The obsession with a long and healthy life is fueling boom after boom in the healthcare industry. Vitamins, supplements, and nootropics. Dietary foods for muscle building and weight loss. Herbal medicines for prevention and recovery—all available over-the-counter (OTC) in pharmacies and drugstores. While some pharmaceutical manufacturers are thriving in this market, others struggle to remain relevant. Where do they fall short?
"I've never seen an OTC company in crisis due to a lack of pharmaceutical or product expertise," says marketing and sales expert Peter Klein. "What most lack is digital know-how and digital marketing expertise." Klein holds a degree in business administration with a focus on marketing and sales. He studied in Cologne and Trier and has held executive positions in consumer goods and pharmaceutical companies. Today, he advises OTC producers as a consultant and interim manager.
What makes OTC products truly relevant? Why should pharmaceutical manufacturers view themselves as customer-centric companies? And how is "Insta Health" transforming the OTC industry?
Fresh insights and actionable recommendations—read the full interview below.
Mr. Klein, you advise OTC producers to adopt marketing strategies from the fast-moving consumer goods (FMCG) sector. Is it that simple?
I believe it is because the two markets aren't that different. Health is a mega-trend—at least in industrialized countries. And with that, healthcare is also a massive market. We’re already in the “mass consumer goods market”—this applies equally to supplements, dietary foods, and phytopharmaceuticals. What sets OTC apart from FMCG is that consumer goods manufacturers are accustomed to the competitive pressures of the market. This pressure is now gradually reaching the pharmaceutical sector.
The FMCG sector excels in marketing largely because it invests heavily in it. This often isn’t the case with OTC. Where’s the mistake?
The mistake is that many OTC manufacturers don’t see themselves as consumer-centric companies. They don’t engage enough with their target audience. Instead, as I often observe in my consulting practice, they are very product-focused: technical, scientific, and pharmaceutical—which is vital for the product. But how a pharmaceutical product or active ingredient is marketed in a modern and contemporary way is, in my opinion, neglected. And this is also due to marketing budgets being cut rather than expanded.
Cutting or eliminating marketing budgets is often related to sales crises. What are the risks of this approach?
Marketing budgets are often the first to be slashed during a crisis. Why? Because it’s easy. However, this is also very short-sighted. By doing so, OTC and other companies risk exacerbating their crisis. I advise companies in sales crises—not only to focus on cost-efficiency programs, restructuring, and financing—but also to maintain their marketing efforts and invest in their marketing strategies.
That sounds counterintuitive.
It might seem so, but companies risk becoming irrelevant if they neglect their marketing during a crisis. And that can happen very quickly these days. If companies let their marketing slip during a crisis, it will eventually backfire. The long-term business goal should be to market their products more and better. This needs to be maintained diligently and carefully, even during tough times. When the situation improves, higher sales can be achieved. And the marketing budgets don’t even have to be enormous.
So what should they be?
If we look at successful newcomers in the consumer goods industry, many excel—not with expensive ad campaigns—but with a deep understanding of their target audience and market. Their knowledge of consumers is deeply embedded in their company culture. Such companies often have clear metrics for their marketing and sales. They engage in Sales and Operations Planning (S&OP). To place their product and reach their target audiences, they also leverage online marketing and new media—including healthcare influencer marketing.
And this isn’t the case with OTC manufacturers?
I see this far too rarely among OTC manufacturers. Traditional billboards and ads in pharmacy magazines are still the primary advertising activities. And while they do work—no doubt—they only reach a limited audience.
What should OTC producers do instead or additionally?
Well, it requires a transformation—from being purely a pharmaceutical manufacturer to becoming a market- and consumer-oriented producer. OTC producers need to focus much more on their target audiences, emphasizing shopper and consumer-centricity. This allows marketing budgets to be used more intelligently. Successful consumer goods manufacturers take this approach: they carefully examine who their retailers are, investigate who their target audiences, shoppers, and consumers are. Why? Because they want to meet their needs. Manufacturers should always know what their target audience is looking for, what is important to them, and where they get their information. Where do shoppers obtain the desired information? Where do they shop? What are the needs of their families—the consumer group?
Keyword "Customer Journey."
Exactly. I see the customer journey being neglected by OTC manufacturers. They should be familiar with the chain of information gathering. It provides crucial insights, both for developing innovative products and for crafting suitable omnichannel strategies and opening new sales channels—like launching their own online store or increasing their presence on major online shopping platforms. OTC manufacturers need to learn to engage their target audience early and position their product effectively. In my experience, however, many still rely solely on the traditional distribution channels: doctors’ offices, brick-and-mortar, and online pharmacies. While that’s fine, it’s no longer sufficient.
You mentioned healthcare influencer marketing earlier: younger generations increasingly seek health-related information online and through social media. The term "Insta Health" is being used to describe this trend. Healthcare and doctor influencers offer advice and recommendations “at your fingertips.” What impact does this have?
