Procter & Gamble is aiming for innovation

Procter & Gamble Israel Innovation Center director Lital Asher says P&G is interested in becoming stronger in life sciences.

Wouldn't it be nice and efficient if every time we brushed our teeth, our toothbrush told us if we had brushed well, how much plaque was on our teeth, and how many years we should expect to be able to keep our teeth, if we carry on the same way? It would be very nice, but how much would we be willing to pay for such a toothbrush?

"The secret is to bring such a technology to market, but to lower the price so that everyone could afford it," says Procter & Gamble Israel Innovation Center director Lital Asher.

Asher will attempt to interest the Israeli life sciences industry in consumer products in a lecture that is part of the "Healthcare Technological Innovation" course, which will take place December 12-14 at the Tel Aviv University Faculty of Management, sponsored by the Israel Life Science Industry Organization, and organized by DFJ Tamir Fishman Ventures managing general partner Dr. Benny Zeevi.

Excellent synergy

The volume of P&G's activity could make even the most sophisticated Israeli CEO's head spin. It has annual sales of $82 billion, and its products reach four billion out of the seven billion people living on our planet (for the sake of comparison, "only" 750 million people use Facebook). Even so, P&G still has aspirations to grow each year, and to bring its products to five billion people worldwide by next year. Is this possible? At P&G they are sure it is.

"P&G's success comes from the interface of science and a true understanding of the consumer," Asher says. "A diaper, for example, is a super high-tech product, which involves 50 processes to produce; nano-technology is involved in order to create the most advanced absorption capabilities in the world, which can then be used in other industries."

P&G is currently interested in becoming stronger in life sciences, though it is already involved in it. "Our technologies come into contact with the body, whether it's deodorant or a panty liner. Preventing dandruff deals with fungi. Toothpaste that prevents bad breath kills bacteria. When you produce a laundry detergent, you need to understand how to get fatty stains off clothing without harming the body."

"We have accumulated an immense amount of know-how pertaining to the field of health," Asher says. She provides an example of how P&G is at the forefront of science in these areas. "We are very seriously examining the question, How is it possible to neutralize the negative influences of bacteria without killing all types of bacteria, among which live good bacteria?

"We are researching how to intervene in the communication networks between the bacteria, because sometimes one bacteria on its own does not cause damage, whereas a colony of bacteria, such as a layer of plaque on teeth, start to secrete a substance that causes tooth decay."

So why did you leave the field of medicine proper?

"We chose not to stay in this field, despite the fact that its profit margins are higher, because regulations have made it not worthwhile. We prefer to focus on lifestyle, the positive side of healthcare.

"We do want to be a big player in OTC drugs, which is why we have joined Teva in creating a joint venture, which has become the largest OTC company in the world. OTC sales for both companies together are $2.2 billion. Teva provides most of the drugs, while P&G provides the marketing capabilities, although we do have a few drugs, and Teva has marketing capabilities in countries like Russia, where P&G has been less active, and therefore the synergy is excellent."

One of the venture's goals is to move drugs from the list of prescription drugs, to the OTC list, and to be ready with a relevant drug when that happens. "These drugs need a very strong marketing engine, because the consumer knows nothing about them," Asher says, explaining why this field has attracted the largest marketing company in the world.

P&G is also cooperating with early-stage companies in all of the fields in which it specializes, and has agreements with universities - including in Israel - and an R&D cooperation program with Israeli companies, with the support of the Office of the Chief Scientist. "We have agreements with all of the universities in Israel, and we have a framework agreement with the Hebrew University, because there's a critical mass of projects that we want to carry out there," Asher said. "This is a great way to enable scientists to cooperate, without the fear of friction over intellectual property concerns."

Asher gives an example of how P&G's collaboration with a life sciences company might work. "Seven years ago, we signed a cooperation agreement with a French company called Cederma, whose products heal wounds. Someone at P&G saw this and thought that this molecule could also be part of a new cosmetic product to rejuvenate skin. We added this molecule to our Olay series, a line that was not doing well at the time. Sales quickly skyrocketed. Cederma currently employs 100 people, purely as a result of this activity, and at the same time they are continuing on their way as a pharmaceutical company."

In other products, P&G integrated slow-release drug technologies, in order to release the pleasant smell of fabric softener from a garment only when it comes into contact with skin. P&G also developed makeup that is composed of two colors, one of which is released during the course of the day, after the first one has begun to fade.

Didn't you feel a need to acquire Cederma?

"No, and this was also better for them too. Joint ventures enable early-stage companies to stay intact with its knowledge and scientists. This is right for the Israeli industry too, I believe. This is one of the reasons that I am giving the lecture: I want to expand their vision to include new and creative ways to do business."

An Israeli company with which P&G had a collaboration agreement - that almost ended in an acquisition, but ultimately didn't - is ConTIPI, which produces a tampon-like device that dramatically reduces urinary incontinence. "Unfortunately, it was not successful," Asher says about the potential acquisition.

Another unexpected field in which P&G is searching for partners is companies that deal in marketing through the Internet, price comparisons, and measuring media exposure. "Ultimately, P&G is a marketing giant," Asher said. "We have an obsession with information."

As a para-health company, P&G is planning to immerse itself in Internet and mobile technology. "If we sell a skin-treatment product, we could offer the customer the option of sending us a picture, and then we send them an analysis of their skin type and how much their skin would improve by using our product," Asher says. "If we are offering a good night's sleep with the use of our Pampers diapers, we can offer a monitoring service."

Is P&G prepared to offer services?

"Yes. We believe that this is the future of our field, but probably we will do this by collaborating with other companies.

Unique products for young African women

"In order to succeed, we need to sell upgraded and interesting products to affluent customers, as well as unique products targeted at rural populations in developing countries. There is innovation in both of these," Asher says.

What kind of innovation is involved in products aimed at the third world, aside from making the technology less costly?

"There is innovation in the product, as well as in understanding the consumer. For example, a disposable diaper in Africa is such a rare and expensive commodity that it must be able to absorb throughout the entire night. They don't have money to pay for two diapers per night. On the other hand, if they used a cloth diaper or a leaky paper diaper, then they wouldn't get a good night's sleep anyway, since they all sleep together in one bed. The diaper we sell in Africa won't be of as high quality as the one we sell in Israel, but it needs to be able to absorb for a long time."

In the same manner, feminine hygiene pads sold in Africa are unique in that their purpose is to hide the fact that a woman is having her period. "Girls who are having their period are not allowed in school. They lose five days of school a month because of this, and it affects their chances of progressing professionally. We had to build a new factory to produce pads that were cheap, but effective enough to hide their period."

P&G has a full line of cleaning products for people who still wash their clothes in rivers. "This substance must not pollute the river, while at the same time counteract pollution that already exists in the water," Asher said. "You can call it Tide, but it will be a very different Tide from the one sold in the US or Israel."

And what is unique about products sold in Israel?

"Mostly the way products interact with the water, since it contains different levels of minerals than water in the US or in Europe. Israelis' hair is also different: there are more people with thick, curly hair." So, the next time that you order cosmetics over the Internet and imagine that you are in New York or Paris, don't forget that the hard water in Israel has never heard of globalization.

Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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