For Sale: Pfizer's $3.4 Billion Consumer Healthcare Business

For Sale: Pfizer's $3.4 Billion Consumer Healthcare Business
October 10, 2017
By Mark Terry, Breaking News Staff

New York – Pfizer is deciding whether to sell, spin off or keep its Consumer Healthcare business. The unit raked in $3.4 billion last year, selling some of the best-known brand names in the world, including Advil and Preparation H.

“Pfizer Consumer Healthcare is a leading player in the largest OTC categories, with iconic brands, robust retail partnerships, global reach and strong fundamentals,” said Ian Read, Pfizer’s chairman and chief executive officer, in a statement. “Although there is a strong connection between Consumer Healthcare and elements of our core biopharmaceutical businesses, it is also distinct enough from our core business that there is potential for its value to be more fully realized outside the company. By exploring strategic options, we can evaluate how best to fuel the future success and expansion of Consumer Healthcare while simultaneously unlocking potential value for our shareholders.”

Pfizer Consumer Healthcare has at least five major categories: dietary supplements, pain management, gastrointestinal, respiratory and personal care. Brand name products include Centrum, Caltrate, Emergen-C, Thermacare, Nexium 24 Hour, Robitussin, ChapStick and Anbesol. Ten of the company’s brand each exceeded $100 million in sales in 2016.

Pfizer has hired Centerview Partners, Guggenheim Securities and Morgan Stanley & Co. as financial advisors to assist with the strategic review. Any decision will be made next year.

“Consumers are taking more ownership of their health and wellness through OTC products, preventative treatments and alternative health paths,” said Albert Bouria,president of Pfizer Innovative Health, in a statement. “Pfizer Consumer Healthcare is playing an important role in changing the world’s well-being. Our colleagues are passionate about empowering consumers around the world to improve their health and wellness through our trusted brands, innovation, and thought leadership.”

Reuters noted that Merck KGaA, based in Germany, employed JP Morgan last month to sell is consumer healthcare business. The company’s healthcare business has sales of approximately $1 billion a year, which helps fund research into prescription drugs. The rationale is that to remain competitive, it needs more investment, so it’s evaluating a sale or strategic partnership.

“We expect increasing internal constraints to fund the business to reach the required scale,” Merck’s Belen Garijo, chief executive of its Healthcare division, said in a statement. “Any possible proceeds from a potential transaction would be used to deliver on the company’s overall financial targets.”

Bernstein analysts estimate that Merck KGaA’s consumer healthcare business could run $4.4 billion. Of a Merck sale, Bernstein wrote, “Consumer health is an industry ripe for consolidation and there are a handful of key players who may participate in the process.”

Barring the idea of Merck KGaA and Pfizer developing some sort of mega-consumer healthcare business together, potential players include Reckitt Benckiser, GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Bayer and Sanofi (SNY). A less obvious buyer would be food company Nestle.

According to Euromonitor International, the global market for consumer health products is about $233.2 billion this year, and is viewed as a fragmented market. Merck KGaA, for example, ranks as 32, with only 0.4 percent of the market. Nestle has indicated it’s interested in the market, which would potentially tie into its sports nutrition and weight management products. Reckitt Benckiser, based in the UK, has made several acquisitions in the consumer healthcare arena in recent years, including Mead Johnson, a maker of baby foods, for $17 billion.

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