Cyclical or Structural? Investors Watching as ‘Critical’ Cold & Flu Season Approaches

After two soft seasons, analysts and investors are watching the approaching cough and cold cycle closely. Jefferies' David Hayes told a recent HBW Insight webinar that the coming winter will test whether the slowdown is cyclical, or something more structural.

Two weak cough and cold seasons back-to-back have hit consumer health manufacturers hard. “The question is whether this is a structural slowdown,” observed David Hayes, equity research director at Jefferies. “If we see another weak season this year, the companies themselves will confess that they can't keep saying it's just a short-term phenomenon. This is something that's going to be an ongoing drag to performance in the mid-term.”

Speaking during HBW Insight’s webinar – Beyond Cough & Cold: OTC in the Age of Prevention – Hayes described 2026 as a “critical year” for consumer health companies when it comes to cough & cold product sales. “There's a lot of focus on this from the market perspective in terms of how we see things play out over the next few months.”

Hayes suggested that the cough and cold season has become a “disproportionate influence on these companies and their share prices.” He offered the examples of Haleon and Reckitt, both of which generate around 12% of annual group sales from cough & cold products. “12% of sales, but if it's swinging around five, ten percentage points growth-wise or contraction-wise, that's approaching a percentage point of growth at a group level.”

The swing between a good and bad season could, Hayes argued, be the difference between shares trading at a premium or a significant discount to their fair value.

For their part, both Haleon and Reckitt believe the upcoming season will be stronger than the past two. “What we're assuming in the back half is we see growth off of this two years of decline,” Haleon CEO Brian McNamara told the firm’s Q2 earnings call. “We still don't expect it to be at the level it was from two years ago.”

Reckitt CEO Kris Licht made a similar prediction on his company’s Q2 call. “We don't expect to recover all the way back, at least we're not planning for a recovery all the way back to a normal pre-COVID average season. We are expecting to do slightly better, to see slightly higher incidences.”

HBW Insight’s managing editor for US consumer health, Malcolm Spicer, echoed Hayes’ point about the importance of the winter illness season for the industry. “Every time an OTC-dominant company is doing their quarterly earnings, multiple questions from the analysts will be, 'What about cough and cold? How is that affecting your results this quarter and going forward?'”

“So you can't escape it,” Spicer noted.

Viewing the issue from the point of view of the manufacturer, CHPA’s president and CEO Scott Melville told the webinar, “It is difficult, I'm sure, for the companies to manage that seasonality, that variability.”

“The last two seasons have been very soft, but it wasn't that long ago that we had a triple-demic of RSV, COVID and flu, and there were shortages of some ingredients here in the US.”

The 2022/23 season saw widespread US shortages of key OTC products including children's acetaminophen and ibuprofen, as manufacturers struggled to keep pace with surging demand.

Despite weaker seasons in more recent years, Melville was emphatic on the future of the OTC cough and cold category. “Cough and cold's not going anywhere. It is a core category. It's a huge part of our market here in the US, but it is indeed very cyclical.”