Reckitt Benckiser’s acquisitive streak seems to have hit the buffers, after disclosing it has ended negotiations with Merck & Co on the purchase of its over-the-counter (OTC) pharma unit.
The UK-based consumer healthcare company – which has already absorbed Schiff Nutrition, a stable of OTC products from Bristol-Myers Squibb and Johnson & Johnson subsidiary K-Y in the last few months – first revealed it was in talks with Merck a few days ago.
Those negotiations seem to have been short-lived, with a terse statement issued by Reckitt yesterday indicating it is “no longer in active discussion regarding an offer for Merck’s consumer health business.”
Reports have suggested that the price Merck may have been asking for the business – possibly as much as $14bn – was the main stumbling block for Reckitt, which has been trying to increase the proportion of sales it gets from more-profitable consumer healthcare products.
Earlier this month, Reckitt reported total revenue growth in the first quarter of 5 per cent to £2.37bn (around $4bn), with its health business rising 7 per cent to £639m. Those figures exclude its prescription pharmaceuticals unit, which posted a 15 per cent fall in sales and is up for sale.
Other companies potentially interested in buying Merck’s business include Bayer, which has already offered to swap its animal health unit for the consumer health unit, according to Reuters.
Merck mulling generics sale?
The news comes amid reports that Merck is also considering the sale of a portfolio of generic pharmaceuticals that could net it around $15bn.
The move would tie in with the recent trend among big pharma companies to hive off smaller, non-core businesses, a move already undertaken by the likes of Pfizer, Novartis and of course the recent three-way deal between Novartis, GlaxoSmithKline and Lilly.