GNC enters China through joint venture with Hayao
GNC on Tuesday announced an agreement regarding a China joint venture agreement with Harbin Pharmaceutical Group (Hayao), a leading pharmaceutical company. Under the terms of the agreement Hayao will invest approximately $300 million in GNC, becoming the single largest shareholder in GNC.
In addition, GNC and Hayao have agreed to form a joint venture for the manufacturing, marketing, sale and distribution of GNC-branded products to the Chinese marketplace.
“Today’s announcements represent important and exciting steps in our efforts to optimize our capital structure and build on our recent momentum as we position GNC to drive growth, improve financial performance and enhance long-term shareholder value,” Ken Martindale, GNC CEO, said. “Hayao’s investment in GNC is a testament to the strength of our brand and the tremendous global opportunity ahead, including in China. By partnering with Hayao and pursuing plans to amend and extend our term loan facility, we enhance our capital structure and financial flexibility and establish a strong platform for growth in the Chinese market.”
The Chinese market is the largest international market for supplements and GNC is one of the most recognized brands by consumers in the market. As a leading player in China, Hayao provides established networks and relationships in the market which will support GNC’s efforts to expand in China, including the ability to accelerate product introduction by leveraging existing “Blue Hat” registrations required for sales in China. Hayao will provide GNC with access to a leading pharmaceutical distribution network in China as well as expertise in operational and manufacturing which will serve as critical resources as GNC works to expand its reach in China.
“As a recognized leader in China, Hayao is an ideal partner as we look to leverage the strength of the GNC brand and capitalize on the demand for nutritional supplements in China. Hayao’s strong distribution network and regulatory, operational and manufacturing expertise will enhance our ability to expand our local product assortment. We are confident this partnership will provide us with the expertise to navigate the competitive Chinese landscape and rapidly expand our brand in China.”
“GNC is one of the most recognized health & wellness brands globally. We are excited about the opportunity to partner with Ken and his leadership team to drive long-term value creation in all markets in which Hayao and GNC operate,” Zhang Zhenping, Hayao chairman, said. “In China we are confident that we can leverage Hayao’s leadership to accelerate the Company’s growth and expansion and deliver GNC products and solutions to millions.”
The transaction is expected to close in the second half of 2018, subject to regulatory approvals in the United States and China, GNC shareholder approval, successful completion of the amendment and extension of the company’s term loan facility due March 2019, entry into definitive agreements regarding the joint venture and other customary closing conditions. Following the closing, Hayao will own approximately 40% of GNC on an as converted basis.
In connection with the investment, the GNC board will be expanded to 11 members including five members from GNC, five members from Hayao and the company’s CEO Martindale.
Cardinal Health’s medical segment helps drive Q2 earnings growth
Cardinal Health grew its revenue by 6% in its second quarter of fiscal year 2018. The Dublin, Ohio-based company’s earnings per share increased 226% to $3.33 following a quarter of growth in its medical business and a pharmaceutical distribution segment that exceeded expectations.
“Overall, we are very pleased with the quarter,” CEO Mike Kaufmann said. “Our pharmaceutical distribution business performed better than expected, and we continue to see strong growth in Specialty Solutions. In the medical segment, the integration of the patient recovery business is progressing as planned, and we are excited by the opportunities in that business. In addition, we remain encouraged by how well our value proposition is resonating with customers.”
Total revenue for the quarter was $35.2 billion, with the company posting $1.1 billion in net earnings — a year-over-year increase of 225%. Pharmaceutical segment revenue was $31.1 billion, which despite being 5% greater than revenue in the same quarter last year, was accompanied by a 4% drop in profit for the segment. Cardinal Health attributed the segment’s profit decrease to its investment in its Pharmaceutical IT platform and the company’s generics program performance. The company’s specialty solution business offset these factors, it said.
The Cardinal Health medical segment brought in $4 billion in revenue — a 19% year-over-year increase — and was accompanied by a $220 million segment profit — a 38% increase. The company said that the revenue increase in its medical segment was driven largely by the acquisition of the Patient Recovery business.
DSN Retail Excellence Awards — Private label
It’s no secret that while sales of national brands are barely growing, private label continues to impress. Innovation is a key factor behind the growth and the reason why more retailers are continuing to view private label as a strategic tool that can help them drive traffic to their stores.
