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Reckitt Benckiser chief targets India condom price curb

Packets of Durex fetherlite condoms, produced by Reckitt Benckiser Group, are seen on a supermarket shelf in London, U.K.
Chris Ratcliffe | Bloomberg | Getty Images
Packets of Durex fetherlite condoms, produced by Reckitt Benckiser Group, are seen on a supermarket shelf in London, U.K.

Reckitt Benckiser, the maker of Durex condoms, Disprin aspirin and Dettol antiseptic, is calling on India to axe price controls on the products — curbs that it said are both undermining its profits and hindering wider access to healthcare products.

Like many other companies, Reckitt is relying on India as a driver of growth and in 2010 bought India's Paras Pharma for 460 million pounds to gain access to a clutch of over-the-counter medicines.

The company's India sales have grown "in the mid-to-high teens" annually for a decade, said Rakesh Kapoor, the company's India-born chief executive. adding that the country was poised to become Reckitt's third-largest market, after the US and UK, within "a couple" of years.

But Mr Kapoor said India's price controls on key products — such as aspirin and condoms — meant that Reckitt makes little or no money on these items, and thus lacked the incentive to invest in promotional activities to expand the market, raising awareness of the potential benefits of the items.

"Companies that do not make money do not invest behind those brands," he said. "This idea that companies work for something that is bigger than just profits is misplaced. Companies work for something bigger — and for profits. Only when those two causes are highly aligned does it work."

"We make no money on Disprin," he said. "As a result of price control, there is no motivation for anyone to talk about the goodness of aspirin and how it can be used to improve health outcomes, whether it is to bring cardiac benefits or everyday benefits of relief from pain."

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During India's socialist era, nearly 90 per cent of drugs were subject price controls, which policymakers believed would ensure that medicine was accessible to all. In the 1990s, price controls were rolled back to just 74 drugs deemed "essential medicines", mostly used for life-threatening conditions.

But India has recently expanded its drug price controls, amid a furore over high healthcare costs. In November 2013, New Delhi imposed price curbs on 348 more medicines. It also added condoms to the list of essential medicines and capped their price at 6.5 rupees ($0.10) per piece, though that was later raised to 8 rupees.

Reckitt and rival JK Ansell had been selling their premium condoms — often with various flavours, colours and textures — at 15 rupees or more each, and both launched a legal challenge to the price control order issued by the National Pharmaceutical Pricing Agency.

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In court, Reckitt said that Indian authorities' were distributing millions of free and subsidised condoms to the poor, while arguing that its Durex condoms were to enhance "pleasure" and aimed at better-off, more aspirational youth.

The Delhi High Court scrapped the condom price caps in July, but affirmed that the contraceptives should treated as "essential medicines" and their prices should not be increased more than 10 per cent a year, which Reckitt said still constituted a constraint.

"Manufacturers should be encouraged to actually promote safe sex, particularly in a fast-growing country such as India," Mr Kapoor said. "India is moving forward and part of the moving forward is that people are going to have sex, and they need to be protected."

With its young population, India is a huge potential market for condoms, but their use remains limited — their take-up hindered partly by restrictions on their advertising and marketing, as well as price controls.