I watch the consumer more than the competition, says GSK Consumer Healthcare President

EMMA WALMSLEY, President of GlaxoSmithKline (GSK) Consumer Healthcare, is leading her company through an exciting deal with Novartis' consumer healthcare business. She will be the CEO of the new joint venture. Excerpts from an interview with Business Today:

A. Every time I visit a country, whether it's India or anywhere else, I visit the front line and the stores with the sales reps to see how the brands are growing, how the retailers are changing and what is going on with consumers. I am proud of the progress the GSK team has made here but I see enormous opportunities ahead not just because of our business, but also because of the way India is changing. In terms of delivery, over the last few years Zubair Ahmed [Managing Director, GSK Consumer Healthcare India] has delivered a top-line growth rate of 16 per cent and bottom-line growth rate of 18 per cent in India. By any standards this is best in class. We have significantly increased investments in the country over the last two years - it's been »50 million of investment, including a fantastic new futuristic office in Gurgaon. We will look at increasing our manufacturing capacity to add to our five manufacturing sites here. We have significantly expanded the access of our products, and distribution has doubled in the last few years. In fact, last year we were the fastest-growing major MNC in terms of distribution.

Q. So what new distribution channels are coming up? Are you looking at e-commerce?

A. Yes, we are looking at e-commerce but it's tiny. I think one point which has been really important for us is driving deep access of our products. We are in 20,000 villages. We have invested heavily in innovation to deliver our products in sachet forms. We have six billion serves of Horlicks a year. We have 1.75 billion sachet forms of a few of our brands. We have put in lots of exciting new IT and handheld tools among our field force to improve efficiency and effectiveness. We have worked hard on our innovation pipeline to create products that are relevant for Indian consumers.

Q. Can you give an example?

A. In brands like Eno we have specific flavours such as nimbu shikanji for India. Learning from typical Indian habits where people would often use cola-flavoured remedies for digestion, we created a cola-flavoured Eno. On Sensodyne, we recognised clearly from an innovation point of view that our formulation needed to be at the right level of  foaming for India, so we adjusted that. We are constantly listening and trying to optimise the pricing structure, the formats and the flavours of products.

Q. Are you merely tweaking the global products for local tastes or is there anything specific to India that you could take out of the country?

A. Many of the Horlicks platforms are absolutely going to export.

Q. Which ones?

A. The global footprint of Horlicks will always be very focused.  We don't want to be in every market in the world so we choose carefully adjacent countries. We are looking out across Asia and Africa and the Middle East.  But yes, absolutely Mother's Horlicks is relevant in the world over.

Q. Has it gone out already?

A. Mother's Horlicks is an example of something that would be under review for exports.

Q. What about the cola Eno?

A. A big luxury for Eno in India is that the volumes are here. Again, it's been great work done on low-unit price packs to drive access here. After his great performance I have promoted Zubair - the reward is he will be responsible for a lot more countries and be accountable for a vast proportion of the world's emerging markets, all of APAC, West Asia and Africa. I am sure there will be many best practices that we have seen delivered in India exported.

Q. How is the deal with Novartis going to impact your growth?

A. First of all, the deal is not closed until sometime in the first half of this year. We still have regulatory approvals to go through. Until we have closed, we are operating separate competing companies, so there is very limited planning you can do until you are fully integrated. The new GSK Consumer Healthcare (post-merger) will be a world leader in many critical categories. We have an incredible portfolio in pain relief (the Crocin brand), Voltaren, which is the world's top cold brand, and many local brands like Iodex. We will have a leading position in respiratory, which is an opportunity market in India, with Otrivin or Theraflu from Novartis and a new allergy brand Fluvirin. We might in future have leading positions in antacids, in skin health products and, particularly in India, in nutrition. Are over-the-counter (OTC) product makers going to compete against FMCG companies? We are one of the few companies that are completely dedicated to healthcare while that's not true of all the FMCG players who compete in many different areas.

Q. But a lot of them are now competing with you on the wellness plank?

A. There are specific capabilities that healthcare and pharmaceutical companies have, whether it's the science that underpins them or designing the clinicals or whether it is the regulatory capability. I have spent 17 years in consumer goods and then I moved into healthcare, so I know it is a different capability. Healthcare is a serious business - this is not just marketing products, we are dealing with very qualified professionals who expect clinically proven science. The magic will be when we can bring first-class healthcare capabilities like big pharma and first-class branding, consumer insights, integrated supply chain, category management that you get more in modern trade, packaging innovation, etc. We want the best of both and I think we are uniquely equipped to do that. The pharmacy channel is absolutely critical but the pharmacy channel needs FMCG modern trade capabilities too. Yes, the lines between FMCG and us are being blurred but I don't think we are going to tread on each other's territory. There's a lot of room for growth for all of us, especially in a country like India where penetration is so low.

Q. Globally, what are your top brands? And what are the top three GSK brands in India?

A. In the new company we have about 19 brands worth over $100 million each. We would want to see many of those delivering market-beating growth. In India, Horlicks is an incredibly important part of the business but we are also booming with Boost. We have done well with Sensodyne but there is an opportunity to drive penetration there and likewise opening up our full OTC portfolio including some Novartis assets.

There has been speculation that nicotine de-addiction products from Novartis will come to India. The challenge in India is about finding the right economic equation whereby we make, distribute and sell a format that doesn't become a real disincentive for people to give up smoking. Also, there is some behavioural and consumer challenges about gum, which is not an Indian behaviour but more seen as an American behaviour. We have other bigger opportunities. Half of our business worldwide is in OTC, half in FMCG. Let's get to that balance in India and then we will see.

Q. In India, what's the breakup?

A. We are close to 80 per cent in nutrition and 20 per cent in oral healthcare combined with wellness.

Q. How does a big company like GSK take on nimble rivals? How do you become faster?

A. We are working on that.  First of all, we need to change the way we design our companies. This is easy to say but it's a lot of work to do to make sure we don't have too many layers and too many interfaces of people having to approve the same thing. So really, being clear and precise around decision-making is something we're going to put a lot of energy into. The second thing is discipline around aligned objectives. Big companies have matrixes/structures and if everyone in the matrix is doing their own thing, things will slow down. India has done this brilliantly, which is part of why they have such good results. This again requires hard work and discipline. You don't want 10 layers between the CEO and the sales rep, so we will be working a lot on that. The third thing is culture. Personally, I've always believed in 80/20 view of just trusting your gut and being a courageous leader and making decisions. That doesn't mean stupidly making decisions but also not analysing stuff to the nth degree. A good decision taken early is better than faffing around and not doing anything, so we will encourage that.

Q. What are you doing to keep ahead on the digital front?

A. I took all my leadership team on a digital safari and we hung out with the leaders of many digital businesses. Last year we made digital capability one of the biggest priority investments for  us and that meant hiring some digital natives at various levels. But you can't just have digital as some specialty thing on the side. You need to drive it through to every single marketer. Every marketer in the company was trained on a six-module digital capability last year.

Q. Going forward, do you see the consumer accepting a tablet instead of food? Is that discussed at all in your innovation labs?

A. No. I watch my Indian colleagues at a buffet and believe me the day they accept a pill like that is a thousand years away. Our job is to supplement people's daily diet because 70 per cent people are not getting the recommended nutrition, but a meal replacement is not happening.

Q. Which is the one competitor brand that gives you sleepless nights?

A. I sleep extremely well. I respect my competition but I don't worry about them. I am more interested in watching the consumer than watching the competitor.