Our Markets

Growing like a weed

It’s difficult to have a conversation in today’s dietary supplement industry without hemp/ cannabidiol (CBD) coming up. Simply, this nonhigh-inducing, cannabis-derived cousin of marijuana is the biggest news our industry has ever seen. And that’s not hyperbole.

No ingredient in the history of natural foods and dietary supplements has grown so quickly, in so many categories, with so many uses, and sold in so many retail outlets. That’s a curious state of affairs for an ingredient not approved for sale by the US Food and Drug Administration (FDA), even as two other Federal agencies decriminalised it and made it legal to grow.

A global spread

The result is a landscape of big money, big opportunity and big risk. With a market rapidly establishing itself and gaining support from both major US political parties, the botanical is unlikely to go away.

Plus, it is a global landscape. Hemp is legally grown in over 30 countries and production is skyrocketing. Europe and Canada led the industry in industrial hemp production until recently. The US jumped on board quickly after the passage of the Farm Bill at the end of 2018; licensed acreage grew to about 500,000 acres, from as few as 78,000 acres the previous year. China, though growing mostly for textile use, has scaled up rapidly and now produces over half the world’s hemp.

One direction

At Nutrition Business Journal (NBJ) we estimate the total CBD market stood at $895m in 2019. The bulk of this is in the dietary supplements sector, which alone has more than quadrupled from $148m in 2017 to $623m in 2019. We anticipate a further doubling in supplements in 2020, en route to a near-$3bn market in 2023 and more than $4bn in the overall CBD market.

To put this in context, CBD is expected to surpass fish oil, a well-established stronghold, in 2021, and the supplement industry’s largest category, multivitamins, is forecast at $6.4bn.

In 2019, NBJ surveyed manufacturers and consumers at two points in the year, about eight months apart, to get a sense of both present attitudes and how they are changing. This showed a doubling of companies marketing CBD products, and an increasing number intending to launch such a product in the next one to two years. The number of consumers familiar with CBD also grew from 47% to 70%.

A panacea?

CBD is marketed as being good for everything. Consumer surveying shows anxiety, pain, relaxation and insomnia topping its uses. When asked if CBD is effective, only 3% said no, with 63% saying it was very or extremely effective.

Yet while consumers are increasingly familiar with CBD, confusion abounds when it comes to legality and effect. Nearly a third either don’t know if it “makes you high” or believe it does, which we suspect explains both eagerness and reluctance. Nor do they know whether it shows up on a drug test or if you can take it on an airplane. (For the record: in a purely therapeutic product it shouldn’t, and yes you can.)

Embedded in the CBD business are critical issues facing the entire dietary supplement sector – efficacy, safety and transparency – and responsible growth is key, along with sharing knowledge and collaborating around the most reasonable approaches to sourcing, claims and labelling.

Whether the ingredient is indeed good for everything remains to be seen. In the meantime, it’s certainly good business for some.

Bill Giebler, New Hope, Informa Markets

Younger, faster, nimbler

The role of wealth management is simple: to help individuals make the most of their money.

Not so simple is what lies beneath this vast and diversified market: from stocks and bonds to financial planning, total asset and liability management, customised goals-based portfolios, tax-mitigation strategies, family legacy planning and more.

All over the world, the rapid reinvention of wealth management is in the air, fuelled by technology, an operational drive for efficiency and the shifting needs of a new demographic, as the client base changes and wealth transfers into younger generations.

Beyond mutuals

Decades ago, mutual funds changed the face of investing. For the first time, they enabled the regular man and woman on the street to access the markets with the built-in diversification, professional management and safety of a regulated fund.

Today, everything suggests the best days of mutual funds are behind them, and they are haemorrhaging assets in favour of exchange traded funds (ETFs). ETFs now have $5.6tn in assets under management and are particularly popular among 25 to 38 year olds, and the investment of choice for 90% of millennials.

In the early days, ETFs were attractive due to their low cost, but are nowadays becoming increasingly sophisticated too, offering innovative investment solutions for institutional investors, advisers and individuals.

As a result, in the US the balance of power has shifted from traditional investment fund and commission-based brokers towards low cost investment vehicles, advice-centric platforms and the increasingly influential client facing financial adviser.

Independence rules

The narrower discipline of investment advice is being replaced by a massive growth in the fee-based investment advisory channel. In this model, firms offer holistic and independent financial planning at the expense of the commission-based brokerage model and proprietary investment products.

