P&G buys Merck's consumer health business for US$4.2bn

The Procter & Gamble Company (P&G) has agreed to acquire consumer health business of Merck for approximately US$4.2 billion. The acquisition enables P&G to expand its consumer healthcare business by adding a fast-growing portfolio of differentiated, physician-supported brands across a vast geographic footprint.

It also offers P&G with healthcare commercial and supply capabilities, deep technical mastery and proven consumer healthcare leadership. This complements the company's existing consumer healthcare capabilities and brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B.

The consumer health business of Merck is active worldwide, in regions such as Asia, Europe and Latin America, and sells more than 900 products. These include Neurobion, Dolo-Neurobion, Seven Seas and Kytta. As such, the acquisition will help P&G improve its over the counter (OTC) geographic scale, category footprint and brand portfolio.

In a statement to Marketing, P&G's spokesperson said the company will welcome approximately 3,400 full-time employees to the P&G family as a result of this acquisition.

"It is too early to make any comments on the new organization structure and location of roles. I can confirm the acquisition covers Singapore, Malaysia, Indonesia, Hong Kong, China and the Philippines," the spokesperson added.

Tom Finn, president, P&G global personal healthcare, said the move helps the company to continue to drive sales and profit growth, by providing the capabilities and portfolio scale it needs to operate a winning global OTC business on its own, without the aid of a healthcare partner.

Stefan Oschmann, chairman of the executive board and CEO of Merck, described the divestment of its consumer health business as an "important step" in its strategic focus on innovation-driven businesses within healthcare, life science and performance materials.

“It is a clear demonstration of our continued commitment to actively shape our portfolio as a leading science and technology company,” Oschmann said. He added that consumer health is a "strong business" that deserves the "best possible opportunities" for its future development.

"With P&G we have found a strong, highly recognised player who has the necessary scale to successfully drive the business going forward," he said.

The acquisition replaces and improves upon the PGT healthcare joint venture P&G had with Teva Pharmaceutical Industries which will be terminated 1 July 2018, the press statement read. This is because both companies concluded that priorities and strategies were no longer aligned, and as such, agreed to terms where it would be mutually beneficial to terminate the partnership.