P&G Buys German Vitamin Maker Merck To Bolster Health Care Biz


Merck KGaA is to sell its consumer health business to Procter and Gamble for $4.2 billion, continuing the trend for big pharma companies to rethink their investment in over-the-counter products. Top brands include Neurobion, Dolo-Neurobion, Femibion, Nasivin, Bion3, Seven Seas and Kytta, along with many others.

The Merck division has been for sale for several months, and the price P&G announced suggests Merck lowered its asking price from almost $5 billion.

P&G, whose stable of brands include Pampers diapers, Gillette razors and Vicks cough and cold products, said that the acquisition had been agreed and would enable it to expand its portfolio of consumer healthcare products.

But intense price competition online, mainly from Amazon, as well as cheaper store-brand products have weighed on profits in the US and other Western markets.

P&G's health care brands, including Vick's, Metamucil, Crest and Oral-B, already generate $7.5 billion in annual sales, about 12 percent of P&G's total revenue. "It is a clear demonstration of our continued commitment to actively shape our portfolio as a leading science and technology company", noted Merck chairman and CEO Stefan Oschmann. And it'll also fill a void left by a healthcare joint venture between P&G and Teva, which is set to end July 1. For the full year 2017, net sales of the consumer health business amounted to 911 million pounds.

PGT accounts for almost all of P&G's personal health care sales outside of the United States.

P&G shares rose 1.3 percent in post-market trading on Wednesday in NY after shifting its third-quarter earnings report to Thursday morning from an initial plan to release results on Friday.

Merck said the divestment of its consumer health business did not change its goal of keeping net sales of its established prescription drugs, such as Erbitux against cancer and multiple sclerosis treatment Rebif, organically stable until 2022.

The sale of the global consumer health business, however, does not yet comprise its French consumer health business, where P&G has made a binding offer to acquire the shares and assets upon Merck having informed and consulted with the relevant works council representatives.

As part of the deal, P&G will buy a majority stake in the German company's Indian consumer health business, Merck Ltd, and subsequently make a mandatory tender offer to minority shareholders.