CALPOL

On January 2007, Product Manager for Calpol has been with a series of
meeting with the CX commercial team of GlaxoSmithKline Philippines to craft
the teams presentation for the upcoming GSKs Annual Sales & Marketing
Convention. This years theme is One Team, One Spirit One GSK in
achieving double digit growth towards Php 6 Billion Sales and beyond. The
annual gathering will be participated by GSKs senior management, RX
(Pharma), CX Commercial and GMS team which will be held in Baguio City on
the 1st week of March. Each group except for GMS (Manufacturing) will be
presenting their respective sales and marketing plan. The marketing director
will present the teams overall plan in supporting the companys objective and
to be followed by each product manager. The scope of the presentation
includes historical sales performance, projected sales growth for the next 3
years and sales strategies and marketing plan to support the projected sales
growth.
The Calpol product manager is contemplating on how to present the case of
Calpol brand during the convention. Calpol market share is steadily declining
while its competitors are gaining.

Top 3 Branded Analgesics for Kids

50
% Market Share

45

46

47

40
30

30

Tempra
26

20
10

10

14

22
16

0
2004

2005
Year

2006

Calpol
Biogesic

The task given by marketing director to the product manager is to change the
market share trend for Calpol and re-establish a strong market share to
compete with Tempra. The goal is to increase market share by 15% points in
the next two years. This can be translated to approximately Php 50 Million
increase in sales.

Industry Background
The Pharmaceutical industry in the Philippines is valued at Php 65.7
billion and a projected increase of 9% annually. The local drug companies are
mainly compounders, formulators and packagers. There are two types of
players in the industry mainly the drug establishments - engaged in the
manufacture, importation, repackaging, promotion, marketing and, very
rarely, distribution of drugs and medicines; and drug outlets engage in
retailing of drugs and medicines for the direct use of consumers. There are
20,649 pharmaceutical-related establishments nationwide and 75% are
drugstores/pharmacies. Excluding retail outlets, 41% of pharmaceutical
establishments are in Metro Manila. Drugstores are the well-distributed across
the different regions of the country while drug distributors and medical
devices distributors are highly concentrated in Metro Manila.
The industry is dominated by top 5 pharmaceutical companies that
includes
Unilab(PhP12.3),
GlaxoSmithKline(PhP6.8),
Pfizer(PhP4.3),
Wyeth(PhP3.6), BMS(PhP3.1)
The top selling products reflect the strong demand for anti-biotic, vitamins,
analgesic, cardiovascular, and respiratory drugs. Pharmaceutical industry,
specifically the pharmaceutical market in the therapeutic class level 2, the
analgesic market is third in market share next to antibiotics at 15% and
vitamins at 9%. The analgesic market is 6% of the therapeutic class level 2 of
the pharmaceutical market.
Why the analgesic market? This segment of market is considered by
GSK because of the potential market growth in its competing products
specifically for the non-narcotic analgesics for children. GSKs competing
brand in this category is Calpol.

The Company
GlaxoSmithKline
(GSK)
is
a
leading
global
research-based
pharmaceutical company with 6.3% of the world's pharmaceutical market. Its
current portfolio in the Philippines includes Consumer Healthcare products
comprising over-the-counter (OTC) medicines, oral care products and
nutritional healthcare drinks. The company is the only pharmaceutical MNC in
the Philippines that has a local manufacturing plant catering to local
requirement and Southeast Asian region.
GSK is providing the market with a wide range of pharmaceutical products.
The company seeks to fulfil its mission Our global quest is to improve the

quality of human life by enabling people to do more, feel better and

live longer.
To achieve this mission GlaxoSmithKline acknowledge the needs of the
customers which is perfect delivery right product, right quantity, right
quality all the time and affordable to all customers.

Product Offering
CALPOL Infant Drops, Paediatric Suspension and 6 Plus all contain
the active ingredient paracetamol, which is a simple painkilling medicine used
to relieve mild to moderate pain such as headache, toothache, teething or
sore throat and fever associated with colds and flu or discomfort caused by
vaccinations. Calpol is a liquid suspension paracetamol suitable for infants
aged 3 months to 12 years old. It provides fast, effective relief from pain and
fever, including the discomfort of teething. With a tasty strawberry and
orange flavour, it is available in 10mL, 60mL and 120mL pack sizes. Calpol
has been in the Philippines for 14 years. The product uses glass, ROPP as its
primary packaging and individual box for its secondary packaging.

