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Bayer buys Merck consumer health unit

Continues trend for major pharma deals
Bayer buys Merck consumer health unit

Several of the consumer health products to be taken over by Bayer

The big asset swap continued in pharma this week with the sale of Merck & Co's consumer health division to Bayer for $14.2bn.

Merck (known as MSD outside the US) said back in January that it was examining options for its animal health and consumer care businesses, and has signed a deal with Bayer for the latter which amounts to six-and-a-half times the unit's 2013 revenues.

Bayer gets some big brands for its money, including the Claritin antihistamine franchise, Coppertone sun protection products and Dr Scholl footcare range, and says bundling these with its own $7.4bn consumer health unit it will elevate it to the number two position worldwide, behind Johnson & Johnson.

The German company also expects cost synergies from the transaction of around $200m a year by 2017, while pushing Merck's products through its distribution channels outside North America will help accelerate sales by around $400m.

Bayer's move comes shortly after UK firm Reckitt Benckiser said it had ended negotiations with Merck on the consumer health unit. Analysts have suggested Reckitt considered the price tag a little high.

"This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business," said Bayer chief executive Marijn Dekkers in a statement

The agreement also includes a side deal on Bayer's soluble guanylate cyclase (sGC) modulators for the treatment of pulmonary arterial hypertension (PAH) and chronic thromboembolic pulmonary hypertension (CTEPH), with the German firm pocketing $1bn upfront plus additional milestones on sales of up to $1.1bn.

Merck will get a piece of already-approved sGC modulator Adempas (riociguat), taking the lead on commercial operations outside the Americas, and will share rights to follow-up vericiguat which is in phase IIb testing as a heart failure treatment.

The consumer care deal comes at a time when large-scale asset transfers are becoming increasingly common in pharma, as companies try to trim down their operations to focus on core, profitable businesses.

Last month, Novartis and GlaxoSmithKline strode down this path, swapping GSK's oncology portfolio with Novartis vaccine unit and forming a consumer health joint venture, with Novartis also selling off its animal health unit to Eli Lilly. 

Pfizer has taken a similar strategy - having already divested its animal health and nutrition units it is considering a further break-up of the group even as it eyes a merger with AstraZeneca.

Article by
Phil Taylor

7th May 2014

From: Sales

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