Experts agree that the overarching factor that makes the best private-label programs stand out is a commitment to excellence. Savvy retailers have found that in this rapidly changing retail environment, relying less on a price-value platform and more on using innovative, specialized offerings to stand apart can create a destination for unique product solutions shoppers can’t find anywhere else.
Take CVS Pharmacy, for example. The chain is leveraging its reputation in health to position itself as a proactive leader in preventive care. Whether in beauty, health or food, CVS Pharmacy is making the ingredients that are absent or present in its store brands the point of difference.
The term innovation means many things to many people, but at its core, a company that is an innovator is one that revolutionizes and transforms an industry. Put another way, innovative companies deftly and quickly satisfy the needs and expectations of its customers.
How does one distinguish between the truly innovative and the myriad of me-too companies out there? To do our part, Drug Store News has created the Retail Excellence (REX) Awards to better help retailers recognize the suppliers that can help them make a difference.
Here’s a look at our 2018 REX Award—Private Label recipients:
When it comes to creating a new product, arguably two of the most important factors that affect whether it succeeds in the marketplace are the right fragrances and flavors. Marietta, Ga.-based Arylessence understands this. With a mission to help companies grow their brands and business, Arylessence uses a combination of creativity, science and technology to create winning fragrances and distinctive flavors that move brands closer to consumers.
Arylessence executives said the company accomplishes this using four key approaches: by bringing strategy to fragrance and flavor; identifying consumer trends and buying behaviors; developing brand-based marketing ideas and working in partnership with clients. Within this distinct approach, Arylessence develops a comprehensive analysis of a brand’s competitive landscape to explore opportunities for new fragrance and flavor concepts. These insights, company officials said, strengthen brands by identifying the scents and tastes that connect better to shoppers and dramatically improve the retailer’s power to compete.
The company believes strongly that by avoiding guesswork, retailers can make sure that fragrances and flavors contribute strategically to their success. “Our entire approach is focused on creating fragrances and flavors that make your brands more competitive, more attractive to consumers and more successful in the marketplace,” said Gary Sycz, vice president of sales and business development. “Our clients depend on us to provide the leverage that improves brand performance to generate market share and sales growth.”
“First to achieve” is a moniker that aptly describes Chase Products. Established in 1927, the Broadview, Ill.-based company was the first to manufacturer spray paint, the first to develop hair spray, the first to package natural starch in aerosol form and the first to formulate and manufacture an antiperspirant deodorant in an aerosol can.
Today, the company offers a wide range of branded and private-label aerosol products designed for industrial, as well as home use, including cleaning, craft and paint-based products — all of which are made in the United States. Company leadership said Chase has grown its private-label program over time through a focus on three pillars for success: experience, integrity and quality. In addition, the company’s program has thrived in part because it offers national brand equivalents and bases its minimums and lead times on the specific needs of each retailer. Products are created using either a retailer’s formula, an existing Chase formula or a custom product developed by Chase’s in-house R&D team, Chase said.
A key part of the company’s success is creating consumer-driven products, which officials say is evidenced by the recent introduction of Home Value, Chase’s line of household and personal care products. The line provides a range of attractively priced products tailored for retailers looking for unique opportunities.
Chase also created a line of cleaners to appeal to the environmentally conscious consumer. Champion Sprayon Green World N products are the first full line of Safer Choice-labeled green cleaners and polishes offering a continuous spray system. These products have earned the Environmental Protection Agency’s Safer Choice label, which identifies products the agency deems safer for people and the planet.
“These green products use natural nitrogen propellant, and the Safer Choice label means that every ingredient in the product has been reviewed by EPA scientists,” said Judy Albazi, president and CEO. “What’s more, the coil-to-can containers are made with a minimum of 25% recycled steel, and are 100% recyclable in communities that accept aerosol cans for recycling.”
Edgewell Personal Care
For Shelton, Conn.-based Edgewell Personal Care, its goal is to lead the industry through focus, insightful innovation and agility. Company executives said that its efforts to deliver better solutions to retailers and consumers is one of the reasons the company is frequently recognized as a leader in the industry.
The company’s private brands group is the world’s oldest and largest producer of private-label razors. With more than 135 years of wet-shaving legacy, Edgewell officials said it works closely with its customers to provide a consumer-focused and category-driven perspective on private brands.
Given the importance of helping its retail partners offer meaningful value to their shoppers, Edgewell’s National Brand Equivalent strategy continues to resonate in the increasingly crowded shaving category. The company is currently the No.1 supplier of private-label shaving products in the United States. Company officials said that Edgewell’s customization capabilities give it the flexibility to meet diverse customer needs through differentiation.
