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P&G agrees $4.2bn buy of Merck KGaA’s consumer health unit

Will also access Merck’s big-selling Neurobion and the Nasivin nasal decongestant range

Merck KGaA

The game of pass-the-parcel for pharma’s unwanted divisions continues apace, with Proctor & Gamble agreeing to take control of Merck KGaA’s consumer health business.

The €3.4bn ($4.2bn) price tag agreed for the unit is at the lower end of analyst expectations and gives P&G access to big-selling brands such as Neurobion, a vitamin B supplement, and the Nasivin nasal decongestant range. Sales have grown organically by 6% over the last two years, reaching €911m in 2017.

P&G said the takeover will help expand its over-the-counter business' “geographic scale, brand portfolio and category footprint in the vast majority of the world’s top 15 OTC markets”, highlighting products for muscle, joint and back pain, colds and headaches, and supporting physical activity and mobility, “many of which are treatment areas not currently addressed in P&G’s portfolio”.

The deal comes as P&G agreed to terminate its seven-year-old joint venture with Teva, which the two companies said was up for review in February.

Merck revealed it was considering a sale or partnership of its consumer health unit last year, marking a departure for the traditionally conservative, family-owned group, which for many years has stayed faithful to its diversified strategy spanning pharma, consumer health, research tools and chemicals.

P&G has won the unit despite interest from other partners, including Nestle, Novartis and reportedly Mylan, which as recently as last week was said to be in advanced negotiations. Mylan bought a Merck generics business more than 10 years ago.

“We like the steady, broad-based growth of the OTC healthcare market and are pleased to add the consumer health portfolio and people of Merck KGaA,” said P&G chief executive David Taylor.

News of the sale comes amid a flurry of deal-making in the pharma sector, with companies selling and swapping units deemed outside their main areas of interest. In the last few weeks Sanofi has sold its European generics business to Advent, GlaxoSmithKline divested its rare disease unit to start-up Orchard Therapeutics after buying Novartis out of a consumer health joint venture last month, and Shire has sold its oncology business to Servier.

Pfizer has also been trying to agree a sale for its consumer health unit, but has had no luck so far, with GSK and Reckitt Benckiser both opting not to proceed with a bid after entering into preliminary negotiations.

Article by
Phil Taylor

19th April 2018

From: Sales

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