Accenture hpb consumer_healthcare_po_v_6 june 2012 v3

High Performance Business
Consumer Healthcare Point of View

Horizon 2015

Copyright © 2012 Accenture. All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. A DFR production

Whitney Baldwin – Accenture
Professional Biography

Current: Accenture Management Consulting, Life Sciences

Johnson & Johnson
• Brand Management, Personal Care
• J&J/Merck Consumer Pharmaceuticals
- Rx-OTC switch of Pepcid AC, first H2 in US market
- $200MM retail sales in Year 1; #1 Share

GlaxoSmithKline
• Global launch team for NiQuitin in EU and LatAm
• OTC Marketing Director, Consumer Healthcare UK
- IMS OTC Company of the Year, 2004
• VP, GSK Brand Reputation Initiative, US Pharmaceuticals

Copyright © 2012 Accenture All Rights Reserved. 2

Overview: High Performance Business(HPB) Analysis

• The High Performance Business (HPB) analysis consists of three sections:
– Company Rankings: High Performance Business rankings (success over
multiple years)
– State of the Market: Which trends and drivers are impacting the industry and what is
the outlook for the future?
– Distinctive Capabilities & Performance Anatomy: How do High Performers
execute and enable their game-winning strategies?


Executive Summary

HPB Rankings
• Dynamic marketplace: rankings have shifted as companies have performance
has evolved
- Reckitt Benckiser remains strongest performer

Distinctive Capabilities and Performance Anatomy
• High performers continuously raise the bar
• Technology enabling organizations


High
Performance
Business
Ranking


Accenture High Performance Business Methodology
Measures Long Term Financial Performance across 5
performance metrics
5 Components of High Performance

Continued performance over Reliable and predictable
industry eras and life cycles performance
Assessment of companies’ TRS Consistency is measured as the
metrics over multiple time periods percentage of years over a 7 year
period that the company has
outperformed its peer set median
in each of a set of measure
(revenue growth, spread, annual
High FV/IC)
Performing
Business

Greater than expected
Positioning returns from investments
Top line revenue growth Economic profitability (ROIC-WACC)
for the Future
Key driver of economic profitability measures the ability of the company
revenue growth is a key outcome to to generate returns higher than its
determine high performing companies
Peer Set
cost of capital, the company’s ability
to create value
Higher future value (FV)
growth and level
Measure the investors’
expectations of the value of the
company’s future cash flow
Copyright © 2012 Accenture All Rights Reserved.

Our HPB analysis has identified high to low performers in
the Consumer Healthcare industry
GROWTH
5 year Average HIGH PERFORMERS

MID TIER PERFORMERS

LOW PERFORMERS

Note: Growth is based on reported Consumer Healthcare Revenue Growth and Profitability is based on Return on Invested Capital
(ROIC) calculated from estimated CH segment invested capital. Consumer Healthcare segment’s % contribution to Group net assets is PROFITABILITY
applied to Group Invested Capital to calculate CH segment Invested Capital 5 year Average

HPB Scorecard 2012
HPB Scorecard 2006-11 (3 & 5 yr equal weighted)

Total Score Longevity Profitability Grow th FV Consistency Performace Definition:
Reckitt Benckiser CH A N/A B+ A+ N/A A+ High Health & Personal Care (excl Pharma)
Mead Johnson CH A- N/A A+ C+ N/A A+ High Group Revenue
GlaxoSmithKline CH B+ N/A C+ B+ N/A A High Consumer = OTC, Oral, Nutritional
Boehringer Ingelheim CH B N/A A+ C N/A C+ Avg Consumer = OTC, VDS
Sanofi-Aventis CH B N/A D+ A+ N/A B Avg Consumer = OTC
Novartis CH B- N/A C+ C N/A B+ Avg Consumer = OTC (excl Animal Health)
Bayer CH C+ N/A C C+ N/A C+ Avg Consumer Care
Rohto CH C+ N/A C+ D+ N/A B Avg Group Revenue
Prestige Brands CH C+ N/A D+ A N/A D+ Avg OTC
Merck CH C N/A D+ B N/A C Avg Consumer = OTC, Sun Care, Foot Care
Takeda CH C N/A C+ D+ N/A C+ Avg Consumer Healthcare
Beiersdorf CH C N/A C+ D N/A C+ Avg Group Revenue
Taisho C N/A C+ D+ N/A C Avg Self Medications
Pfizer Wyeth CH C- N/A D+ C+ N/A D+ Avg OTC & Nutrition*
Merck KGAA CH C- N/A D+ D+ N/A C Avg Consumer Healthcare
Procter & Gamble CH C- N/A C+ D N/A D+ Avg Healthcare Products
Johnson & Johnson CH D+ N/A D+ D+ N/A D Low Consumer
Lion Corp CH D+ N/A D+ D+ N/A D Low Healthcare
Omega Pharma CH D+ N/A D+ D+ N/A D Low Group Revenue

Copyright © 2012 Accenture All Rights Reserved.

