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Executive Summary

NORWICH PHARMACEUTICAL REPORTS TO P&G PRESIDENT PEPPER as part of the management shifts surrounding the departure of current P&G Chairman John Smale at the end of this year. Procter & Gamble's effort to build a prescription drug business has been the responsibility of President John Pepper previously, but it will be the only domestic U.S. business reporting to him after the shift in responsibilities. Most of Pepper's responsibilities after the changes take place will relate to P&G's $8.5 bil. non-U.S. businesses. The shift to the international side is apparently a move to broaden Pepper's familiarity with the wide range of P&G operations. At 51, Pepper continues on a track toward the top post at the corporation. Current P&G International President Edwin Artzt, 59, will succeed Smale at the beginning of 1990 as P&G chairman. Artzt joined P&G in 1953; he has been vice-chairman and head of the company's international operations since 1984. Artzt has held a series of foreign posts following his appointment as head of the firm's European business in 1975. Pepper's retention of responsibility for the pharmaceutical business may indicate an attempt to keep that development project in the focus of the P&G heir-apparent for the mid-1990's. By the middle of the next decade, P&G will probably be at a point to determine the realistic prospects it has for participating in the drug business. According to Smale, international sales will account for over 50% of the company's business "within a very few years." Foreign sales represented 39% of P&G's consolidated volume in fiscal 1989 (ended June 30) and have increased at a rate of 17% and 32% during the past two fiscal years, respectively. The company recently announced plans to build a $200 mil. technical center in Japan and during the past fiscal year has acquired companies or formed joint ventures in China, Brazil, Venezuela, Italy and South Korea. In another management shift to broaden the background of an advancing manager, Group VP Durk Jager will assume control of the U.S. health and beauty aids and soap and detergents divisions as exec VP. He will take over just as the beauty group enters the color cosmetics market for the first time via the planned $1.3 bil. purchase of Noxell ("The Pink Sheet" Sept. 25, T&G-16). Jager, a Netherlands native, was previously VP/Japan. Smale, 62, is stepping down as of Jan. 2 after 16 years as chairman and nine years as the chief executive. Since he assumed the top spot in 1981, P&G's sales have nearly doubled, from $11.4 bil. to $21.4 bil. and net income has grown at the same rate, reaching $1.2 bil. for fiscal 1989. Smale will continue to serve as a director and as chairman of the board's executive committee. He has been with the firm since 1952.

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