E & C Europe OTC Sales "Set To Treble By 2003"

The market for over-the-counter medicines in central and eastern Europe advanced by 27% in 1993 to total $430 million, and by 2003 it is expected to have reached $1.22 billion, representing a leap of 184% from 1993's value, according to Nicholas Hall, chairman and chief executive officer of Nicholas Hall & Co.

Opening a conference in London last week, organized by his company to discuss the opportunities for OTCs in central and eastern Europe, Mr Hall noted that by far the biggest market in the region is Poland, accounting for 37.2% of the eastern and central European total last year, followed by Hungary at 15.7%, the Czech Republic on 9% and Slovakia at 4.8%. consumer advertising of OTCs is permitted in all countries of the region, and is the greatest influence on consumer decisions to purchase OTC products; he estimated that brands must spend at least 50% of first-year sales on advertising if they are to succeed. The most effective advertising medium by far in the region is television, he added; in Poland, it accounts for 75% of all media advertising of OTCs, while in Hungary it takes 61% and in the Czech Republic it represents 76%.

Mr Hall then examined the range of strategic options open to OTC companies wishing to enter these markets. First, he said, they can invest in their own brands; this is a high-cost, high-risk option but one which can bring high returns. Timing, the reliability of market growth forecasts and levels of competition are critical to achieve success using this strategy, as is the capacity of the company's sales force. The next option, he continued, is to acquire a local company. At present, the chances of doing this at a good price are better in eastern and central Europe than anywhere else in the world and such a move will achieve critical mass in the short term. However, he added that most local companies and brands are weak, with poor prospects, with very old-fashioned manufacturing facilities, so choosing this option may well produce major problems longer-term.