Sector Report

Sector Thesis

Growth of the Consumer Health market (valued at $350B) is being driven an aging population, an elevated focus on preventive healthcare, and an expanding middle class. However, growth trends have been obfuscated by volatility caused by the COVID-19 pandemic. In our view, many larger consumer companies have not focused on innovation, creating an opportunity for middle-market brand aggregators. These middle-market brand aggregators, in turn, have successfully embraced social media, influencer marketing, and AI-driven sales strategies.

Over-the-Counter (OTC) Medicine

• The OTC market has experienced significant volatility due to the impact of the COVID-19 pandemic on demand for cough, cold, and flu products. Demand trends are starting to normalize in 2024.
• Rx-to-OTC switches have been a focus in the OTC market. The FDA has been actively encouraging Rx-to-OTC switches, and brands scheduled to come off-patent could be profitable targets.
• Women’s health products are growing faster than the overall OTC market, and the recent Rx-to-OTC switch of Perrigo’s contraceptive, Opill, has created a new category in this space.

Vitamins, Minerals & Supplements (VMS)

• VMS demand has normalized to a historical growth rate in the mid-single digits. Post-COVID, general awareness of preventive health has continued to be an underlying driver of demand.
• Nutritional support programs and active lifestyle supplements, including proteins and multivitamins, are emerging as a new driver among a growing number of patients using GLP-1 medications.

Personal Care & Wellness (PCW)

• The PCW market exceeds $5B+ annually, with an expected annual growth of ~6%. The market consists of a very broad spectrum of products ranging from health, appearance, fitness, nutrition, mindfulness, and sleep — beyond the traditional categories of OTC and VMS.
• We have been monitoring the ongoing trend towards “clean” personal care — consisting of shampoos, deodorants, beauty supplies, and other products being made with natural ingredients. This a largely unregulated term created in response to the otherwise limited regulation in many of these industries.