‘Hor­licks Alone Won’t Give GSK Fast Growth Here’

Co shifts fo­cus to Sen­so­dyne tooth­paste and OTC drugs such as Crocin, though Hor­licks re­mains a core brand in In­dia

The Economic Times - - Business Of Brands - Ratna.Bhushan@ times­group.com

New Delhi: GSK Con­sumer Health­care, the world’s lead­ing over-the-counter (OTC) health­care and wellness prod­ucts maker, is shift­ing its pri­or­ity fo­cus in In­dia to power brands Sen­so­dyne tooth­paste and OTC drugs Crocin, Otrivin and Voltaren. This marks a shift, for the first time in over three decades, away from its main­stay Hor­licks in the coun­try.

“We will in­vest in OTC brands dis­pro­por­tion­ately. Hor­licks doesn’t have the power to be glob­alised though it re­mains a core brand for In­dia. But if In­dia has to grow faster, we will have to dial our wellness (OTC) port­fo­lio,” Zubair Ahmed, head of GSK Con­sumer Health­care for Asia-Pa­cific, Mid­dle East and Africa, told ET in an exclusive tele­con in­ter­view from Sin­ga­pore, where he is now based.

Ahmed said the Bri­tish firm ap­plied ‘fil­ters’ to se­lect power brands which could be glob­alised. “So far, Hor­licks is very much an In­dia brand and in some pock­ets like Pak­istan, Mid­dle East, Malaysia. Be­yond that, we have not been able to glob­ali- se it. At a coun­try level, of course, we will re­tain fo­cus on Hor­licks – on in­no­va­tion and ad­ver­tis­ing. But the global fo­cus will be on the power brands.”

In In­dia, the power brands will be Sen­so­dyne, Panadol (called Crocin in In­dia), nasal de­con­ges­tant Otrivin and Voltaren pain re­liev­ing gels and rubs.

The .₹ 4,000-crore Hor­licks which com­petes head-on with Mon­delez’s Bourn­vita and Heinz’s Com­plan, leads the milk food drink cat­e­gory with near 70% share but head­room for growth is rel­a­tively less.

“Even if you look at the cat­e­gory dy­nam­ics, it is not high dou­ble dig­its; it is slow­ing down for good rea­son and there are more nu­tri­tion choices like break­fast ce­re­als and so on,” Ahmed said.

The firm will bank on wellness and nu­tri­tion to get into mid- to high dou­ble-digit growth in In­dia.

Ahmed, who over­sees the Asia-Pa­cific re­gion in­clud­ing In­dia, China, Ja­pan, Aus­tralia, New Zealand, Tur­key and Africa, said China re­mains his big­gest mar­ket fol­lowed closely by In­dia. “In terms of sheer po­ten­tial, China is the big­gest mar­ket. China would be roughly four times the size of the In­dia wellness busi­ness, and growth is fu­elled by in­come lev­els and its large pop­u­la­tion.”

Key pri­or­ity mar­kets for GSK in­clude China, In­dia, Ja­pan, Aus­tralia, South Africa and Tur­key, as the firm be­lieves it should in­vest heav­ily in these mar­kets be­cause the po­ten­tial of prof­itable growth is the big­gest.

The £23.9-bil­lion GSK plc is look­ing at learn­ings from mar­kets like China and South Korea to lever­age the ecom­merce space, and di­ver­sify to cat­e­gories such as the al­lergy space, ex­tend the Crocin eq­uity be­yond fever, pain, smok­ing ces­sa­tion prod­ucts and oral care.

“In spite of our best ef­forts, the wellness busi­ness is still un­der­lever­aged and is heav­ily de­pen­dent on nu­tri­tion (Hor­licks). In oral health care, our share here is in low sin­gle digit of the to­tal tooth­paste mar­ket. In Tur­key, Sen­so­dyne is the lead­ing brand in the full tooth­paste cat­e­gory – it’s in the 30s. We’re to­tally un­der­lever­aged in these cat­e­gories in In­dia and we will def­i­nitely play in these spa­ces,” he said. Ahmed said that op­ti­mism about GDP, salary in­creases, con­sumer con­fi­dence in­dices isn’t yet trans­lat­ing into con­sump­tion. “We don’t see that con­nect so far and most cat­e­gories are ei­ther flat or in slow sin­gle dig­its. Per­haps by quar­ter two-end, we could see an up­ward swing on con­sump­tion.”

GSK, which is in the process of set­ting up its Asia head­quar­ters in Sin­ga­pore for the en­tire con­sumer and pharma busi­ness, is fac­ing im­mense share­holder pres­sure to split up into four sep­a­rate com­pa­nies into phar­ma­ceu­ti­cals, con­sumer health, vac­cines and HIV medicines. Ahmed, who led GSK Con­sumer In­dia for seven years be­fore mov­ing out early last year, said: “It (the split) is very spec­u­la­tive; it’s def­i­nitely not part of plans and strat­egy that have been dis­cussed. We’ve just formed the new JV (with No­var­tis) and our strate­gies are fo­cused on sales, profitabil­ity and driv­ing share­holder value re­turn.”

Post the merger with No­var­tis, the con­sumer health­care busi­ness is set to ac­count for about 25% of the busi­ness and about £6 bil­lion plus in rev­enues. Ahmed said the in­te­gra­tion with No­var­tis around peo­ple, cul­ture and brands has been tai­lored to in­clude peo­ple and per­for­mance. Glob­ally, post the GSK No­var­tis merger, GSK plc has over­taken Reckitt Benckiser and John­son & John­son in the OTC space, in terms of size and topline.

ZUBAIR AHMED Head, Asia-Pac, ME & Africa, GSK In spite of our best ef­forts, the wellness busi­ness is still un­der­lever­aged and is heav­ily de­pen­dent on nu­tri­tion. In oral health care, our share here is in low sin­gle digit of the to­tal tooth­paste mar­ket

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