Forced by unfavourable conditions on the pharmaceutical market, producers, distributors and retailers are in search of alternatives to boost profit margins, and one solution is dermocosmetics.
Within just one month, two major global drug producers, Bayer and Actavis, have launched competing dermocosmetics ranges on the Romanian market. Such products appeal to producers in the pharmaceutical industry as they do not have a set retail price and therefore mark-ups are not capped throughout the entire distribution chain. The Romanian dermocosmetics market was estimated to be worth 20m euros last year.
The growth rate could reach 20% this year, so that the value of this market could be worth 24m euros. In the case of Bayer and Actavis, the ranges are sold just through pharmacies and advice given by pharmacists is a plus both for customers and for producers.
In March, Actavis decided it was time to enter Romania, after the company launched Decubal in 10 countries and by yearend has launches in another six countries planned. Decubal sales hit 20m euros last year group-wide and 2008 sales on the Romanian market are expected to reach 1m euros. The Decubal range includes 18 products, with 17 being also present in Romania.
Bayer's only dermocosmetics range, Dardia, was launched this month. Globally, the dermatology unit of Bayer Schering Pharma posted 224m-euro sales last year.
Cosmetics and dermocosmetics are attractive in terms of mark-ups for pharmacies and distributors. This category generates at least 20% of the turnover of the main networks.
Some retailers even have partnerships with producers in the field to develop their own dermocosmetics ranges. Sensiblu is one example. Others, such as Help Net, have considered buying a player in the field.
In the case of Centrofarm, sales of cosmetics and dermocosmetics are expected to account for 30% in turnover this year. The retailer late last year launched the e-Commerce service that allows online orders for OTC drugs and cosmetics. In 2007, Centrofarm launched together with Banca Transilvania a co-branded credit card expected to be one of the factors to boost sales of these types of products.
According to MEMRB data, sales of non-food products through pharmacies last year accounted for 8.8% in the total, from 8.4% in 2006.
The cosmetics market last year reached 720m euros and is expected to advance by 10% this year.
Pharmaceutical retailers' tendency to bolster sales of cosmetics and parapharmaceuticals became more visible in early 2005 and gained momentum in 2006 and 2007.
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