Proctor and Gamble 2003 Annual Report Download - page 17

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Our objective in Health Care is to lead Company growth
by helping people and pets live longer, healthier lives.
We’ve built a rapidly growing, profitable Health Care
business by focusing on the successful commercialization
of breakthrough innovation, strategic acquisitions and
partnerships, and operating cost discipline.
Innovation. Successful innovations include Actonel, our
prescription osteoporosis drug, which reached $650 million
in worldwide alliance sales after only three years in the
market. In Oral Care, Crest Whitestrips has reached almost
$300 million in sales and continues to grow. We’ve added
another whitening innovation with Night Effects, a “liquid
strip” that whitens your teeth while you sleep. In Personal
Health Care, we created a new category with ThermaCare,
a therapeutic heat wrap that is 33% more effective than
ibuprofen in reducing lower back pain. We’ve grown our Pet
Health and Nutrition business behind breakthroughs such as
Iams and Eukanuba Dental Defense. In just the last three
years, we’ve introduced innovations across Health Care that
represent well over $1 billion in new sales.
Acquisitions, Partnerships and Alliances. We actively
seek to add to our own innovation by identifying and
effectively executing strategic acquisitions, partnerships and
alliances. We look for opportunities where the combination
of an external brand, product or technology and P&G’s
capabilities can create significant incremental value for
shareholders. We bought the Iams Company four years ago.
Since then, we’ve nearly doubled sales to $1.5 billion. Iams
is now the #1 dog and cat food brand in both the U.S. and
Canada, up from #5 at acquisition. We acquired the
Dr. John’s SpinBrush business in January of 2001 and more
than doubled this business to more than $200 million,
stimulating growth of the power brush segment, which is
increasing 25% per year. We’re creating a growing water
purification business with PUR, which we bought three years
ago and have grown by more than 50%.
Cost Control. Innovations are successfully commercialized
only if they provide meaningful value to consumers. To
ensure that we can offer good value to retail customers and
consumers day in and day out, and at the same time create
value for shareholders, we maintain constant focus on cost
control. Our capital spending as a percentage of sales in
2003 was 2.5% – among the lowest in the Company and
the industry in which we compete. Margins have improved
over the last two years, as profit growth has outpaced
sales growth.
We believe the future for Health Care is one of continued
high growth. We’re currently launching Prilosec OTC for
the treatment of frequent heartburn. Prescription-strength
Prilosec was the top-selling pharmaceutical drug in the
world. Actonel continues to build share in major markets,
including the U.S., Germany, France, Canada and the UK –
and the prescription market for osteoporosis treatments
continues to grow. Less than 25% of consumers who have
osteoporosis are currently diagnosed.
We have an exciting pipeline of innovation across Health
Care that we’ll be commercializing in the months and
years ahead. We’ll continue to develop this with smart
acquisitions, partnerships and alliances. With ongoing
cost optimization, we expect that profits will continue to
grow ahead of sales.
We expect the future of Health Care to be one of continued
high growth. We’ve built a fast-growing, profitable business
with breakthrough innovation, strategic acquisitions and
partnerships, and operating cost discipline.
Bruce L. Byrnes
President