Sector News

Reckitt CEO, nearing spinoff, thinks he can outdo Big Pharma in consumer health

December 5, 2014
Life sciences
As shareholders gear up to vote on Reckitt Benckiser’s plan to spin off its ailing pharma division, company execs are gearing up to double down on consumer health. And though a handful of pharma heavyweights are targeting the field with renewed focus, the British OTC giant believes it has the edge.
 
Earlier this year, CEO Rakesh Kapoor said the company would be creating a “new force” in consumer health, allocating “significant resources” to the division in the form of capabilities, R&D, brand equity investment and innovation, the Financial Times notes. And in his view, that should help it surpass Big Pharma, whose focus he says lies on “big, bold advances” in medicine rather than brand tweaks that aid consumers.
 
“Innovation in consumer health means considering mums, not molecules,” he has said, as quoted by the FT.
 
Take heartburn and acid reflux med Gaviscon, UBS analyst Eva Quiroga points out. Once in a big bottle, the company began producing it in a small package users could slip into their purses and take on the go–an “important consumer-enhancing innovation.”
 
“For RB, the consumer is at the core, which has framed the way they look at OTC,” she said, as quoted by the Times. Bernstein’s Andrew Wood says the company’s consumer focus is what’s helped its OTC business grow at almost twice the rate of the market for the past 6 to 8 years, the newspaper notes.
 
But Emma Walmsley, a former L’Oréal exec set to helm GlaxoSmithKline and Novartis’ consumer health JV once their deal closes next year, sees things differently. There are “significant competitive advantages to having a pharmaceutical and consumer healthcare business as part of one group … where consumers regularly use and trust our pharmaceutical products, research shows this translates into loyalty toward our consumer healthcare brands,” she told the FT.
 
And Reckitt will have plenty of that pharma competition as a new-look consumer health field takes shape. The Glaxo/Novartis deal will put those companies into the worldwide leader spot, followed by a newly beefed-up Bayer that snapped up Merck’s consumer unit this year after Reckitt dropped out of a two-horse race. Johnson & Johnson, Sanofi and Pfizer all lead RB in the global market share department, too, the Times reports.
 
But whatever market battles lie ahead, analysts largely agree the divestment of the company’s pharma unit–centered on declining opioid addiction treatment Suboxone–is a good thing. With generics eating away at the treatment’s sales, pharma results have been “very volatile,” Raymond James analyst Hermine de Bentzmann told the paper.
 
“It’s always very positive to see a company focusing on its core business,” he said.
 
By Carly Helfand
 

Related News

April 10, 2021

Genentech aims high with new diversity goals, including doubling hires and spending $1B with diverse suppliers

Life sciences

Quita Highsmith, Genentech’s chief diversity officer, is helping the pharma double down on diversity and inclusion goals with a new 2025 plan. 

April 10, 2021

Merck CEO Frazier joins army of Black execs speaking out on restrictive voting-rights laws

Life sciences

Merck CEO Kenneth Frazier teamed up with former American Express executive Kenneth Chenault to protest a voting-rights law passed recently in Georgia.

April 10, 2021

Zimmer Biomet bundles robotic surgery, apps and digital health programs into one orthopedics package

Life sciences

By bringing together big data and robotic procedures, the ultimate goal of the connected suite is to take some of the guesswork out of orthopedic medicine. 

Send this to a friend