What
will shape
Future High
Performance?


What really makes the difference?
Over the long-term, High Performers demonstrate
successful integration of seven distinctive capabilities
High Performance Building Blocks

Market Focus Strategic Market Leadership
Focus on winning in high-value categories and high potential markets
& Position

Actionable Innovation In Store Regulatory &
Insights Marketing Availability Switch
Actionable New product Customer Excellence
Distinctive information that innovation with clear excellence that Cross market
Capabilities drives better differentiated benefits, drives in-store sales regulatory expertise
decisions leveraging new driving product
technology strategy & positioning

Simple Operating Model High Performance Focus
Performance Simple organisation that embraces scalability, Systematic approach to drive continuous
collaboration & integration performance improvement at speed
Anatomy

Performance Business Foundations – IT, HR, Finance, Sales, Marketing, Supply
Foundations Chain
Functional infrastructure aligned to deliver business objectives



& Position

Distinctive information that innovation with clear ly excellence that Cross market

Simple Operating Model High Performance
Performance Simple organisation that embraces scalability, Management
collaboration & integration
Anatomy Systematic approach to drive continuous
performance improvement at speed

Foundations Chain


Strategic market leadership requires a move from internal
and historical to an external and future-driven strategic
planning process

High Performance Differentiators
High Performers …
• Build dominating brand portfolios 17
Powerbrands
– Smaller portfolios containing more global brands represent
70% of
– Scale global brands while including selective Company net
revenues
localisation for high potential and emerging
markets

• Place fewer, bigger and more profitable bets –
high growth and high margin categories

• Re-evaluate choice frequently in a volatile market

• Make global trade offs to build business rapidly

• Allocate resources more efficiently


Case Study

Reckitt Benckiser’s strategy is simple, but powerful …
and it’s working
Reckitt’s clear and consistent
strategy is to drive above Dettol #1 in topical antiseptics and
antiseptic liquids
industry growth and returns Strepsils #1 in medicated sore throat products

through: Veet #1 in Depilatories

• A disproportionate focus on driving Clearasil #2 in Acne Treatment
Powerbrands, global leaders in Mucinex #2 in cold & flu (incl. decongestants)
categories with high growth potential

• High levels of media and marketing
investment
After Boots HCI and Adams Respiratory,
Reckitt’s latest acquisition is SSL
International.

Durex and Scholl will join Reckitt’s
• Exploiting opportunities from add-on Powerbrands in a newly created category:
acquisitions “Sexual Wellbeing and Footcare”

• Systematic and continuous innovation
to excite consumers (highest innovation
rate – 35% of sales from new products)
Acquisition of
• Transforming net revenue growth into Para pharma to
increase
even better profit and strong cash flow presence in
India



& Position

Distinctive information that innovation with clearly excellence that Cross market


Foundations Chain


Actionable insights enable the business to move from
reactive and scattered decision making to proactive and
targeted decision making

High Performers …

• Invested $1bn in consumer & shopper
• Have an integrated organisational focus on the understanding between 2001 and 2007,
transforming from a traditional market
right skills and focus on cross-functional analytics, research organisation into a consumer
creating more productive knowledge workers understanding powerhouse.
• Standardised information creation and
• Make better decisions, driven by insight provision from its Global Business Services
unit
• Maximise returns on decisions • Conducts direct research with >4m

• Use predictive, data-driven decision making consumers per year

based on continuous stream of insight
• Buy rather than build – develop strong relationships
with key partners to ensure shared insights


Companies that still rely on ‘gut feel’ due to limited access
to enterprise-wide data and analytical talent will lose out
Companies need timely, in-depth actionable insights if they are to remain competitive globally
— in effect a “whole business” approach to analytics

Data explosion Companies moving up the The closed loop: from raw
sophistication curve data to insights
Ubiquitous computing and
technology capabilities have Driven by globalisation and greater Desire to move from deep functional
increased dramatically the volume of business complexity insights to tying together the causal
data at companies’ disposal chain cross-functionally to be more
(structured and unstructured, visual, predictive
voice, geospatial)

“Predictive analytics “…in this new age of
will be the difference High performers are investing future-facing business
between the winners
and losers in the
heavily in analytics analytics, any BI user
without strong
next economic advanced analytics
cycle” • As a competitive differentiator … capabilities is
Dave Rich, Managing Director
seriously deficient and
at a competitive
Accenture Analytics
• typically exploited as a service to disadvantage”
minimise investments Business Intelligence (BI) Polishes Its
Crystal Ball, Forrester, Aug 2010


High Performers have moved on from figuring out what
happened yesterday and are focusing on what could happen
tomorrow …

Optimisation “What’s the best that can
happen?”

