GlaxoSmithkline to launch new products
By Pradeep Rane | 12 Mar 2002
Mumbai: GlaxoSmithkline India, which recently completed the integration of its operations following the global merger of their parents, has decided to tread discreetly in launching new products in the domestic market, as the company is looking at rationalisation of its products basket.
“Rationalisation and and new launches are going on simultaneously,“ a senior company official said. “We will rather concentrate on a few products and make them big than launch five more and find that we are not putting money in any of them.“
GlaxoSmithkline, which is the largest pharmaceutical company in the country, feels that the trick is to get a few and make them blockbusters and generate profit out of them. “We are not in the game of introducing the maximum number of new products,“ the official said.
In India a new product does not necessarily mean higher profits - some of the older products may give you more margins than newer products, he said. “New products are needed to propel sales growth, be competitive in the marketplace and retain the market leadership; but new products often give profits because of the price control on older products.“ The company is trying to cut a balance in its product portfolio in order to maximise the margin growth.
Last year, the company had a look at its product portfolio to achieve a shift of emphasis from the topline to bottomline. “We need to put an effort behind the right brands and the right products, with the right margins, and look at ways to optimise the product mix,“ the official said. Following this exercise, the company decided to discontinue, or not to promote, 65 to 70 SKUs.
Now the products that it is focusing on are growing much faster than the market - a fact that is evident from the brands like Zinetac, Seretide and Acuhaler; they are treated as strategic brands, which are important for the future growth of the company.
The company is also keeping the purchasing power of Indians while pricing its products. “For Glaxo, the mindset has always been to have Indian pricing. SmithKline Beecham was more rigid. In GSK it will be more like Glaxo, where pricing will be justified on a local market basis as long as it does not have telling implications in other parts of the world.“
“As a global corporation, we are aware that in India we cannot charge global prices. The corporation is quite prepared to look at primary and differential pricing. Different pricing has been in the past, presently is and will be in the future,“ he said. The company is aware that Indians are ready to go for something that is cheaper and available in the Indian branded generic market.
“We will have to recoup a little bit of intellectual property in products, whereas Indian companies don't have any intellectual property. So we will always be at a premium. But for some products in the branded generics market, if you charge too much of a premium, nobody will buy,“ the official said.
The company has successfully completed the domestic integration of Glaxo and Smithkline following the global merger of the two pharma majors. The global merger of Glaxo and SmithKline Beecham began in August 2000, and the formal merger of GlaxoSmithkline India took place on 27 December 2001.
The company is using the merger as a great opportunity to revitalise the company. “We used the merger as a trigger for the next phase of the transformation of what is India's largest pharmaceutical company in the domestic market,“ he said.
The merger brought about a re-examination of the business models of the two companies. The key objectives of the merger were to retain the market leadership and the growth of profits faster than the sales.
