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Bayer buys Chinese consumer care company

Acquires Dihon Pharmaceutical as Algeta takeover closes

Bayer 

Bayer has boosted its consumer healthcare operations in emerging markets with a deal to acquire China-based Dihon Pharmaceutical Group.

Dihon specialises in over-the-counter pharmaceuticals, herbal remedies and traditional Chinese medicine (TCM) and brings a number of top-selling Chinese brands, including dandruff treatment Kang Wang and antifungal cream Pi Kang Wang.

The announcement - made one day ahead of Bayer's annual results teleconference - ties in with the German group's stated ambition of bolstering its via a series of 'bolt-on' acquisitions, according to Bayer's chief executive Marijn Dekkers.

"This acquisition moves us into a leading position amongst multinationals in the OTC industry in China," he added. Bayer also bought herbal medicine specialist Steigerwald in 2013, adding products such as Iberogast for functional gastrointestinal disorders and Laif for mild-to-moderate depression.

According to its website, Dihon employs more than 2,000 workers and operates a Good Manufacturing Practice (GMP) facility in Kunming with 15,000 sq. m. of production and warehousing space. The company recorded sales of around €123m last year, making it roughly twice the size of Steigerwald in terms of revenues. Bayer has not disclosed the terms of either deal.

All told, Bayer's consumer health business contributed €1.9bn out of total group revenues of €9.64bn in the third-quarter of 2013. Profits have been pegged back a little by high marketing expenses in emerging markets, however, so the addition of Dihon could provide opportunities to raise both the top and bottom lines of the unit.

The company has the ambition to become the top OTC company in the world, ahead of current market leader Johnson & Johnson, with targets of €8bn in sales this year rising to €9bn by 2015. The company has a strategy of acquiring companies that have a few big-name brands, rather than a lot of commodity lines.

"Adding the strong OTC brands from Dihon to our portfolio will significantly advance our business in China and positions us well for future growth,” said Bayer Healthcare CEO Olivier Brandicourt

"Equally important is the foothold we will gain in TCM, which makes up about half of the OTC segment in China," he added.

Meanwhile, Bayer has closed its $2.9bn takeover of Norway's Algeta, taking full control of prostate cancer radiotherapy Xofigo (radium Ra 223 dichloride), which was approved in the US last year. By the extended deadline of February 26 the company had agreements to acquire a little over 97 per cent of Algeta's stock.

Article by
Phil Taylor

27th February 2014

From: Sales

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