GSK Pharma to pare brands to 20 in India, bring new products into country

British drugmaker GlaxoSmithKline Pharmaceuticals is working on a strategy to reduce the number of brands in India to around 20 from 130, and bring in more patented products from the parent to the country.

This would not only enable the company to simplify its operations, analysts say this is a strategic move by the drugmaker to focus on high-price and high-margin products.

Talking to Business Standard, Annaswamy Vaidheesh, vice-president, South Asia, and managing director for India, GSK Pharma, said: “We have decided to have fewer brands. This not only simplifies our operations but also enables us to put our energy where it matters. Each brand launch takes a lot of time and resources (from legal approvals to marketing push), and we have decided against it.”

The company will launch brand extensions whenever needed and focus on bringing in patented products. GSK has marquee brands such as Calpol, Augmentin, Zinetac, Eltroxin, and Celin. 

The company did not say which brands would be phased out. In the last one year, it has reduced the number of brands from 130 to the current 70.Vaidheesh said the target was to have at most 20 brands (over the next year and a half or so) and focus only on six or seven top brands.

“We are doing a lifecycle management of brands. We plan to bring in more intellectual property products to India, especially in the respiratory and anti-infective space.” 

The strategy is appropriate when one considers the fact that the top 10 brands contribute nearly 52.1 per cent of GSK India’s sales. 

Ranjit Kapadia, analyst with Centrum Broking, said it was a smart strategy. “The move is expected to boost GSK India’s margins and also reduce its marketing costs. Some of GSK’s brands are under price control and they are not growing. The company will focus on bringing in new products (from the parent) that would be out of the price control purview,” he said.

GSK is a leading player in the dermatology portfolio and vaccines in India, and has a strong presence in the anti-infective and 

gastrointestinal segments.  
 

The data from market research firm All Indian Origin Chemists & Distributors (AIOCD) Airborne Warning And Control System shows that GSK’s Rs 8.02 billion dermatology portfolio has clocked an 8.7 per cent compound annual growth rate (CAGR) over the last five years. Similarly, the vaccines portfolio (Rs 6.2 billion) has clocked a 7.9 per cent growth rate.

FINGER ON THE PULSE Top brands of GSK India

Vaidheesh said GSK was now beefing up the dermatology portfolio and planning to bring in new drugs such as its psoriasis drug. In the respiratory segment (where it has seen increased competition from home-grown players), GSK is set to bring in its novel biologic drug Nucala (for treating severe asthma) between January and March 2019.

GSK’s respiratory portfolio faced competition from Cipla and other domestic players in recent years, and it is natural for the company to bring in new products now, said D G Shah, secretary general of the Indian Pharmaceutical Alliance, the lobby group of domestic pharma players. The AIOCD data showed GSK’s respiratory portfolio has seen a negative CAGR of 2.4 per cent in the past five years.

The company is expecting its portfolio would tilt in favour of chronic therapies (medicines that are taken on a regular basis) in coming years. It currently draws 90 per cent of its revenues from the acute segment. Vaidheesh said this would tilt in favour of chronic (around 25 per cent share) in the next five years.

GSK’s margins have been stable at around 20 per cent for some time now. It finished 2017-18 with an operating profit margin (OPM) of 20.01 per cent. The OPM grew steadily from 7.57 per cent in the June 2017 quarter to 23.1 per cent in the March 2018 quarter.