“Consumers, eager to find new ways to stretch their budgets, place great trust in their favorite store brands — and we take that responsibility very seriously,” said Tom Parker, senior business development manager at Edgewell’s private brands group. “Through 2018 and beyond, we’ll continue to focus our efforts toward innovation and delivering unsurpassed value, and plan to expand and innovate our portfolio with a focus on quality, performance, and, of course, consumer value.”
For more than 30 years, Garcoa has been supplying companies personal care products, including hair care, skin care, OTC topical analgesics, hand and foot care, baby care, powders, hand sanitizers, oils and household products.
The company’s four key tenets for success, according to officials, include focusing on offering exceptional quality, performance, design and value. In addition, officials from the Calabasas, Calif.-based company said it strives to maintain a superior level of integrity in its products and actions, with both is business partners
Its ability to provide turnkey programs that include concept, formulation, package development and procurement has made it a standout in its field, officials said. According to Garcoa executive vice president Richie Rubin, the company defines innovation as something new or different that can deliver value and enhance or simplify life.
“We spend a fair amount of time interpreting consumer trends, understanding the white space on the shelf, and examining what is selling and why,” Rubin said. “Once we have a grasp on what consumers want, we can quickly respond to their needs with products that address what they are looking for.”
For more than two generations, Grandall Distributing’s focus has been on servicing Latinx health and beauty needs. The family-owned business, which is based in Glendale, Calif., has a range of products, including cough-cold, OTC analgesics, creams, lotions, pain relief ointment, dietary supplements, oils, soaps, hair care products, eye care products, foot care products, deodorants, digestive products, first aid and personal care products, as well as herbal and diet products.
In addition to its market focus, the company is best for providing quality products, excellent customer service, competitive prices and staying on top with the latest technology.
If LNK International could only be known for one thing, officials said it would be its commitment to quality. Just ask Doug Bausch, vice president of sales and marketing at the Hauppauge, N.Y.-based company. Bausch said that given the company’s emphasis on manufacturing private label over-the-counter pharmaceuticals — specifically solid-dose and liquid-dose analgesics, cough-cold, allergy, sinus and gastrointestinal products — producing anything but the highest quality product possible isn’t an option.
LNK is able to control quality and keep costs low by being involved in every step of the production process, from the acquisition of raw materials through the manufacturing, packaging and distribution of the finished products, according to Bausch. In all, LNK offers more than 150 pharmaceutical formulas, nearly all of which are produced in its facilities.
As many companies work to chase the next big thing, Bausch said LNK has made a conscious decision to focus on its core competencies. This means not spending time chasing the next fad and controlling every detail of its operation from beginning to end.
The payoff from this strategy has helped make LNK the largest privately held OTC pharmaceutical product company in the United States. And being a privately-held company means it has the ability to quickly get business done.
“Yes, we do all these things with excellence,” Bausch said. “But at the end of the day our products not only need to work for consumers, they need to stand apart on our customers’ shelves via our packaging, so that consumers take notice.”
Since 1986, Brooklyn-based ProFoot has been one of the leaders in the foot care business, creating products that address a range of foot concerns. While the company still derives the majority of its business from its own ProFoot brands, it has developed a strong presence in private label.
“We bring a background to the private brand side that our customers find highly valuable — the knowledge of how to create, support and grow brands by offering consumers both quality and innovation,” president Dan Feldman said. “Whether that brand is one of our own — Profoot, ProClearz or ProCure — or a private-label or control brand, we use the same experience and creativity to grow the business.”
The company offers insoles and inserts, as well as solutions for ball-of-foot and heel concerns. “Over the years, we’ve developed many of the top pain relief items in the corn, callus, bunion set,” Feldman said. “Consumers who shop this area of the store are looking for innovative new products to add to their foot-pain toolkit, and it’s our job to offer solutions.”
PuraCap Pharmaceutical produces quality, affordable pharmaceutical and health care products, alongside a team that company officials said works to meet market needs through innovation.
Piscataway, N.J-based PuraCap and its business unit companies deliver over-the-counter and prescription softgels, branded prescription products and more than 100 generic prescription products to leading retail, wholesale and specialty pharmacy outlets nationwide.
The company’s roster of OTC products include ibuprofen, acetaminophen, naproxen and such national brand equivalent healthcare solutions as stool softeners, sleep aids and products for gas relief, allergy relief, pain relief and upper respiratory relief.