Dosage

Flavour

Target Patients

Calpol Infant Drops

100mg/ml

Orange

0-2 years old

Calpol Paediatric Suspension

120mg/5ml

Strawberry

2-6 years old

Calpol Suspension 6 Plus

250mg/5ml

Orange

6-12 years old

Variant

Pack size

Primary Packaging

Secondary Packaging

Calpol Infant Drops

10ml

Glass, ROPP

Individual Box, Cal & Pol

Artwork

Calpol Paediatric Suspension

60ml, 120ml

Glass, ROPP

Individual Box, Cal & Pol

Artwork

Calpol Suspension 6 Plus

60ml, 120ml

Glass, ROPP

Individual Box, Cal & Pol

Artwork

Variant

Market Environment
According to NSO the growing Filipino population now at 90 million
which 82% is below the poverty line. Gender distribution across the different
ages is almost equal, although there is a greater proportion of females within
the oldest age groups (65 and up). Children (age 14 and below) make up
around 37% of the population, while those aged 15-64 make up the majority
(60%). The elderly (age 65 and up) make up only 3%. The 15-64 age groups
are expected to increase in growth rate over the next few years, while
children and elderly are expected to maintain a steady growth rate.

Common illnesses consulted by the general population with medical

doctors are colds, cough, headache, fever, diarrhea, arthritis, asthma,
hypertension, diabetes, and skin infections/diseases. The general behaviour of
Filipinos is to self-medicate when illness strikes. Some would rely on the
previous prescription if the disease pattern is similar to what was consulted
before. Others try home remedies, folk medicines, and OTC. When the illness
worsen, then thats the only time they consult doctors. However, when it
comes to children getting sick, the general behaviour is to consult a medical
doctor and purchase medicine as prescribed. Parents have a general tendency
to purchase branded products rather than generics.
With the advent of the computer age, healthcare information is readily
available in the internet. E-commerce is now becoming marketing and trading
although this is only applicable to OTC when it comes to healthcare products.
There are a lot of branded and generic medicines available because of
expiring patents each year. Caution must be practiced when buying medicines
because of possible proliferation of counterfeit drugs.
The increasing population density due to continuous growth of
population and migration of people from the provinces and the higher
pollution index particularly in the urban areas are some significant factor how
people are struck by illnesses. Thats why vitamins and food supplements find
a growing market to boost body resistance and prevent common
communicable diseases.
The amount spent on healthcare has consistently been a very small
proportion of total household expenditure in the country, moving within a
narrow range of 1% to 2% since 2001. There is practically no difference in
proportion of healthcare expenditure between urban and rural households.
This observation, along with the fact that most healthcare expenditure comes
out of the patients own pockets, validates the need for a more massive
government-subsidized healthcare program. It also suggests a huge potential
for the insurance market, although the primary hindrance to citizens availing
of insurance is poverty. Due to this economic factor among Filipinos,
alternative medicines find its way to Filipinos that seek medication at the
lowest cost.
The weak implementation of the government on the Generics Act of
1988 and the frail acceptance of Filipinos of generics in the analgesics for
children category keeps the market controlled by branded products. The
Pharmaceutical and Healthcare Association of the Philippines (PHAP) regulates
member companies on the amount of promotional expenditures for ethical
concerns. Bristol-Myers-Squibb, the makers of Tempra and GlaxoSmithKline
are active members of this association. Biomedis, a subsidiary company of
Unilab is not a member of this association, thus promotion and advertising
efforts has no limitation making this arena an uneven playing field between
competitors.

SWOT Analysis
The company has an established sales and marketing organization with
support from its local manufacturing facility and distribution partnership with
Zuellig Pharma. The marketing program can easily be implemented because
of strong financial capability of the company however the regulation of the