Even at traditional brokerage firms, fee-based, advice-driven revenue from advisers has eclipsed sales of commission products. That won’t change, and it is also creating new opportunities and challenges for other service providers.

Brokerage firms and advisory custodial platforms alike have recently reduced trading fees to zero, which will inevitably have an impact on revenue and spend. On the independent side, Charles Schwab’s acquisition of TD Ameritrade has shrunk the largest independent custodians to a mere three players, which together hold some 80% of US independent advisory assets.

New technology for new answers

In an industry that is highly focused on streamlining and cost reduction, wealth managers are heavily investing in new technology and new solutions for staffing, operations, compliance and intelligence.

With the emergence of a broader range of investment customers, marketing by the wealth ecosystem that connects product firms, advisers and investors is growing.

It is anticipated that the US financial services industry will increase its digital ad spending by 16.3% to $18.3bn in 2020, in part to reach younger audiences through mobile, search and social ads.

The one constant for wealth management firms throughout this period however, will need to be an unwavering focus on the conversations and products that benefit their clients, the investors, no matter who they are, what they choose and how that investment is enabled.

William O'Connor, Finance & Investment, Informa Connect

Brand discovery goes digital

From branded sunglasses, luggage and replica football shirts to action figures, perfume and even festivals and theme parks, licensing is a powerful brand extension tool. lt enables an intellectual property owner to lend their brand to trusted specialist operators and gain fresh markets, fans and revenues.

Licensing can take brands into new categories, stores and indeed entirely new industries with minimal investment. It also gives retailers differentiation, a widening customer base and the opportunity to boost share of wallet and profitability.

In 2018 the global licensing industry was valued at $280bn, a rise of over 3% on the previous year. Its success, however, is hard-wired to its ability to continue to anticipate market trends and social dynamics as it enters the next decade.

Entertainment brands have always been huge players in licensing, and characters and entertainment still account for almost half of global retail sales of licensed product. But there are many examples of brands becoming smarter and more creative with licensing through product placement, brand extensions, collaborations and experiences.

We’ve seen the BBC’s first ever Peaky Blinders festival, Primark’s Friends- and Disney-themed cafés and Netflix’s Stranger Things Secret Cinema experience. We are living in an experience economy: experiences are what people want to buy and pop-ups and experiences tap into a cult level following with true fans  spending money at a high level.

The traditional route for licensed entertainment product used to be film, then TV, then toys, video games, books and so on. But thanks to the internet and social media, content distribution is no longer linear. There are multiple entry points to discovering a brand, from Netflix and Instagram to merchandise, retail and movie releases. That’s exciting for the licensing industry because it provides many more opportunities to engage with consumers.

Licensing is also appealing to both new and disruptive businesses as well as more traditional ones. The internet has given birth to many digital-first brands including Uber, Airbnb, Casper bedding, Glossier – disruptors who are applauded for doing things differently. But just like more traditional consumer-centric offerings, these brands need to be able to forge meaningful connections with their customers and licensing is opening up multiple ways to achieve it.

One new phenomenon of the market is esports: essentially, competitive video gaming. With gamers competing for prize pools of up to $30m watched by a global audience of 450m viewers,  it is one of the world’s fastest growing entertainment genres.

Audiences and live events are getting bigger, more frequent and, critically, televised and streamed. The availability of esports’ consumer products was previously limited to live events or online, but given the size of the audience today esports has huge licensing potential. This is already starting to be realised by companies such as Activision Blizzard and properties including the global phenomenon Fortnite.

At a time when the high street is struggling, the licensing market is benefiting from traditional retailers looking for new ways to drive footfall and profit. Inditex, Uniqlo and Zara are among the global retail brands getting it right, and Target and H&M are successfully using collaborations too. Primark has mastered the art of using licences (Harry Potter, Friends, Disney and Peaky Blinders) to  create engaging in-store experiences.

Environmental impact is, however, as in many sectors, a growing consideration. In licensing, it is an issue driven in part by consumers, especially in the younger demographics, who look to companies to lead by example. Categories such as fast fashion and toys have particularly come under fire for their use of water and the impact of packaging, waste and landfill. The licensing industry has fast-tracked the issue up the agenda, and it’s a responsibility that must be shared by all involved.

Anna Knight, Licensing Group, Informa Markets

Helping the world treat the mind

A growing acceptance that ‘it’s ok not to be ok’, and a better understanding amongst employers and policy-makers has sharply increased the profile of mental health in recent years.

