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PROCTER & GAMBLE HEALTH CARE BUSINESS IS $2.2 BIL. WORLDWIDE

Executive Summary

PROCTER & GAMBLE HEALTH CARE BUSINESS IS $2.2 BIL. WORLDWIDE, made up of $1.65 bil. in U.S. sales and $550 mil. in international sales, Procter & Gamble Chairman and CEO Edwin Artzt told analysts at a May 21 meeting at company headquarters in Cincinnati. "Welcome...[to] the Kremlin," Artzt said at the unusual gathering for the usually closemouthed P&G. The session served as an introduction of the new chairman to the financial community. The last such meeting was held in 1982, when former Chairman John Smale was new to the post. Emphasizing the growth potential in the company's health care business, Artzt noted that "today, health care is only 9% of our business worldwide -- about $2.2 bil. in sales split 75/25 between the U.S. and international." Artzt pointed out that the firm has "strong brands like Crest, Pepto Bismol, Metamucil, and the Vicks line" in its health care operations and "we expect that segment to account for a good deal more than 9% of our profit growth in the '90's, and we're organizing to make it happen." The firm's health care business is composed of OTC and pharmaceutical products. Procter & Gamble recently consolidated its prescription and OTC business under a single group executive, Group VP Malcolm Jozoff, for the first time ("The Pink Sheet" May 14, p. 16). Pharmaceuticals represent a "just under" $400 mil. business to the firm and Procter & Gamble is planning to "grow" the business "organically," Artzt said during the question-and-answer session following his speech. In response to another question on the future of the firm's health care operations overall, Artzt said the firm's strategy for OTC growth hinges on development through acquisitions. He noted in particular that oral care product growth will be the result of a combination of acquisitions and organic development. The prescription drug business, on the other hand, will be developed through both "organically grown" technology and agreements with other companies, he said. Discussing specific products, Artzt noted that the firm recently obtained approval in Germany for a cholesterol-lowering claim for Metamucil. Since the brand was acquired from Searle in 1985, he said, Metamucil's "volume has grown more than 30%, profits are up almost 60%." On the status of the NDA for OTC Naprosyn, Artzt said that FDA is "well along" in "working with" Syntex and Procter & Gamble representatives. In a related product area, Artzt said the firm has narrowed the scope of its food additive petition for the synthetic fat substitute, Olestra. As a result, "we're getting a lot better cooperation from Washington in defining the final data requirements necessary for approval of our petition," he noted.
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