Sector News

Merck KGaA will hold onto its consumer health biz–for now

December 1, 2014
Life sciences
Selling off OTC businesses is the trend du jour in Big Pharma, but Merck KGaA is not jumping on the bandwagon. The company is planning to hold on to its consumer healthcare unit in a move that could deliver a much-needed boost as it deals with its slumping drug portfolio.
 
Merck KGaA expects to rack up $1 billion in 2014 sales by expanding its over-the-counter division and has no intention of letting go of its consumer healthcare business, Uta Kemmerich-Keil, CEO of Merck Consumer Health said in a briefing, Reuters reports. The company in September shelled out $17 billion for laboratory supplies maker Sigma-Aldrich, prompting some speculation of a possible sale of its consumer unit. But for now, at least, Merck is not budging.
 
“We really want to stick to that business,” Kemmerich-Keil explained in the briefing in London (as quoted by Reuters). “Our strategy is a pure growth strategy and by the end of this year we will hopefully hit the $1 billion sales mark.”
 
The company also has its eye on global markets, planning to have at least three leading brands with a minimum 3% market share in target countries, including a number of emerging markets like Brazil where demand for OTC products is growing by leaps and bounds. The strategy falls in line with Merck KGaA’s plans to beef up its presence overseas, as in July CEO Karl-Ludwig Kley said that the company would add nonprescription drugs to its offerings in China to achieve sales of €1.3 billion by 2018.
 
Small, bolt-on acquisitions or licensing deals could help Merck KGaA achieve its sales goals in the long run, but the drugmaker does not feel the need to make any large-scale deals for now, Kemmerich-Keil said during the briefing.
 
“OTC is a local play, so you need to make sure in the markets you are in that you are strong,” she said. “It’s not important how big the overall business is.”
 
Merck KGaA is far from the only company with its eye on OTC growth, as big names in pharma are looking for their cut of the profits. In April, Novartis pulled off a $20 billion asset swap with GlaxoSmithKline, melding its over-the-counter medicines and health products with Glaxo’s consumer unit. The resulting business, dubbed “GSK Consumer Healthcare,” is expected to produce $10 billion in annual sales, competing with larger, consumer-focused rivals.
 
In May, Bayer snatched up Merck’s consumer health unit for $14.2 billion, vaulting the drugmaker to the top of the OTC market and helping it develop a stronger presence overseas. Last month, Perrigo snatched up Belgium’s Omega Pharma in a deal valued at $4.5 billion, fueling its international growth strategy and solidifying the drugmaker’s position in the European OTC market.
 
By Emily Wasserman
 

comments closed

Related News

September 25, 2022

Rise of the machines: Novo Nordisk pledges $200M to create first quantum computer for life sciences

Life sciences

Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.

September 25, 2022

Mount Sinai AI uncovers new brain analysis method to predict dementia, Alzheimer’s disease

Life sciences

Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.

September 25, 2022

New AstraZeneca-backed report finds big money behind diverse owners and entrepreneurs in Europe

Life sciences

There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.