amount of promotional expenditure by the Pharmaceutical and Healthcare

Association of the Philippines (PHAP) is a weakness of not only GSK but all the
member companies. GSK has it own local manufacturing facility to support
product requirements of the market. Up to date, GSK is the only multinational
pharmaceutical company that maintains a manufacturing facility in the
Philippines. The manufacturing facility site also in-houses technical experts
that enable the company to facilitate product line extension.
The main weakness is the cost of products which appears in the higher side of
the product costs range among competing brands. Although, Calpol brands
efficacy has been recognized by experts, this product offering is not widely
known by its target market and has been perceived as high cost brand being
associated with GlaxoSmithKline product.
Threats can be seen on people living in the poverty line to try
alternative treatment or medicines. The volatile Peso-Dollar exchange rate
also threats the cost of production as 95% of raw materials are imported. The
high promotional effort of Biomedis, makers of Biogesic posts significant
threats not only to GSKs Calpol, but also to BMSs Tempra. However,
opportunities can be seen in the growing market of analgesics for children.
Parents consult doctors and heed their advice when their children have fever.
This is an opportunity for medical advertising for doctors to prescribe Calpol.
Calpol has the best tasting flavor that includes strawberry and banana
flavor. Kids preferred the test of Calpol and have a proven efficacy and
paediatricians are recommending it even for 2 month old baby. The company
also takes pride in its strong advocacy in maintaining high quality products
thru its well established and global quality management system.
The pharmaceutical industry is a lucrative business. The industry is not
limited as medicine is a necessity. And given the recent turn of events
(political-wise, according to GNP growth), market growth in the overall
industry has a high probability of growing annually.
With the introduction of new government policy such as Cheaper
Medicine Bill, Granting of Parallel Importation and policy on Generics, the
competition will intensify in this market segment. Coupled with inefficiency of
the government to address worsening counterfeit activities and smuggling
operation in the Philippines, the industry will definitely be affected.
Product Pricing
Product price is determined by foreign exchange rate, prices of
imported raw materials and domestic production tax rates, cost of utilities,
and wages rates. The biggest cost of pharmaceutical concerns is
manufacturing activities (50.70%) administrative and selling activities
(39.22%). Although, product brand under GlaxoSmithKline are perceived to
be expensive, Calpol price is positioned next to its competitor. With the same
pack size, Calpol is priced much lower than the leading competitor. Tempra
(P84.82), Calpol (P78.00), Biogesic (P55.63).

Product Positioning
GlaxoSmithKline, the manufacturer of Calpol is a leading global
research-based pharmaceutical company with a powerful combination of skills
and resources that provides a platform for delivering strong growth in today's
rapidly
changing
healthcare
environment.
GSK's mission is to improve the quality of human life by enabling people to do
more, feel better and live longer. Although most multi-national
pharmaceutical companies in the Philippines rely on toll manufacturing to
secure their supply of products to the market because of the economy of
scale, GSK maintain its factory in Cainta, Rizal to ensure products are of the
highest quality standards. It is the thrusts of the company to provide high
quality products by implementing a world-class Quality Management System
in all of its existing manufacturing facilities. Hence, Calpol is a product of very
high quality. In fact it has established its claim to be the fastest fever relief
medicine. Calpol is considered the fever specialist for kids.
Product Competition
Analgesic Market holds six percent (6%) of the overall pharmaceutical
industry. Childrens paracetamol market is dominated by three major brands.
These are Tempra Brand under BMS, Biogesic for kids from Unilab, Calpol
from GSK. Calpol and Tempra are almost equally prescribed by doctors yet
Calpol's sales are lower by a factor of two behind Tempra which has strong
heritage (30 years vs. Calpol's 14 years) and strong medical marketing team.
Biogenic for Kids was re-launched in 2003 and priced much lower than
Tempera and Carpool and has adopted aggressive advertising campaign and it
slowly taking away a portion of Carpools market share. Generic paracetamol
is also considered in the competition but most mothers rely on doctors
prescription and their inherent buying behaviour that favours branded over
generic medicines. Generic rely mainly in medical marketing and not so much
on advertising.
Recent market research concludes a significant decrease in Calpol
market share in the last three years. Currently, Tempra is the leading
analgesic for kids with 47% of the market followed by Calpol with 22% and
Biogesic with 16% and the rest distributed among generics and other brands.
Calpol being an OTC medicine needs to have an appealing packaging
and must be comparable to the second generation packaging that its
competitor is using. Currently it is still in glass packaging which appeared less
appealing compared to the current product in the market and has some safety
issue.

People Consumer Behaviour

The whole market for Calpol is segmented into parents, clinics /
hospitals, and stores. Segmentation is based on who actually will make the
purchase of the product.

