GSK fortifies its OTC play

The UK-based pharma major is revamping a legacy brand, Ostocalcium, to bet bigger on over-the-counter consumer products, its second-largest portfolio

The consumer arm of British pharma major GlaxoSmithKline (GSK) is making a bid to fortify its over-the-counter (OTC) portfolio, the second-largest category after health food drinks (HFD). Adding to its roster comprising Eno (Rs 400 crore), Crocin (Rs 120 crore) and Iodex (Rs 100 crore), it is relaunching one of its legacy brands, Ostocalcium (which is now only Rs 42 crore).

OTC, which like GSK's oral care (Sensodyne), sits outside the listed entity, has been identified as a key driver of its health and wellness agenda in India. It will relaunch its calcium supplement in August, in order to ramp up its sales in the OTC space.

HFD is the only category that is part of the listed entity, GlaxoSmithKline Consumer Healthcare, in India. For the 15 months ended March 31, 2014, the company reported a topline of Rs 4,682 crore, led by products such as Horlicks, Viva, Maltova and Boost.

OTC would be crucial to GSK's health-push in the country. While oral care, led by Sensodyne, gives GSK about Rs 150 crore in sales, GSK derives about Rs 662 crore from its OTC portfolio.

Jayant Singh, executive vice-president, marketing, GlaxoSmithKline Consumer Healthcare, says that the calcium segment within the overall vitamins, minerals and supplements (VMS) market is expanding, which gives brands such as Ostocalcium the scope to grow.

"As a category, the calcium segment is about Rs 600 crore, growing at a rate of about 15 per cent per annum. Given the greater awareness of calcium deficiency and doctors prescribing calcium as a supplement for women and children, it is a segment that will only continue to grow in the coming years," he says.

The relaunch of Ostocalcium will see GSK come up with new packaging and pricing for the brand, which will be advertised on national television from the first week of August. While the relaunched Ostocalcium (available as syrup and tablet at Rs 85.8 and Rs 101.2, respectively) is priced 10 per cent higher than the earlier version, it is still neck-and-neck with rivals such as ShelCal in pricing.

ShelCal, owned by Ahmedabad-based Torrent Pharmaceuticals, was acquired along with other products from Mumbai-based Elder Pharmaceuticals in a Rs 2,000-crore deal last year. Shelcal is the leader among branded calcium supplements with sales of Rs 170 crore.

With the relaunch, GSK will push Ostocalcium in urban markets in Uttar Pradesh, Bihar, Jharkhand, West Bengal, Maharashtra and Tamil Nadu. The product was so far available largely in rural areas in UP, Bihar, Jharkhand and WB. The syrup was the dominant format. "While we do have chewable tablets, they are not very popular in rural areas. Tablets are preferred in urban areas, where it is convenient for users," says Singh.

The tablets or solids segment within calcium supplements, according to industry estimates, is a bigger category at Rs 500 crore. Liquids or syrups make up the balance Rs 100 crore. The tablets segment, say experts, is growing, given the ease of use.

Singh says that the company is working on a number of different formats within the calcium solids space such as gummies and chewies, as well as different flavours, to increase consumption among both children and adults.

GSK is also expected to push the product into more markets in the coming months as it eyes a larger footprint for the brand.

While Singh does not get into further details about new OTC products, analysts say that given the growth in the market, the likelihood of more offerings from GSK cannot be ruled out. One possibility is more products in the VMS space, which is growing at 15 per cent. In this space are iron and other mineral supplements, chawanprash, immunity, energy and growth supplements.

In an earlier conversation, GSK Consumer Healthcare's MD Zubair Ahmed said that all the three categories (OTC, HFD and oral care) are "big focus areas for us. We will take a call appropriately regarding which segments to push".

The reason for GSK's big push into health and wellness is also linked to its turnover objective. The company is looking at making Rs 8,000 crore in the next two years. It has already crossed the Rs 5,000-crore mark, if topline of all the three segments are taken into account.

Analysts expect GSK to push harder into new areas in the next two year to reach its objective. The action, then, is expected to get hotter in the coming months.