baby talc and medical devices, posted its first sales decline in India since at least 2002, according to the company’s filings with the Registrar of Companies.
The company posted a 3% decline in sales to Rs 5,828 crore in the year ended March 2018, while profit increased 18% amid quality issues and competition that has eaten into its market share. J&J’s growth has slowed in the past few years, compared with 10-15% expansion annually for most of the past decade.
“Since J&J is not listed in India, we do not disclose market information or details that may be commercially confidential,” the company said in an email in response to ET’s queries.
Revenue from J&J’s consumer business in India, including baby talc, shampoo, ear buds and sanitary pads, fell to Rs 3,092 crore in FY18.
J&J, which posted worldwide sales of $76.5 billion in 2017, controls three-fourths of India’s Rs 4,000-crore baby care market, although it faces growing competition from companies including Dabur India and Himalaya Drug Company. Two years ago, Hindustan Unilever launched Dove-branded baby care products in a market where an estimated 26 million children are born every year.
While the company lost share in the sanitary pads segment to Japan’s Unicharm and Procter & Gamble, J&J’s share in both soaps and skincare fell 100 basis points to 3% in 2017 from over 4.5% in 2014, as per industry estimates based on Nielsen data.
India was a high-potential market for J&J with its demographic growth and the rising income level of its people. However, the slowdown for the company started in 2014, when the Maharashtra drug regulator cancelled its licence after tests showed that the baby talcum powder made at its plant was sterilised using ethylene oxide, a chemical said to cause cancer.
Although J&J went to court and got its licence back, Reuters reported last year that the company deliberately hid the fact that its talc powder contained asbestos. In response to an inspection by Indian regulators, J&J said it was in full compliance with current Indian regulatory requirements for the manufacturing and testing of its talc.
“We stand behind the safety of our talc, which is routinely tested by both suppliers and independent labs to ensure it is free of asbestos,” J&J said in a statement in December 2018. The company said its baby powder is safe and asbestos-free.
In 2017, J&J’s medical device business suffered when India capped the price of knee implants, reducing them by almost 70%. J&J took a $10 million (Rs 65 crore) hit on its international knee-implant business in the July-September quarter in 2017, which it blamed on the price cuts in India. The company called India’s decision to limit prices of stents and knee implants as one of the “extreme examples of what it has seen in other market places.”