SEGMENT 1
It is comprised of parents. This segment is divided into three groups having
their own characteristics:
Parents of infants aged 3 months to < 1 year old
They want the best for their children. They, definitely, consult the
doctor first before administering any medicine and prefer medicines
that are branded, safe with no side-effects (allergic reactions, stomach
pain, bad for the teeth), provide fast effective relief to sickness, easy to
administer and handy;
Parents of children aged 1 < 6 years old
They still consult doctors before administering any medicines.
However, as their child gets older (up to about 3 years old) and they
gain more experience in taking care of their kids; their visit to the
doctors for common illnesses is lessened. They now tend to decide on
which medicines to give their children based from their own experience
and some advice from friends and relatives. They have almost similar
medication preferences as the first group; except for another
preference: the medicine must be likeable by their children. During this
age, children are starting to be picky on the foods or anything they eat;
Parents of children aged 6 < 12 years old
May not consult doctors for common illnesses like headaches and colds.
Usually has the following preferences for medicines as branded, safe,
provides fast effective relief to sickness, easy to administer and handy.
SEGMENT 2
Composed of the clinics and hospitals who intend to utilize the
products. The segment is further subdivided to private pre-school clinics,
private elementary school clinics, paediatric / childrens clinics and hospitals.
Schools in the Philippines are required to have clinics. Clinics must have
medicines for common illnesses like colds, headache, and flu. These clinics
stock medicines that are recommended by the resident doctors.
SEGMENT 3
It includes the distribution stores who purchases goods by bulk or large
amount. Their primary objective is to obtain profit by reselling the product.
Usually, stores go for popular brands. Grocery stores and convenience stores
dont usually sell infant medicines

Promotions
Discounts and price reduction for improved versions and launch of new
product will be implemented.
Discounts

Consumer discounts: Will run for 30-days upon the introduction

of the newly packaged orange and strawberry variants and the
launch of the new pineapple and banana flavour.

Distributors and Dealers: Will be comprised of a combination of

price reduction and credit payment terms depending on volume
purchased.

Product Bundling

Calpol New flavor will be bundled with other Calpol products.

Examples of Calpol products for bundling: Calpol tablets, Calpol

Jr. and Calpol Forte

Medical Marketing

Team of medical marketers will conduct visits to hospitals, public

health centers and private school clinics to give more information
about Calpol, its line of products and activities lined up for
doctors and health practitioners

Private school clinics will also need to be visited to increase

school based med practitioner prescriptions and establish brand
loyalty among children aged 4-12

Multimedia Promotions

New ads developed for TV, radio, print and the Internet

Needed to re-establish Calpol as still the best tasting and fast

acting fever and pain medicine for children Calpol Its My
Choice!

Print ads

Will be developed
sections

Sunday family lifestyle sections

for

Saturday

childrens

supplementary

Ads for home and family magazines will also be used for
showcasing Calpol and its new product will come in the form of
parent testimonials about the product and initial thoughts on the
addition of a new variant

Event Organization and Sponsorships

Calpol Consultation Camp

Will be continually organized to establish and strengthen

existing relationships with consumers.

Organized during the summer as a reminder for parents to make

time for regular health check up with the paediatrician

4-day camp combines business and pleasure for participating

parents and children as doctors to provide health advice and
reminders for parents and children while providing an
opportunity to enjoying recreational activities lined up by GSK.

Medical conventions

Organized annually to thank health practitioners and distributors

for their support and encourage them to continue the practice of
patronizing Calpol

Serves as an opportunity to give updates on both the product

and report activities lined up during the year that attendees and
their organizations can take part of.

Sales and Distribution

Looking at the sales and distribution of pharmaceutical product in the
Philippines, Metro Manila accounts (44%) of market sales, rest of Luzon
(29%), Visayas region (15%) and Mindanao region (12%).
GSKs area of concentration of distribution of Calpol is in Greater Manila Area.
Metro Manila is the main location for pharmaceutical manufacturing and
trading, the per capita income is higher compared to other regions, have
greater access to health care facilities and physicians and more aware about
available pharmaceutical products and their benefits to health.
GSK is also considering Botika ng Bayan as one of its distribution
channel. This channel is situated in cities, municipalities and barangay level
that will also contribute to increasing brand awareness.

Target Growth
GSK Consumer Healthcare feels that the sales forecast figures are
stretch target but with the phase-in of the new strategies and considerable
budget (10% of projected sales) in promotions and advertising, the group is
optimistic in achieving the 15% point improvement of its market share.

Year

Analgesic for Children Market

(Million Pesos)

Calpol Market Share (Million

Pesos)

2004

600

2005

652

2006

710

156

2007

782

218

2008

852

306

Calpol Projection

Percentage

40%
30%
20%
10%
0%
2006

2007
% Share

2008
Growth