It is now more common for more people to recognise mental health challenges and seek treatment, driving increased demand for clinical support and sustaining the ever-present, practical interest mental health professionals have in accessing emerging ideas and treatments.

Informed understanding, applied

There is a wide range of advanced publishing on mental health, ranging from longer-established disciplines such as psychiatry, clinical psychology, psychoanalysis, psychotherapy and counselling to rising professions such as coaching, sex and family therapy and occupational therapy.

With the increased interest in better understanding mental health, increased authorship and attention are also permeating more traditionally academic subject areas.

In psychology, for example, research shows a strong correlation between physical and mental health, particularly when it comes  to treatment and behaviour change.

In neuropsychology, neuropsychological rehabilitation after brain injury is increasingly focusing on psychological therapies alongside rehabilitation in cognitive and social functioning.

In developmental psychology, one of the biggest growth areas is in ageing research, which is tied up with issues of wellbeing, purpose and the mental health concerns of an ageing population.

Adolescent development is increasingly focused on mental health concerns, particularly with the rise of social media and societal pressures. In the UK, the Government has made children’s mental health a priority, with additional funding and new compulsory health education intended to teach children how to look after their mental wellbeing and recognise when friends are struggling.

We also have a number of titles published and a significant number of upcoming titles that reflect the latest thinking and practice on aspects of race, gender and sexuality across mental health.

International practice

The misconception that various mental health professions and practices are purely Western is changing rapidly.

There has been a sharp growth in the number of mental health professionals in Eastern Europe over the past 10 to 15 years, with a concurrent rise in those attending and presenting to major conferences.

Interest in health issues is also spreading across Asia and in particular in China, Japan and South Korea, initially spearheaded through Western mental health professionals teaching in Asia  and partnering to train the next generation of professionals.

In China, the implementation of the Mental Health Law in 2013 made clinical research and medical services for mental disorders subject to legal definition for the first time, and in 2014, it established a National Clinical Research Center for Mental Disorders, raising mental and psychological development to a national and strategic level.

Advancing knowledge

From a publishing perspective, foreign rights sales, particularly for books in Russian and Polish, are increasing, with demand feeding the ability to commission and publish more research that directly addresses these markets.

The amount of mental health books we offer has grown rapidly, and in our Journals business, three out of our top 10 Open Access articles published in 2019 were related to the topic.

Making the very best quality books available, written by the best people and at the right level, can help drive professions forward and, in mental health, it can help the quality of the treatment on offer to patients to be better informed.

Kate Hawes, Global Mental Health Publishing, Taylor & Francis

From treatment to cure

After a decade of mixed earnings, Pharma companies enter 2020 facing intense pressure from investors for more top line growth. It’s a big ask: to meet even the modest single digit projections sought by investment analysts, the industry’s top players must grow revenues equivalent to those of a mid-size biotech, every year.

Expectations are just as high regarding patients and payers. Advances in understanding the biologic origins of disease reveal almost infinitesimal combinations of genes, molecules and proteins that could lead to druggable cures for the world’s biggest killers. It’s the final frontier of medical discovery, with clinical validation risks and costs that match the potential therapeutic gains for patients.

At the same time, consolidation among payers has enhanced their negotiating leverage with drug manufacturers, resulting in value for money, evidenced by patient outcomes, becoming a performance metric. This reversal of the industry’s once dominant position has depleted that mainstay of traditional drug life-cycle management: regular price increases for older therapies that companies rely on to subsidise new innovations. This emerging feature of the US pricing environment will dog drug makers for years to come.

Innovative capacity is also shifting toward smaller, more agile players, some from outside the industry. For the last three years, Biotech start-ups have led the Pharma big 10 in the number of novel products approved by the FDA. The lesson here seems to be that the benefits of size and scale are outweighed by the bureaucracy and lack of focus associated with large Pharma organisations.

So what will the Biopharma C-suite do to satisfy investor expectations for sustained revenue growth and profitability?

Prioritising the product portfolio

With $170bn of biologic patent expirations estimated to hit the industry by 2023, the race is on to impose more discipline on research and development (R&D). Abundant cash reserves and low borrowing costs will continue to favour mergers and acquisitions, licensing and external partnering to plug pipeline gaps and consolidate therapeutic category leadership. Favoured asset classes in rare disease and oncology are looking increasingly crowded, however, so companies are reconsidering the opportunities in large-population chronic conditions like cardiovascular disease. Therapeutic possibilities linked to the human microbiome also appeal.

