Print“This partnership will create value by immediately expanding the number of channels and geographies in which each company's OTC products will be sold.”
Procter & Gamble and Teva Pharmaceutical are forming a joint venture to accelerate sales of their over-the-counter medicines outside North America, where they anticipate aging consumers and growing purchasing power will create new profit opportunities.
The companies’ combined sales in markets included in the joint venture totaled more than $1 billion in 2010 and could reach as much as $4 billion in the future, the companies say. The transaction is expected to close in the fall of 2011.
Over-the-counter medicines offer significant growth potential for both companies in developed and emerging markets. In particular, a strategy of transitioning prescription drugs soon to face generic competition to over-the-counter versions may extend the profitable life of certain brands. Procter & Gamble has already found success with such a strategy in brands including Aleve and Prilosec.
The partnership puts Teva in charge of global manufacturing and supply for all of the drugs covered by the deal, including P&G brands such as Vicks, Metamucil, and Pepto-Bismol. In addition, Teva will manufacture medicines for P&G’s existing over-the-counter business in North America.
“This partnership will create value by immediately expanding the number of channels and geographies in which each company's OTC products will be sold," says Shlomo Yanai, Teva's president and CEO. "Together, we will develop a new platform with the potential to reshape the entire global OTC market.”
March 25, 2011
http://www.burrillreport.com/article-procter_gamble_and_teva_forming_otc_drug_venture.html
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