Bristol-Myers Squibb took another step towards exiting the consumer healthcare market by licensing Latin American rights to a portfolio of over-the-counter (OTC) brands to Reckitt Benckiser.
Under the terms of the deal, Reckitt will pay a large upfront fee of $438m for a three-year license to distribute the products, plus a $44m option fee for the rights to buy them outright at the end of that period.
The products – which make most of their sales from Mexico and Brazil and are top brands in their categories – include antacid Picot, pain-reliever Tempra, sore throat remedy Graneodin, antifungal Micostatin, nappy rash treatment Dermodex, Naldecon for colds and flu and anti-flatulence product Luftal.
BMS will continue to manufacture all of the products, either in-house or via contractors, and will sell them to Reckitt, which will also pay royalties on sales. These came in at $102m during 2012.
The US-headquartered pharma company has been exiting consumer healthcare and other non-core markets in favour of a tighter focus on R&D-based prescription medicines since 2007 when it introduced its ‘string of pearls’ strategy.
This strategy which has focused on the development and licensing of novel and first-in-class biopharmaceuticals.
Most notably, BMS divested infant nutrition unit Mead Johnson in 2009, a year after selling wound-care specialist ConvaTec and medical imaging unit Avista.
“This agreement allows us to increase our focus on the launch and commercialisation of our innovative portfolio in these important markets in Latin America,” commented Charles Bancroft, BMS’ chief financial officer.
Meanwhile, Reckitt has been steadily acquiring consumer health assets and shifting away from its traditional focus on personal and household care products, buying Schiff Nutrition last November in a $1.4bn deal, Durex condom manufacturer SSL in 2010 for $3.88bn and Adams Respiratory in 2007 for $2.3bn.
It also acquired Boots in 2008 for £1.93bn (around $3bn), but lost out to Johnson & Johnson in a bid for Pfizer’s OTC unit in the same year.
The BMS deal is expected to close in the second quarter of this year, subject to anti-trust approvals.