Leveraging its expertise in product development, company officials said PuraCap draws on cost-efficient models to establish new product lines, utilizing global distribution networks and ensuring its products are made in world-class manufacturing facilities.
“We continually explore ways to build expertise and expand offerings through organic growth, and by seeking in-licensing opportunities, partnerships, acquisitions and other professional alliances,” Mark Bolling, president of PuraCap’s consumer and Generic Rx division, said. “PuraCap Pharmaceutical is growing rapidly as we expand each of our business units,” Bolling said. The company’s new product plans include launching new OTC, generic prescriptions and branded prescriptions products.
In response to consumer demand for innovative, unique packaging and formulas, the company has developed several OTC first-to-market softgels, including Severe Cold & Flu Day–Night and simethicone 250 mg. Additionally, in the first half of 2018, officials said PuraCap will launch innovative portable packaging in the OTC and generic prescription segments.
Trividia Health is a global medical device company with a simple, yet important mission: to help people with diabetes maintain a healthy lifestyle. Trividia officials believe that living well with diabetes means caring for the body holistically. “People living with chronic health conditions are affected as a whole, and we are committed to helping them live healthier lives,” said Neal Bhattacharya, product marketing director at the Fort Lauderdale, Fla.-based company.
Trividia accomplishes this by designing, developing and manufacturing diabetes management solutions in its U.S.-based manufacturing facilities, officials said. From blood glucose meters and test strips to sharps and nutrition, each of its TRUE solutions complement the next, forming one powerful, interconnected system to help people with diabetes keep their bodies in balance.
“For over 30 years, we have maintained our focus on delivering high-quality products comparable to market leaders at a sub-
stantially lower price than our competitors,” Bhattacharya said. “This savings is passed on to patients and healthcare providers through our partnerships with retailers, distributors and managed care organizations.”
As a result of its foundation in quality and commitment to excellence, Trividia has become the trusted supplier of diabetes products to the nation’s premier retail drug stores, including Walgreens,
CVS Pharmacy and Rite Aid, as well as many regional and independent pharmacies and mail service providers. Its reach doesn’t stop there, as it has global distribution in more than 92 countries and is still growing.
“Looking ahead, we are excited to expand our innovative and cost-effective diabetes management solutions to fit the ever-changing diabetic patients’ lifestyle,” Bhattacharya said.
21st Century HealthCare
Headquartered in Tempe, Ariz., 21st Century HealthCare is one of the largest manufacturers of dietary supplements in the United States. With more than 1,000 branded and private-label health formulas to choose from, the 26-year-old company’s product range includes vitamins, minerals, herbal extracts and protein powders, as well as herbal teas and pet-wellness products.
Whether referring to its branded or private-label offerings, Kyle Wiederspan, vice president of sales, said what enables the company to stand apart from others offering similar products is its dedication to providing high-quality products with the finest ingredients available. Speaking specifically about its private-label strategy, Wiederspan describes the company’s program as one that offers the retailer or distributor a wide range of premium products at a great value to the consumer with unsurpassed customer service.
“As part of our services, we use industry data and planogram software in order to develop an up-to-date, successful vitamin program for our private-label customers,” he said.
As a vertically integrated company, 21st Century HealthCare controls every facet of product production at its facility in Tempe. This also means its speed to market in developing and delivering the newest product innovations is unrivaled.
“In an industry where many companies are taking their business overseas, our retail partners appreciate that we are in charge of every step of the manufacturing process, from the sourcing of all our raw materials to maintaining complete control of the quality of our finished product,” Wiederspan said.
United Exchange Corp.
United Exchange, or UEC, is best known for delivering quality private-label, personal care, beauty, pet consumer goods, and control and licensed health products to retailers worldwide. The minority-owned, privately held company, based in Cypress, Calif., utilizes state-of-the-art U.S.-based and international contract manufacturing facilities to quickly bring innovation and technology to its customers.
According to CEO Eugene Choi, the company’s competitive advantages include its expertise in national brand quality products, competitive private-label cost structure, exceptional customer service that allows them to meet the retailers’ needs in a timely manner, speed to market on new products and its partnership with fully-equipped manufacturers that are capable of supporting low- to high-volume production needs.
“For UEC, innovation in our private-label business means finding value and quality in our new product launches, which include leveraging licensed brands opportunities with our retailers,”