Premium hygiene products may face cleanup drive

MUMBAI | NEW DELHI: Hygiene product makers said they will have to stop pushing premium value-added products and innovations within segments such as sanitary napkins, hand washes, disinfectants and adult diapers if the government puts a cap on their prices.A list of essential hygiene products is reportedly being finalised and these categories could come under price control. Companies say premium items that are costly to manufacture compared with basic versions are still being sold at lower margins unlike pharmaceutical companies that use similar technology and raw materials but have different pricing. Therefore, the analogy doesn’t hold for hygiene products, they argue.“For advertising spends, new launches and even innovation, we need profitability,” said a senior executive at a multinational consumer goods company. “The margin for us and trade is not very high since they are nascent categories and we are focussing on increasing usage by squeezing margins already. Also, it is still not clear whether all price points will be covered.”Companies say using cheaper raw materials to maintain pricing will translate into lower-quality products. In India, the sanitary napkin segment is controlled largely by three firms — Procter & Gamble, Unicharm and Johnson & Johnson. RB, which owns Dettol, has a significant chunk of the hygiene and liquid antiseptic market.“If price regulation is notified as a blanket cap, RB could be one of the most impacted and lose its pricing power, since Dettol is their biggest brand in India,” said a senior executive associated closely with the multinational.70834729 Marketing Strategy May be Hit TooThe proposal comes months after RB introduced a high-margin, chemicals-free range of soaps and handwashes under the Dettol flagship brand, about 10-20% more expensive than the base brand. The India arm of the UK healthcare and consumer products maker rolled out the range in June.India is a top-five market for Dettol and has over 10% value share in bar soaps; in the smaller, handwash category it has 45-50% share. “Price regulation could impact marketing strategy too, since RB is a top advertiser,” said the person cited above. “Dettol has also been the face of the company’s Rs 100-crore Banega Swachh India campaign for five years now.”P&G declined to comment. RB, Hindustan Unilever and ITC didn’t respond to queries. HUL sells Lifebuoy, while ITC sells Savlon, which has a small presence in the segment.While the government is revisiting the National List of Essential Medicines (NLEM) to make relevant additions and omissions, it’s also preparing separate lists for medical devices, disposables and hygiene products.The Times of India reported on August 25. It currently regulates prices of about 384 essential medicines, including medical devices such as stents, by imposing a cap on their maximum retail price. Drugs companies are allowed to raise prices by up to 10% annually for their products. There is also a cap of 30% on trade margins for 42 cancer drugs.“Prices of adult diapers or feminine hygiene in India are among the lowest in the world. And there is no question of making super-profit in an open market. However, we feel the government must be referring to products and prices that consumers have to pay at institutions and hospitals, where such products can be classified as essentials,” said Kamal Johari, founder of Nobel Hygiene, which is a leader in the adult diaper category with their brand, Friends. “Patients end up paying more due to monopoly of these hospitals which dictate prices by marking them up several times over retail prices.”Lower prices typically lead to a rise in sales but not necessarily in discretionary segments. About six years ago, the government included condoms in the list of essential medicines and fixed their ceiling price in the Drug Pricing Control Order (DPCO). This in turn led to sales of the contraceptive declining a year ago for the first time as companies lowered marketing spends and halted innovations.In 2017, the National Pharmaceutical Pricing Authority (NPPA), an expert committee set up by India’s drug pricing regulator, decided that prices for prophylactics will be fixed in two broad categories--ordinary condoms and those with special features.

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