20 Apr 2018 --- Procter & Gamble (P&G) has acquired Merck KGaA’s, Darmstadt, Germany, consumer health unit in a US$4.2 billion acquisition that hopes to boost P&G’s health care capabilities, such as with vitamins and supplements, and give them a stronger foothold in global markets.

P&G already touts healthcare capabilities, as represented by their Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B brands. However, the Consumer Health business of German-based Merck provides solutions in relieving muscle, joint and back pain, colds and headaches, as well as supporting physical activity and mobility, many of which are treatment areas not currently addressed in P&G’s portfolio.

The acquisition comes amid disappointing quarterly sales from P&G, which reflected some deteriorating numbers and slower growth in organic sales, such as in their key Gillette razor market. P&G held a conference to reveal the acquisition news but was faced largely with questions over the disappointing quarterly numbers, and the global giant was put under pressure to explain such falling numbers, The Wall Street Journal reports. The acquisition is forward looking for the company and will replace a past joint venture with Teva Pharmaceutical Industries.

“We like the steady, broad-based growth of the OTC Health Care market and are pleased to add the Consumer Health portfolio and people of Merck to the P&G family,” says David Taylor, Chairman of the Board, President and Chief Executive Officer.

The acquisition of the Consumer Health business of Merck replaces and improves upon the successful PGT Healthcare joint venture P&G had with Teva Pharmaceutical Industries, which will be terminated on July 1, 2018.

The PGT Healthcare joint venture delivered disproportionate top and bottom-line growth and established a major presence in over 50 countries since its formation.

However, following a recent review, Teva and P&G concluded that priorities and strategies were no longer aligned and agreed to terms where it would be mutually beneficial to terminate the partnership. PGT product assets will return to their respective parent companies to reestablish independent OTC businesses.

The US$1 billion Consumer Health business of Merck grew 6 percent over the past two years and provides a broad range of which top brands included are Neurobion, Dolo-Neurobion, Femibion, Nasivin, Bion3, Seven Seas and Kytta, along with many others. These are sold primarily in Europe, Latin America and Asia.

“P&G’s global scale and strategic interest in the health and well-being of consumers provide an excellent basis for accelerating growth, leveraging our teams’ capabilities and expanding the Consumer Health business profitably. The marketed portfolios, product pipelines and geographic footprints of both businesses are highly complementary,” says Belén Garijo, Member of the Executive Board of Merck and CEO Healthcare. “With this transaction, we continue to rigorously deliver on our strategy to become a global specialty innovator and bring breakthrough medicines to patients.

The Consumer Health business of Merck is active across 44 countries and includes more than 900 products. P&G is aiming to close this deal during the 2018/19 fiscal year, subject to customary closing conditions and regulatory clearances.

Consumer healthcare investments
The acquisition announcement comes fresh off the back of similar consumer healthcare investments with GlaxoSmithKline (GSK) reaching an agreement earlier this month with Novartis for the acquisition of Novartis’ 36.5 percent stake in its Consumer Healthcare Joint Venture for US$13 billion, after dropping its pursuit of the Pfizer’s consumer unit.

GSK reported that the Consumer Healthcare Business is well positioned to drive sales and earnings growth, powered by “category-leading Power Brands, science-based innovation and improved efficiencies.” Novartis reported that the sale will enable it to further focus on the development and growth of its core businesses.

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