficulty for Canadians to access their family physician to obtain simple prescriptions, which in turn increases their desire to self-manage their own healthcare wherever possible. When combined with the steady increase in OTC products, these frustrations drive more and more Canadians to demand easier access to these types of products.

How are Healthcare Product Manufacturers Adapting?

These challenges present quite the conundrum for manufacturers on both sides of the healthcare spectrum. On the one hand, pharmaceutical companies face a fiercely competitive consumer healthcare market, saturated by the savvy marketers of consumer-packaged goods. On the other hand, consumer-packaged goods manufacturers are now dealing with additional competition from products that were previously limited only to prescriptions and often have substantially more effectiveness than competing products, especially when compared to standard off-the-shelf medications. This situation results in pharma companies and consumer-packaged goods providers to search for additional efficiencies in their operations and methods to market, often leading them to evaluate their supply chains for new opportunities.

Pharmaceutical companies are altering their approach to OTC products in order to minimize the risks that are associated with prescription-only businesses. To this end, many are seeking strategic alignment with other companies in the OTC business, or are engaging in acquisitions in order to expand their reach. This approach has resulted in substantial growth for pharmaceutical manufacturers in the consumer healthcare market.

Consumer-packaged goods businesses are also doubling down on their efforts to acquire greater share of the consumer healthcare market by leveraging their wealth of data and powerful marketing machines to compete. These companies are also seeking strategic partnerships and acquisitions in order to broaden their reach and strengthen their share of the consumer healthcare market. Appealing to the upscale consumer with higher-end products and aggressive marketing campaigns, these actions have resulted in a surge of demand that consumer-packaged goods companies are more than willing to supply.

Gaining Advantage Through Logistics

One of the keys to success in the consumer healthcare market is an efficient and well-honed healthcare supply chain. Every step in the process from warehousing, material handling, packaging, fulfillment, transportation service, and even returns(post-sale logistics) must be carefully examined in order to determine where investments should be made.

Consumer-packaged goods and pharma companies alike can benefit from the resources and capabilities offered by national and global third-party logistics (3PL) providers. With coast-to-coast distribution, transportation, and warehousing, 3PL companies are able to deliver to all major urban centers quickly and consistently. 3PL businesses are also able to assist with tasks such as order fulfillment, inventory management, and even customer service.


In the coming years, these trends will only become more entrenched in the healthcare industry. More and more consumer-packaged goods companies will find themselves competing for customers against major pharmaceutical companies from around the globe.

Conversely, pharma companies are going to be entering an increasingly challenging marketplace, as competitors gear up their marketing efforts to maintain and grow their presence and market share. To succeed, companies on both sides will need to continually improve their supply chains in order to achieve greater agility and flexibility.

SCI’s 3PL solutions can be the advantage your company needs to take your logistics operations to the next level. Our coast-to-coast network is ready to serve your healthcare business and give you a competitive edge in the Canadian market.

Contact SCI today to arrange a no-obligation consultation.

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