Merck KGaA expects its consumer health sales to hit the $1bn mark in 2014, but said it is unlikely to follow this year’s trend for major deals in the sector.
Uta Kemmerich-Keil, chief executive officer and president of Merck’s Consumer Health division, told a media event on Friday: “It’s important to understand that you need to win locally – sheer size in itself is not the key element.
“What’s important to us is that, in the markets where we are we want to win, we want to be big enough to compete with Bayer, with Novartis, with the other big players – that’s feasible.”
The company’s long-term strategy in consumer health is to focus on 20 core markets and hold a 3% market share in each of them with at least three products in the top sales positions.
“What we want to do is reach the strategy and it might be that there are areas where we say it won’t do organically and then we look for inorganic growth,” Kemmerich-Keil (pictured above) told PMLiVE.
“I would call them more ‘bolt-ons’ – this is not a big strategic move [across] many countries, it’s much more to make sure that we grow in the markets where we need some additional muscle.”
More than 50% of the company’s sales come from emerging markets, with Brazil – where its growth is running at 20% plus – among its key targets, and it’s these territories that are responsible for most of Merck’s growth, Kemmerich-Keil said.
She acknowledged that, despite this year’s rash of major deals, there remains a lot of room for further consolidation in the “scattered” consumer health sector, and noted that “more and more players want to occupy this space”.
Also speaking at Merck’s consumer health media event was Datamonitor Healthcare analyst Ali Al-Bazergan, who said consumer health was “an industry poised for more consolidation”, following deals involving Novartis and GlaxoSmithKline, and Bayer.
“Key industry players are looking at their own portfolio and seeing where their strengths and the trend towards ‘precision M&A’ will have a big effect on consumer health,” Al-Bazergan said.
He added: “A key theme in consumer health is the internationalisation of brands. We’ve seen Perrigo acquire Omega, and that’s not necessarily to build its expertise in North America, it is to drive its own brands into Europe.”
The burgeoning interest in consumer health has drawn in some, but not all, pharma companies and that interest is reflected at a country level as governments look to relieve the pressure on their health systems.
Jo Pisani, a partner at PwC’s global pharmaceuticals and life sciences practice, explained: “From a healthcare efficiency point of view there’s no doubt about it – if you can get patients to self-diagnose, self-treat and self-pay that’s tremendously efficient for healthcare economies.
Healthcare costs in some developed countries are running in excess of 15% of GDP, Pisani noted, adding: “With an ageing population that’s living longer and getting fatter, cost containment is clearly important.”
• Read a full interview with Merck Consumer Health’s Uta Kemmerich-Keil first in the print edition of PME in the New Year