Adcock Ingram Integrated Report 2018

MARKET TRENDS u u Economic pressure on the consumer tends to shift mix towards more economy brands and/or smaller pack sizes. u u Recommendations by healthcare professionals are still highly valued. u u Rapidly advancing technology is changing the way patients access advice and execute transactions. u u Mobile penetration, in particular interactions on social media are playing a greater role in how people interact with brands. u u Consumers are actively involved in their own health andwellness, seeking to educate themselves on self- care and preventative therapies. u u Increased patient access to medicines through down-scheduling from Prescription to OTC of certain molecules. u u Convenience and access to medicines in specific channels, plays an important role in the consumer’s choice. u u Consumer behaviour and consumption are influenced by factors such as loyalty programmes and retailer offerings. STRATEGIC FOCUS u u Protect and build heritage brands. u u Enhance customer relationships through business partnering and service delivery excellence. u u Launch innovative new products into new and existing categories. u u Focus on consumer education in line with the self-care and preventative consumer trends. u u Embrace the opportunities offered by digital penetration. u u Growth through acquisitions and partnerships. u u Expand into export markets. u u Ensure regulatory compliance in a changing environment. u u Quality and cost effective, proudly South African manufacturing. ACHIEVEMENTS IN 2018 u u Agreement signed with Abbott to market, sell and distribute Brufen, Calmettes, Duphalac and Creon. u u Rebranded vita-thion – ‘vita-thion fizzies’ and ‘vita-thion extra’. u u Installed a fully-automated powder sachet packing line at the Clayville manufacturing site. u u Progress on construction of an ophthalmic manufacturing plant at Clayville. u u Clayville manufacturing site certified as a National Key Point. OVERVIEW OTC supplies medication for patients in South Africa’s private and public sector as well as to certain export markets, competing in the self-medication category (Schedule 1 (S1) and 2 (S2)) in Pharmacy, and also in the FMCG channel (Schedule 0 and unscheduled) with an aggregated complement of 103 premium and economy brands. The division’s brand portfolio and operational excellence have assisted in maintaining its volume and value leadership position in Schedule 1 and Schedule 2 in pharmacy. Two in every five packs, S1and S2 products, sold in the private sector, is an Adcock Ingram product. The division competes primarily in the following therapeutic categories: PERFORMANCE The OTC division is the market leader in the pain category in pharmacy, with its top ranked brand Adco-Dol continuing to outperform the market. The pain market has evolved significantly in the last year with the down- scheduling of several brands from schedule 3 (prescription only) to schedule S2 (OTC). The division offers a full breadth of economy and premium brands with Adco- Napamol performing particularly well in the economy sector. Pain Despite difficult economic conditions, core brands like Corenza, Solphyllex and Alcophyllex contributed to sustained growth in this mature and highly competitive category. OTC remains a leading player in this market, with representation across cold preparations, expectorants and cough sedatives. The division prioritises innovation and recently launched its new immune booster Immuenza, as well as a packaging upgrade for Actophlem, and the repositioning of Stearns to earn the trust of a diverse customer base. Cough and Cold OTC is a significant participant in this market through one of its flagship brands Allergex and Allergex Non-Drowsy. The anti-histamine portfolio has had several exciting new launches in the last few years and now has full representation across several key molecules. The extended portfolio of brands includes Levogex (levocetirizine), Ceticit (cetirizine) and Adco- Desloratidine (desloratidine). Allergy The heartburn and indigestion category is very relevant to Adcock Ingram with high efficacy brands such Citro-Soda and Adco Mayogel trusted by healthcare practitioners and consumers, both performing strongly in pharmacy and FMCG. Citro-Soda is supported by extensive above-the-line campaigns, digital promotions and in- store activations. Heartburn & Indigestion The energy category in both pharmacy and FMCG is under pressure given the discretionary nature of the category. vita-thion as a front shop brand relies on innovation with exciting new upgrades and line extensions that were launched during the year. Energy 29% 37% 10% 15% 2% of total Revenue of total Revenue of total Revenue of total Revenue of total Revenue #1 * #1 * #1 * #1 * #2 * * Pharmacy rank ADCOCK INGRAM  Integrated Report 2018 23