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Why do you have a
Consumer Healthcare business?
Summary
Our Consumer Healthcare business is a key part of GSK. It is a profitable, logical complement to our Pharmaceutical operation with a powerful portfolio and a healthy pipeline.
- Outstanding performance in 2007, with double-digit sales growth.
- Excellent prospects, particularly in developing economies.
- Opportunity to share expertise and resources across the two businesses.
- Steady, long-term growth helps balance the Pharmaceutical business.
A healthy performance
Consumer Healthcare is an important business to us. Not only does it provide an excellent balance with our Pharmaceuticals operation, it is also a thriving business in its own right which is delivering a strong performance for shareholders.
Consumer Healthcare has shown significant acceleration in top line performance, with sales growth up 14 per cent in 2007. It has a powerful portfolio that includes Lucozade, Sensodyne, Panadol, Horlicks and Aquafresh, a brand which has benefited from investment and the launch of new brand extensions. 2007 also saw the successful US launch of alli, the first over-the-counter (OTC) weight loss aid approved by the Food and Drug Administration (FDA), which is currently being reviewed by European regulatory authorities. Through our Consumer Healthcare business, and its expertise in sales and marketing, we are well placed to be the partner of choice for 'switch' products, bringing them from the prescription to the OTC market.
Top five Consumer Healthcare products by turnover 2007
| Products | Turnover 2007 £m |
|---|---|
| Lucozade | 347 |
| Aquafresh | 308 |
| Sensodyne | 293 |
| Panadol | 262 |
| Horlicks | 174 |
Capitalising on long-term potential
Global healthcare markets are in a state of change. For example, there is an increasing trend for governments to cut state healthcare costs by influencing a switch from prescription to generic or OTC products.
Looking ahead, healthcare is becoming more consumer-centred. People expect to be able to access medical knowledge and to influence their own treatments. For many, OTC products are their first destination for everyday healthcare.
We expect that the highest rates of growth for all healthcare businesses will be driven by the developing, emerging economies. OTC is the foundation of healthcare in these countries. In China, for example, OTC accounts for 36 per cent of drug expenditure, compared to eight per cent in North America and 10 per cent in Western Europe.
Sharing strengths
The Consumer Healthcare and Pharmaceuticals businesses are not stand alone entities, but are complementary and synergistic in a number of important areas. They are both backed by science-endorsed strategies and a focus on R&D.
There is a growing trend worldwide for patients to manage their own healthcare, choosing OTC products, rather than relying on a prescription - a behaviour in which our Consumer Healthcare professionals are richly experienced. We are able to draw on these skills and knowledge in our Pharmaceutical business and share costs and resources. We also share expertise and resources in other areas, such as regulatory matters, R&D, marketing, distribution and procurement.
Getting the balance right
The Pharmaceuticals business operates in a tough climate. Increased legislation, cautious regulatory regimes and pricing pressures are among the key challenges that face any pharmaceutical company. At the same time, the patent framework for pharmaceutical products tends to result in a relatively short life cycle for even the most successful treatments.
In contrast, our Consumer Healthcare business offers long-term, steady cash flow. A broad portfolio of pharmaceutical and OTC products can help mitigate the impact of losses to generics and help smooth the more volatile nature of the pharmaceutical markets.
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A personal perspective from
"One reason we in Consumer Healthcare are so passionate about working for GSK is our belief in our global mission to help people do more, feel better and live longer.
We're proud to work for a company that's already helped 6.5 million people around the world stop smoking through therapeutic nicotine products - and averted more than one million premature deaths.
The prospect of helping millions of people around the world lose weight through the alli programme is really exciting. With this programme we are starting to tackle the growing obesity epidemic which has the potential to cause hundreds of thousands of cases of Type 2 diabetes and other serious health problems associated with being overweight.
There's also a huge amount of enjoyment in innovating GSK's Consumer Healthcare products. It's very energising to see products that my team developed on the shelves of supermarkets and pharmacies, and advertised on TV, backed by some great claims that are supported by excellent research.
Everywhere you look in the Consumer Healthcare business there's pride at seeing a great business flourish and move forward with industry leading sales growth - and a fantastic pipeline to follow too."