Procter & Gamble buying Merck’s health brands for $4.2B
Procter & Gamble has announced it will acquire the consumer health business of Germany-based Merck in a $4.2 billion deal, adding more over-the-counter medications to P&G’s existing product offerings.
Merck products that will now be a part of P&G include Nasivin nasal decongestant, Febimion women supplements and Seven Seas cod liver oil, all of which are primarily sold outside the U.S. According to Bloomberg, this will greatly boost P&G’s health-related sales, which currently make up only 12 percent of its revenue from products like Vicks cough and cold products and Pepto Bismol. The company has been under consistent pressure to improve performance with its stock price falling 13 percent in the past year.
“Over the past few years, our Health Care business has delivered consistent growth and strong shareholder value creation,“ said P&G’s group president of global healthcare Steve Bishop. “The Consumer Health business of Merck … brings a strong set of brands, products and capabilities, and provides an attractive and complementary footprint to further fuel growth as we continue to grow our existing leading brands.”
Along with the acquisition, P&G will be ending its existing seven-year-old joint venture with Teva Pharmaceuticals to market their over-the-counter medicines. Teva said in a statement each company would retake control of their brands once the venture is officially terminated on July 1.
“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,” P&G said in a press release.
Merck had put the unit up for sale in 2017 as the company faces it own struggles. While it's rated as stable by Moody’s Investors Service with projected growth between 3 to 6 percent over the next 12 to 18 months, the agency also said Merck is facing both pricing erosion in the U.S. and future consolidation within the industry.
The acquisition is expected to be completed by the fourth quarter of 2018.
John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.