Digitalization is the top trend of the consumer healthcare (CHC) industry. To find out which specific developments the big players are focusing on and how they are dealing with them, Simon-Kucher conducted a survey among international CHC experts*.
With their help, we have gained a comprehensive overview of what is currently driving the industry. Unsurprisingly, digitalization is at the heart of most of the perceived trends: Four out of five trends mentioned in our study are a direct consequence of the ongoing online shift in the consumer healthcare industry. In detail, the top trends are:
- Rising importance of D2C (direct to consumer) sales approaches
- Increasing significance of online channels
- Shift in sales team organization and approaches towards digital communication/marketing
- Growing importance of Amazon
The fifth trend mentioned is the consolidation of trade partners.
Most trends more opportunity than risk
The CHC experts surveyed seemed to have a positive outlook on the digital development of their industry, and therefore perceived most of the trends mentioned above as beneficial, not threatening. The overwhelming majority deemed the rising importance of online channels as an opportunity for their business. And almost 90 percent perceived the shift towards digital communication/marketing positively. In contrast, respondents were ambivalent about Amazon’s growing influence: While 56 percent judged it to be an opportunity for their business, 36 percent saw it as a risk.
How CHC companies can master these trends
The thing is, no matter if consumer healthcare companies assess these digital trends as risks or opportunities, they will have to deal with them in order to build sustainable success. Building on our global industry expertise, we developed a tried and tested approach for CHC companies to master trends like these. Our advice is to focus on three key topics:
1. Understand digital marketing and growth hacking
First of all, CHC companies need to obtain a deep understanding of digital marketing and find out which kind of growth strategy might work for their specific business. We build our digital commerce growth strategy on three pillars: Organic growth, which is facilitated by customer acquisition and retention measures as well as a suitable monetization model. The second element are analytics & insights, which CHC companies gather through a 360 degree customer lifetime value (CLV) funnel analysis. The third pillar consists of an improved growth operations excellence achieved by building a cross-functional team combining marketing, business intelligence, and product-oriented capabilities.
To implement this growth strategy, CHC companies need to adapt it to their specific circumstances. What are the opportunities and challenges of replacing traditional marketing approaches with a testable-trackable-scalable approach? What does a 360 degree assessment of their digital funnel currently look like; how is user experience and user interface at key interaction points along the funnel? With answers to these questions, they can define their strategy going forward, which KPIs are relevant to them, and possible starting points for their growth strategy.
2. Refine your channel strategy
After defining their digital marketing strategy and growth approach, taking a close look at their sales channels is the next step for consumer healthcare companies. They need to find out what the optimal (online) channel strategy is against the backdrop of a disrupted market environment due to changing customer requirements, new players, and new sales models. They also should determine how they are able to grow successfully in digital channels and how these digital channels can be played in the best possible way. Lastly, they mustn’t overlook to define a position vis-à-vis Amazon.
3. Build up Big Data capabilities
Another key aspect to master digitalization in consumer healthcare is to invest in Big Data capabilities. This works best after figuring out which capabilities a company already has at its disposal. Next step is to assess what kind skills will be required in the future. CHC companies need to ask themselves how they can build up the necessary resources and capabilities and integrate them into their organization to provide the basis for successfully mastering digital trends.
Best practice approaches
There are already a couple of industry trailblazers that handle the ongoing development pretty well. Looking at them, we can distill certain factors that make their endeavor especially successful:
Conclusion: Mastering digital trends requires strategy and dedicated resources
By looking at CHC companies that are already mastering the digital transformation of the global consumer healthcare industry, we can see that there is a variety of steps necessary to catch up. Apart from a suitable strategy, it seems to be most promising to invest in dedicated resources and know-how to be able to turn the current trends into profitable opportunities.
Reach out to our global CHC experts for more details
Within our global CHC practice, dedicated experts are happy to discuss and advise on international and local CHC market trends as well as your company’s individual challenges. Please reach out to the authors:
*Full study results are available on request.