Predictive
Modeling “What will happen next?”
Competitive Advantage

Predictive
Analytics
Forecasting/ “What if these trends
extrapolation continue?” (“now what”)

Statistical analysis “Why is this happening?”

Alerts “What actions are
needed?”
Query/drill down “What exactly is the
problem?”
Descriptive
Ad hoc “How many, how often, Analytics
reports where?”
(“what happened”)
Standard “What happened?”
Reports
Sophistication of Intelligence


Case Study

aims for "360 degree" consumer insight

Copyright © 2012 Accenture All Rights Reserved. Source: Procter & Gamble 2010 18


& Position

Capabilities drives better differentiated benefits , drives in-store sales regulatory expertise

Anatomy Systematic approach to continuously drive

Foundations Chain


Innovation marketing entails intensive market research and
consumer-led product development, combined with heavy
promotion of top brands

High Performers …
• Continuously update their product portfolio to ensure the right price/value
proposition
– Trusted global brands serve as an umbrella across segments and categories
– Continuous introduction and retirement of products
• Start from a margin improvement and then find the idea that delivers
• Spend disproportionate amounts of A&P on their core brands
• Give consumers new reasons to buy. Innovations are relevant and consumers
are willing to pay (more) for them
• Achieve superior returns on marketing investment by creatively managing the
channel mix
• Have opened their innovation process to other partners
• Have a connected innovation and marketing process and organisation


The formula for success is simple …
The art is in the execution


Age-, gender-, lifestyle- and condition-specific hyper
segmentation makes products relevant for different
consumer groups under a trusted brand umbrella

Gender Age/Life Stage
The first level of segmentation e.g. children, pregnant women or men over 50

Medical Condition Life Style
Appealing to consumers with specific health problems, e.g. migraine Targeting by socioeconomic factors, e.g. athletes or busy people


If an innovation catches on – even originating in a
seemingly unrelated category – it is quickly crossed
over to other categories … and copied by other players
Digestive … … Cough & Cold … Mouth care

2005 2008 2009

Copycat products

Bayer’s Rennie Ice Boehringer’s Zantac
Cool Mint

Dishwashing … … Cough & Cold

GSK’s Beechams
Copycat products
Bayer’s Aleve
2009


To further persuade the consumer, successful companies
ensure their brands are recommended by experts and their
innovations supported by claims and ‘tested’ benefits

#1 recommended by dentists

#1 doctor recommended

Paediatrician recommended brand

Clinically proven technology

Scientifically proven

4 times stronger

Significant improvement after 3 weeks

Results in as little as 10 days

Requires just one single application

Dermatologically tested


Consumer goods companies are upping investments in
digital, social and mobile channels …

Consumer goods
companies are on the path
of growing their
interactive marketing
spend by 22% CAGR —
more than any other
industry.

This shift occurs as
marketers seek to combat
recessionary effects, further
engage consumers, and
embrace Adaptive Brand
Marketing.

Source: Forrester, 2010


Case Study

Johnson & Johnson is reaching over a million moms,
one at a time …

• Mom-to-mom support :
“You can ask a question and hundreds
of women will respond and say, ‘I went
through the same thing and have you
tried this?’

#1 baby site

text4baby
• The programme is a free mobile
information service offering practical
information for improved maternal and
infant health.

Sources: Health News, iHealth, Johnson & Johnson, 2010



& Position



Foundations Chain
Functional infrastructure aligned to business objectives


High Performers connect their customers into their
business model

High Performers …

• Have moved from a “push” to a “pull” model, enabled by a consumer driven
supply network

• Have access to near real time Point of Sales information by partnering with
retailers in the developed markets and distributors in emerging markets

• Engage in deep collaboration with their customers and build in flexibility to deal
with their variances and needs

• Have fully integrated trade marketing, supply chain and customer services
processes


High Performers are rethinking their supply chain to
become more demand driven

Consumer Push
Goods Model
Company
Production Warehousing Retailer Consumer/
& Distribution Shopper

Pull
Model
Consumer
Goods
Company
Supplier Production Warehousing Retailer Consumer/
& Distribution Shopper

• The ability to manage demand rather than just respond to it
• A networked rather than linear approach to global supply
• The ability to embed innovation in operations rather than keep it
Copyright © 2012 Accenture All Rights Reserved. isolated in the laboratory 29

High Performers are getting increasingly sophisticated
in capturing POS data and turning this into actionable
insights …

Demand Analytical CH Company
Signal Engine
Repository

Demand Signal Repository Capabilities Analytical Engine Capabilities Sales Team
Customised Interface

