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Reckitt Benckiser slams price controls

News, 23 September 2015

NEW DELHI: India's price controls on products such as aspirin and condoms are holding back investment in promotional activities, the chief executive of Reckitt Benckiser has claimed.

Rakesh Kapoor told the Financial Times that the business made little or no money on such products. "Companies that do not make money do not invest behind those brands," he stated.

An example was Dispirin. "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."

Reckitt has faced similar problems from a price cap on condoms – set at around half what it had been charging for its Durex brand – and recently went to court in an attempt to get it overturned.

There was a mixed outcome: while the court ruled that the cap should be set aside it reaffirmed that condoms could be classed as drugs rather than devices and so included on a list of "essential medicines" with prices increases limited to a maximum 10% a year.

But that was still a constraint, according to Reckitt. "Manufacturers should be encouraged to actually promote safe sex, particularly in a fast-growing country such as India," Kapoor maintained.

But promotional efforts are not limited just by price controls – public sentiment is a sensitive issue for makers of such products as one manufacturer recently discovered.

A television ad sparked controversy with several public figures calling for an ad featuring actress Sunny Leone to be banned. Following a complaint that they were promoting obscenity in society, police interviewed the actress, the manufacturer and the advertising agency.

Data sourced from Financial Times, Economic Times, The Indian Express; additional content by Warc staff