J&J Targets Buys in OTC Segment

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Johnson & Johnson (J&J) India will reduce its dependence on its neargeneric Johnson’s baby care range of products that makes up for half its revenues, and focus more on feminine hygiene, skin-care and over-the-counter (OTC) items.

“India is one of our top three markets in the Asia-Pacific region, the other two being China and Australia,” the reclusive company’s group chairman for its Asia-Pacific division, Grace Castano, told media in an interaction.

J&J is very keen to do whatever it takes to regain lost ground from rivals like Procter & Gamble and Hindustan Unilever, especially in the feminine hygiene and skin-care segments.

The American multinational, which makes products such as Stayfree sanitary napkins, Neutrogena and Clean & Clear skin-care products, and Listerine mouthwashes, is planning to launch high-margin variants of its brands and step up distribution and marketing efforts to win back competition.

“As we start bringing our global portfolio to India, the contribution of the baby range to our overall portfolio would come down over a period of time. We are now looking at bringing in more products from our global portfolio and are in talks with multiple companies for acquisitions in the OTC category,” India MD Swami Raote said.

While Castano said India has emerged as one of the key markets for the company and that it has been witnessing strong double digit growth for the past five years, analysts and industry watchers said J&J has not been as aggressive as some of its rivals.

The company has been in India for half a century and has sales of Rs. 2,700 crore in the calendar year ending December 2011 while the consumer business has revenues of Rs. 1,900-2,000 crore. Its other businesses include pharma and diagnostics.

J&J’s competitior, P&G Hygiene and Healthcare, that sells Whisper brand of sanitary napkins and Vicks, is present in India for two decades, has a turnover of Rs. 1,001 crore (year ending June 2011) with a net profit Rs. 150.88 crore.

Late entrant P&G has hinted that it will raise its game in India, and the company had taken a decision last year to invest Rs. 1,000 crore in manufacturing facilities and distribution network in the next couple of years. Over the past couple of years, P&G had also doubled its network with a direct reach to 1.3 million outlets against 1.6 million outlets of Hindustan Unilever. Raote, however, said that J&J is in the process of ramping up its network, but didn’t give out any numbers. Shirish Pardeshi, executive director and co-head, research, at financial services firm Anand Rathi Securities, said that J&J has a strong brand equity and its brands have aspirational value. But in India, its strategy has been more or less focused on the baby range. For other categories, J&J’s brand distribution has by and large been restricted to pharmacy and drug stores. “Any brand that has to compete with rivals like P&G and HUL, and even regional brands, will need to step up mass distribution and marketing,” he explained. J&J’s consumer business in India is split into five verticals. The baby care segment comprises soaps, shampoo, oil, cream and lotions; women’s health consists of Stayfree and Carefree sanitary napkins and OB Tampons; skin-care products make up Neutrogena cleaners, moisturisers and sun protection creams, while Clean & Clear is specifically aimed at the teens. The over-the-counter unit, which is the largest contributor to J&J’s consumer business globally, has a presence in India through tobacco cessation product Nicorette and low-calorie sweetener Splenda. In the oral and wound care segment, J&J has brands such as Band-Aid, Listerine mouth wash and Savlon anti-spectic liquid and soap. J&J has also rolled out a high-margin variant of Stayfree to take on P&G’s Whisper, which has a dominant network in urban markets. The feminine hygiene market in India is pegged at Rs. 1,500 crore, with urban and rural penetration at 30% and 12%, respectively. J&J’s gameplan in the rural market is to increase penetration of Stayfree for which it has tied up with Unicef to increase awareness of feminine hygiene among the uneducated and poor. Though J&J had the first-mover advantage in this category with Carefree and Stayfree brands, it has been facing fierce competition from P&G’s Whisper, in distribution and marketing.

In the baby care segment, Johnson & Johnson has rolled out high-margin variants of baby products including wipes, shampoo and the bedtime range for kids at 15-20% premium over its existing range. In the beauty segment, Neutrogena is already priced at a premium over its rivals such as P&G’s Olay and HUL’s Lakme, while face cleansing brand Clean & Clear competes in the same space as Garnier.

One day when I asked my son why was he doing bad in school, he said that ‘Mom, you are never there.’ This made me rethink about my job as I felt I was neglecting my child. So, I left J&J after working for 10 years… I rejoined after 18 months. I think issues facing women are same everywhere

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