Food supplements fight for healthy profits on an ailing market

Newsroom 01/11/2010 | 13:59

Prevention is better than cure, goes the old saying. Romanians have a similar maxim, but the numbers tell a different story. Annual per capita consumption of nutritional supplements in Romania is only EUR 4.7, about 20 times below that in Germany and about 8 times lower than the figure in neighboring Hungary. Pharmaceutical companies complain about the lack of education and slashed purchasing power, but agree that against this backdrop there is huge potential for growth in the coming years.

Simona Bazavan

 

There are considerable differences between the local nutritional supplements market and its European counterparts, and definitely not for the better. To begin with, there are difficulties in settling what a food supplement is in the first place. “The Romanian consumer isn’t yet fully accustomed to the notion itself, and this is why there is a multitude of interpretations regarding the products and their proper use,” Pfizer Consumer Healthcare representatives told Business Review. The same sources added that similar products have a different status, as some are registered with the National Medicines Agency (ANM) as OTCs (over the counter medicines) while others are licensed by the Health Ministry or the Institute for Medical Bio-resources.

“The Romanian food supplement market is still in its infancy and there are still big names expected to enter the market. Only about six local brands have chosen to invest on the local market, the others simply settling for placing their product on the shelves and expecting sales out of a low price policy,” said Pfizer Consumer Healthcare representatives. Pfizer is present in Romania with the Centrum brand of food supplements.

The local dietary supplement market reaches approximately EUR 100 million in Romania. Until 2008, the market had been growing constantly, even posting double-digit increase rates. But in 2010 the market is expected to decrease by up to 20 percent in value according to some pharmaceutical companies, mainly due to shrinking personal and family budgets. The VAT hike to 24 percent in July has also taken its toll on sales.

Reports from pharmacy chains are less pessimistic. “Quantitatively, consumption so far in 2010 is similar to the figure posted in the same period of 2009. However, considering the price increases made by producers and the VAT hike, we have witnessed an 11 percent value increase on this segment,” Isabelle Iacob, general manager of Help Net Farma SA, told Business Review.

While prescription drugs are taxed at 9 percent VAT, the same doesn’t apply to food supplements. Although apparently unrelated, reduced funds for free and subsidized prescriptions also affect the market. “Due to decreasing purchasing power, some patients, especially the elderly, will focus on acquiring the necessary prescription drugs to the detriment of prevention through nutritional supplements,” explained Iacob. The strong link between decreasing purchasing power and consumption however, is also a sign of Romanians’ lack of education regarding prevention through food supplements, producers complain. Romanian doctors are also more likely to recommend prescription medicine than dietary supplements as most Romanians ask for their services when it’s too late to avert the ailment.

“The Romanian consumer is, unfortunately, insufficiently educated and faces difficulties in choosing from the food supplements available on the market those that better address his or her needs,” Adrian Samson, general manager of GlaxoSmithKline Consumer Healthcare Romania, told Business Review.

Part of the OTC (over the counter) segment, dietary supplements are an attractive market for pharmaceutical companies as authorities have no word in the pricing policy and in spite of the competition there is still a lot of room for growth.

GlaxoSmithKline is present on the local market with the Eurovita range of supplements and Vitamax. This year the company has launched new Eurovita products: Eurovita MultiVital A-Z, Eurovita Osteo Vitactiv, Eurovita Magneziu 400 Plus Vitamins C and E, Eurovita Ginkgo Mental, Eurovita MemoExtend, Eurovita Omega 3 Concentrate and Eurovita Q10 VitalCel.

GlaxoSmithKline makes most of its sales through pharmacies which is another characteristic of the local market. Only about 10 percent of overall sales are generated through retail networks and online stores. “Few brands are sold through the retail network,” Samson explained, adding that in Western countries there are vitamins for which retail distribution is much more important than dedicated drug stores. “But in this case we are talking about a different education level among consumers and an older tradition,” he added.

In 2009, food supplements represented about 8 percent of the total sales of Help Net and a similar share is expected this year also. Best selling supplements at the pharmacy chain are those for strengthening the immune system, products treating cold and flu symptoms and weight loss aids, said company representatives.

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