Raising operational efficiency

The transition to personalised medicine from a treatment-tocure model of disease requires new innovative investments in manufacturing, safety and patient logistics. Process engineering is part of this. One example is work underway on allogenic off-the-shelf cell therapies that can be produced faster and in large quantities for patients, at lower cost. Meanwhile, a decade of decline in R&D productivity is poised for improvement as advanced data analytics tools like AI are applied to Biopharma’s single biggest cost factor:  the clinical trial.

Culture counts

Big Pharma or Biotech, it’s people and culture that determine how well organisations adapt to today’s disrupted system of healthcare. A realignment of internal behaviours is needed to eliminate silo thinking, particularly in persuading R&D and the commercial business to learn together the new language of value-based payment. Success for a raft of expensive gene therapy launches in the next several years depends on it.

Reputation’s wild card

As producers of what is widely considered a public good, Biopharma’s future rests on its reputation. A poor company image has direct business consequences, from unwanted regulatory scrutiny to a loss of public confidence in the quality and safety of products. Ignored or mishandled, this becomes a corrosive stain on the licence to operate in the industry’s most valuable markets. According to a new global survey by the Wellcome Trust, public confidence in the safety and efficacy of vaccines is now greater in poor countries than in wealthier ones. The lesson for the Biopharma C-suite in 2020? Tune in to the vox populi.

William Looney, US Pharma, Informa Intelligence

Under the skin of beauty

Even in economic slowdowns, some sectors seem to defy gravity. The beauty sector is certainly one: between 2016 and 2022, projections suggest it will generate business worth nearly $430bn globally and deliver annualised growth of over 4%.

Suitably enough in an industry that thrives on trends, the landscape for retail and professional beauty products evolves by the year.

Gen Z: The new faces of beauty

There are now as many Gen Z consumers, born from 1995 onwards, as millennials, and they account for around one-third of the global population.

Gen Z-ers are also digital natives, driven and informed by the relationships they have with social media and consciously living double lives, using a filtered and sometimes fabricated persona online. In a survey of China’s booming Wanghong economy, more than half of Gen Z-ers chose livestreamer as their dream job.

When it comes to beauty, the “we” generation of consumer has quickly evolved into the “me” generation, and is demanding unique rather than mass market brands that cater to them as individuals.

This is creating a revolution in brands and distribution and provoking a search to find ever more creative and innovative concepts, materials, ingredients, laboratories and packaging  to inspire the new generation of consumers.

Innovation through sustainability

For the beauty sector, we see key territories being China, the US, India and Indonesia, where Gen Z-ers will rapidly become the largest spending groups and major brands need to find creative ways to capture them.

One of those ways is through harnessing increased interest in sustainability. Where 10 years ago natural and organic qualities were key drivers, today ethics have joined them centre-stage.

In Asia, where most of the world’s 1.8bn Muslims reside, the greatest potential may lie in halal-approved beauty products: essentially, products free of animal derivatives or alcohol.

Recently the Indonesian Government announced it would introduce mandatory halal labelling of cosmetics and personal care products. Where previously ethical labelling was typically a voluntary action, beauty brands may now have to take a certification route.

China: Beautiful opportunities

China’s reputation as the world’s beauty factory only tells part of the story. It is also the number one target audience for many beauty marketers, and its status is evolving as a major beauty conceptualiser and developer. Local brands have invested in  state-of-the-art development laboratories, hired internationally, and are harnessing new ingredients as they pursue safe, sustainable and, very soon, cruelty-free products.

After the K-Beauty movement in Korea and Japan’s upcoming J-Beauty segment, C-Beauty is also rising fast. It speaks to a young and vast Gen Z population that is proudly Chinese, looking for the very best in locally-generated beauty and fashion and willing to spend on products they deem worthy.

It is a rich prize indeed: the market is worth nearly $60bn, up 23% compared with the prior year, with nearly 50% spent in direct  and speciality stores. Non-traditional channels are also key in  this sector: advanced technology, such as virtual reality and AI,  is creating a new shopping environment and narrowing the gap with traditional physical services at the beauty counter.

Indeed, physical retail is facing challenges due to competition with online sales, which can reach 2m pieces sold per month. Competition between foreign products and local brands is also hotting up as importers select an ever-increasing amount of international products that are unique in the Chinese market.

Claudia Bonfiglioli, China Beauty, Informa Markets