In what an executive familiar with Mr. Lafley's plans called the hardest look P&G's brand portfolio has ever received from a CEO, most of P&G's prescription drug brands and some other second-tier brands have been given as little as a year to meet performance goals. If they miss, they could hit the selling block.
Among its Rx drug brands, only Actonel, the prescription osteoporosis remedy being launched in the U.S. and deemed by P&G execs as a potential $1 billion brand, is safe for the foreseeable future, the exec said. Other prescription drug brands in the P&G portfolio-such as ulcerative colitis drug Asacol, ulcer drug Helidac and bone-health drug Didronel-could be sold if they don't at least break even within the next 12 months.
Besides Actonel, currently rolling out in the U.S. and Europe and backed by advertising from Grey Global Group, New York, the remainder of P&G's prescription drug business has sales of only about $800 million annually. The brands receive little media support other than interactive and professional advertising. Stedicor, a heart arhythmia drug on which P&G had also placed high hopes, is still awaiting U.S. Food & Drug Administration approval.
"It sounds like nonsense to me," said a P&G spokeswoman of the possible drug divestiture. "The brands we have there are established. We have a really nice market share. It doesn't make a whole lot of sense that we would separate things."
P&G has been evaluating its brands in other categories as well, the executive said. In beauty care, the Olay, Cover Girl and Japanese SK-II cosmetic and skin-care brands are all likely "keepers," he noted. But the Max Factor cosmetics brand, handled by Leo Burnett Co., Chicago, may be divested. Brands in P&G's food and beverage business, a sector where sales were off 11% last quarter, will also get "a hard look," he said.
Decisions on P&G's portfolio and divestiture strategy will be made over the next one to two years, Mr. Lafley told analysts in September, beginning with P&G's annual budget process that begins next month.
Struggling brands will get a "fix-it-fast" plan in which they will either have to meet performance goals or face divestitures. What Mr. Lafley called "average" brands that aren't No. 1 or 2 in their categories will have to develop plans to "do better than average fast." But he said divestiture decisions will be made on a brand-by-brand basis rather than by categories or businesses.