 Collect, cleanse, and harmonise demand  SKU/Store level forecasting • Sales Leadership
data from key retailers and syndicate data  Stock-out root cause analysis • Sales Account
with manufacturer’s master data  Perpetual inventory calculation Executives
 Perform value-driven analysis, insights,  Planogram compliance analysis • Category Development
and real-time alerts  Promotion display analysis Managers
 Feed granular / aggregated data into key • Customer Service &
applications like S&OP, Demand / Logistics
Replenishment Planning, Enterprise Data • Marketing & Finance
Warehouse, RFID analytics, and more…


… and are using the latest technologies to measure
shelf visibility in store

Digital merchandising services enable a company’s sales force to gather continuous data on buying
patterns, shelf availability, prices, promotions and product placement, from a simple image captured at
POS.

Point of Sale DM Services HPC Company

Shelf Smartphone KPI extraction Dashboard

How it works



& Position



Foundations Chain
Fucntional infrastructure aligned to business objectives


A simple operating model enables speedy decision making,
scalability and integration

High Performers …

• Have a simple operating model enabling speedy decision making globally and locally

• Provide integrated, global service delivery to the internal business customer

• Have created an externally linked global innovation network to reduce cost, increase
scope & speed (plug and play alliances)

• Can integrate acquisitions incredibly fast


CH companies have been moving from a traditional multi-
local model to a regional then global model and are now
simplifying their operating model to enable local flexibility in
the global model

GBS Lead
Performance

Process Management
ISS Lead Service Development
Service Management
Fin IT HR Other
Service Delivery
Finance & Accounting Service Management Supplier Management
Fin IT HR
IS Service Lines
Comms / Training
Country-based HR HR
Shared Services IT & Facilities Support OTC STP BI FTS CRM

Other
NAM EMEA APAC
RTR HTR MDM PLM
Global Process Owners

1 2 3 4 Time
Regional/Functional
Multi Local Model Global Model Super Global – Super Local Model
Model



& Position

Distinctive information that innovation with clear excellence that Cross market
Capabilities drives better functional benefits drives in-store sales regulatory expertise
decisions for which consumers are driving product
knowledge workers willing and able to pay strategy & positioning
more for

Anatomy Systematic approach to drive performance
improvement at speed

Foundations Chain
Fit for purpose business infrastructure getting the basics right


High performance management is the ability to drive
financial goals in performance measurement and to multiply
talent to generate superior levels of effort

High Performers …
RB has 400 managers all around the world, yet has a
• Nurture commitment, achievement, entrepreneurship, and single compensation and incentive programme. At RB
any manager may receive bonuses of up to 144%
teamwork based on the performance of his group; not based on
outperforming some other group. Everyone is
focused on contributing to the overall good of RB, not
just their specific group.
• Have an individualistic, swift decision-making, innovation,
financial & performance-driven culture

• Ensure performance is tracked against specific quantifiable
measures related to company goals • Novartis has a performance oriented culture
and is committed to reward people who invest
ideas and work into the company
• Novartis does not have employees, but
• Reward performance with attractive financial constructs, and ‘associates’ who are part of the same ideology
punish failure in equal measure


There has been much research, many articles written,
and even more industry opinions; our observations on
the enablers of high performing talent look like this

Theme Example

Getting the right business operating The P&G operating model is considered a key
model to drive the right business industry differentiator
performance
Using effective workforce planning for job RB has approaches to managing business
rotation, project roles, and achieving the demands on jobs and structure of their jobs to
drive business results less expensively
balance between ‘specialist’ and ‘general’
skills
Aligning performance management & Unilever has instituted a 6 month bonus cycle to
rewards with business results drive quick business results

Identify the need for and create the develop P&G uses multiple strategies to help ensure
of the right skills and capabilities across depth of skills
the company
Creating a culture that drives the very Colgate’s commitment to developing personal
highest business performance – and pulling leadership is a formal process that includes goal-
setting, training courses to strengthen skills and
this winning culture throughout all aspects of
support personal development, and ongoing
their business feedback from managers


Summary

High performing organizations are driving harder to:

• Develop continuous, comprehensive insights of their customers
and translating these into innovation on a global scale at speed

• Evolve their business models to be more effective and efficient

• Enabling technology creates competitive advantage


Accenture Contacts
Whitney Baldwin
Management Consulting, Life Sciences
2001 Market Street
Philadelphia, PA 19103
USA
Mobile: +1 610 213 8408
whitney.baldwin@accenture.com

Michael Brueckner
Managing Partner Life Sciences
Campus Kronberg 1
61476 Kronberg
Germany
Bus: +49 (6173) 94-67245
Mobile: +49 1755767245
michael.brueckner@accenture.com


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