Specialist
Former senior executive at GlaxoSmithKline plc (GSK)
Agenda
- Secular trends in consumer health and coronavirus-related impacts, highlighting Haleon’s (LON: HLN) key categories and inflationary environment
- Haleon’s portfolio and brands, related growth strategies and margin dynamics, discussing shift from Rx to OTC (over-the-counter)
- Competitive landscape including channel dynamics and barriers to entry
- M&A optionality and portfolio management
- Zantac (ranitidine) litigation situation and ramifications for Haleon, GSK (LON: GSK) and the industry
Questions
1.
What high-level trends and dynamics are driving consumer health, whether consumer behaviour, channel or category trends? Are there any geographical nuances that we should consider?
2.
You mentioned coronavirus encouraging or enforcing consumers to think more about their everyday wellbeing precondition. Do you think that will be long-lasting, because you noted life almost returning to normal? Was that a structural change from the pandemic that could impact the industry? Might companies have to tweak some of their strategies?
3.
Do you think the new consumer needs contribute to a more favourable longer-term growth trajectory for the category globally, or is it a one-off uplift and then growth rates normalise? Do you have any comments on the industry’s future growth and any geographical nuances?
4.
What are your thoughts on Haleon’s Zantac [ranitidine] liability situation? Do you have any comments around different exposures or what the total liability for the industry might be? How might this be split across Sanofi, GSK and any others? Where might Haleon fit into the whole picture?
5.
What are your thoughts on the inflationary environment and potential impacts on Haleon’s P&L? To what extent can cost pressures be passed on to the consumer?
6.
What could happen to the P&L of consumer health companies over the next 18 months? Do the categories traditionally have very good pricing power, so they maintain margin subject to volumes not falling off a cliff?
7.
Once Haleon has decided on balancing margins and cash flow, might any categories across the portfolio be particularly vulnerable to margin pressure or volume elasticity? Or do you think the company can manage it across the portfolio as it goes along? Could anything catch people by surprise?
8.
Regarding the potential trade-down to generics in the pain category, do consumers return to brands when things improve, or might they never have contemplated private label or generics, then try it and stick with it?
9.
Haleon had a pretty good start to 2022 with sales up around 12% for H1, yet is guiding 6-8% for the full year, implying that H2 will slow down quite significantly. I appreciate it is lapping much tougher comparables. What should we read into that beyond the comparables, with regards to a slowdown? Do you think Haleon is just being conservative?
10.
Could you segment Haleon’s portfolio? I appreciate there’s quite a lot of documentation on this. Is there anything we need to monitor, whether that’s the big businesses either by sales or by profit pool?
11.
When did Haleon’s cultural shift from a pharma culture to something more akin to an FMCG company begin? Was it some time ago with the IPO? Has it involved bringing people in from outside, with a more marketing or FMCG background, or is it being shifted organically?
12.
What benefits do you see with running Haleon as a stand-alone entity? What are the benefits of the spin-out to a Haleon shareholder now vs a shareholder of the Haleon-GSK combination?
13.
What might be the disadvantages or dis-synergies from separating Haleon from GSK?
14.
Can you explain how the Rx to OTC [over-the-counter] transition will work post-separation? In Haleon’s investor presentation, it spoke a lot about this being pretty key to the pipeline or innovation. How will that work in reality?
15.
Does the separation actually change anything, in terms of the Rx to OTC strategy? Under combined ownership, would Haleon – within the GSK group – have exclusivity to a particular Rx when it was due to be switched, or would it have favourable terms? Does anything change, or has it always been a commercial agreement between Haleon and any pharma company?
16.
What might have changed in Haleon’s holistic growth strategy since or leading up to the IPO, with a little more freedom, if anything? You spoke a lot about the organisational structure and the structural and cultural changes that have been taking place.
17.
Where do you see the greatest organic growth opportunities across Haleon’s portfolio, regarding the key business units, key brand geographic combinations, key brands or key geographies? Where should the company be focusing its resources to grow the businesses?
18.
Might any tailwinds remain in the short term, in terms of revenue synergies from the combination of GSK and Pfizer? Were there any to begin with? If so, have they been fully extracted?
19.
What are your thoughts around Haleon’s e-commerce capability and how that compares to that of peers? You could incorporate anything from your role in digital technology analytics.
20.
Can D2C be a legitimate business model in the category or for Haleon? The company talks about experimenting in D2C.
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