Quick access to information online, particularly through the development of "Insta Health," is a huge topic. One effect is that consumers today get advice faster and are better informed than in the past. Some healthcare influencers have millions of followers. Healthcare influencers who share their "patient journey"—their knowledge, experiences, and insights on a specific condition—are very popular. They offer storytelling; their stories are relatable, understandable, authentic, and trustworthy. Specialized medical expertise on specific topics is also in high demand.
What are your recommendations for OTC producers?
As I said earlier, I’ve never seen an OTC company in crisis due to a lack of pharmaceutical or product expertise. I’ve also observed excellent data management in many pharmaceutical companies—from clinical studies to production capacity and more. But what most companies lack are digital know-how and marketing expertise, as well as data on their market activities. This is critical because companies miss out on important insights and KPIs. Given these developments, I strongly recommend companies take action and acquire digital marketing expertise. That’s just the first step. The second step concerns content.
You mean content marketing?
Exactly, I recommend that companies focus on developing effective communication strategies for digital media: smart content marketing, compelling storytelling. This will become increasingly important—producing good, relevant, and easily accessible content that offers measurable value. The content should be linked to digital touchpoints: making information available at a click and products easy to find—whether on digital shopping platforms or social media. Purchase decisions are no longer purely rational; they are often opportunistic, spontaneous, and sometimes emotional. That’s why OTC producers must anticipate and map out the decision-making processes of their shopper target group in a customer journey.
What guiding questions can help in this process?
First, manufacturers should ask themselves what impulses they want to trigger in the decision-making process. Guiding questions to explore this include: On what occasions does our target audience purchase the product? Are these genuine purchase decisions, impulse buys, or habitual purchases? Based on the findings: Where should we make our product discoverable? Which online formats and content work for our target audience? Which ones don’t, and how can that be measured?
Some OTC manufacturers are excelling in this area: Meliston, Saltadol, and Paracetamol Sanavita were named the top three "OTC Growth Champions 2023" by Healthcare Marketing magazine. Meliston, in particular, increased its revenue by 1,786 percent in just one year.
Without knowing the specific marketing measures of these brands, the ranking is very interesting. It shows that when brands get it right, there are tremendous opportunities in OTC products. The product must be effective and relevant. It needs to be listed and recommended—by the local pharmacy but also on online platforms through genuine user reviews. After all, the first place the shopper target group looks for information is online. And this relevance, driven by demand, effectiveness, and visibility, creates growth opportunities.
To apply this to the OTC Growth Champion Meliston: the product is homeopathic and claims to be effective for anxiety.
And both anxiety and the demand for phytopharmaceuticals instead of psychotropics have increased—we live in uncertain times. The demand for herbal OTC products continues to grow, with organic quality becoming increasingly important.
What other criteria do you think OTC shoppers consider?
Innovation and lifestyle. This includes innovative packaging: Is it practical? Is it occasion-specific? Are there trial or travel-sized versions of the products? This demand allows OTC companies to further develop their products to meet needs more precisely, potentially adding a unique selling proposition. Often, the same active ingredient, such as ivy, is used by many other providers. But those who make a significant difference—whether in design or organic quality—and know how to market it effectively, will succeed. Additional shopper criteria include safety and availability. What good is a medication with excellent efficacy and composition if it’s not reliably available? OTC manufacturers must ensure the availability and frequency of their products to maintain sales.
Pricing also plays a crucial role in purchasing decisions.
Absolutely. Price is a significant factor with a disproportionately strong impact on profitability. How willing are consumers to pay certain prices in specific situations? OTC manufacturers need to understand this and adjust accordingly.
As prices for OTC products have risen recently, consumers are increasingly purchasing herbal medicines from drugstores. This trend has led to OTC being referred to as a "battleground" between pharmacies and drugstores. Additionally, there is another development that could intensify this trend: younger generations are turning more to preventive products from drugstores rather than medications from pharmacies. Do you believe this trend will lead to significant changes?
This is an interesting development, and it remains to be seen how it will evolve. However, the key difference between drugstores and pharmacies is that pharmacies primarily generate revenue from prescription, or Rx, medications. Therefore, I don't see OTC as a "battleground." However, it’s true that we've recently seen a significant decline in the number of pharmacies. Currently, there are 17,571 pharmacy branches in Germany, a historic low. The major issues facing pharmacies today are high operational and personnel costs, increased workload due to supply chain issues, medication shortages, and a lack of skilled workers.
Finally, the Deutsche Apotheker Zeitung headlined in February, "Rx Drugs in Drugstores: Werner Wants to Replace Pharmacies." Werner is the CEO of the drugstore chain dm. What is your take on this?
I believe that’s an exaggerated claim. People make purchases based on convenience. When they feel acutely ill, they generally go to a pharmacy rather than to dm or Rossmann. Why? Because they want pharmaceutical advice. And currently, drugstores cannot provide that, even though it was recently discussed. Additionally, we have very strict regulations in Germany regarding the approval and distribution of medicinal substances. In the U.S., for example, the situation is different, with some antibiotics, painkillers, and sleep aids being available in supermarkets and drugstores. That’s not possible here, and in my opinion, thankfully so.
Thank you for your insights, Mr. Klein.
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