Print“This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business, says Bayer CEO Marijn Dekkers. ”
German pharmaceuticals giant Bayer agreed to buy Merck’s consumer care business for $14.2 billion (€10.4 billion), to become the second largest player globally in the non-prescription over-the-counter products and significantly increase its business in North America and across multiple therapeutic categories.
In conjunction with the acquisition, Merck and Bayer have forged a $2.1 billion global co-development and co-commercialization agreement focused on soluble guanylate cyclase, or sGC, modulators as therapeutic treatments for cardiovascular disease. As part of that alliance, Merck will pay Bayer $1 billion upfront and up to another $1.1 billion in sales-based milestone payments.
Bayer’s purchase of Merck’s OTC products, which follows the recent multi-billion dollar swap of assets between GlaxoSmithKline and Novartis, is the latest in a recent spate of acquisitions as major pharmaceutical companies position themselves in the changing global healthcare environment by building up areas of strength and shed underperforming divisions.
“This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business,” says Bayer CEO Marijn Dekkers. “At the same time we are leveraging our capabilities in the cardiovascular therapeutic area.”
Bayer sees opportunity in building scale in an area where it already has a significant presence. North America accounts for 70 percent of sales for Merck’s OTC products, which include leading brands such as Claritin, Coppertone and Dr. Scholl’s. Pro forma sales of the combined businesses in 2013 were $7.4 billion (€5.5 billion) with Merck’s business contributing approximately $2.2 billion.
“With this transaction, we are acquiring leading product brands that will make Bayer the OTC leader in North America and Latin America and also move us into top global positions in key OTC product categories,” says Olivier Brandicourt, CEO of Bayer HealthCare.
Bayer also expects its strong commercial presence outside the United States to drive sales of the combined business, especially in dermatology and gastrointestinal products, two of the five most important non-prescription healthcare product categories.
The $14.2 billion purchase price includes a payment associated with sales of Claritin and Afrin in certain countries where these products are still available only by prescription. The deal is expected to close in the second half of 2014 and will be treated as an asset purchase, for which Bayer expects to receive significant tax savings from the first year after closing.
Bayer and Merck also agreed to enter into a strategic pharma collaboration in the area of cardiovascular diseases with a focus on sGC modulation that may have the potential to address diseases such as certain forms of pulmonary hypertension or heart failure.
The collaboration includes Bayer’s Adempas, which is already approved for the treatment of certain types of pulmonary hypertension and is being developed for other life cycle indications, as well as vericiguat, an investigational compound that is currently being developed in two mid-stage studies in worsening chronic heart failure. The collaboration also includes sGC modulators presently in earlier stages of development.
The pharmas will equally share costs and profits from the sGC modulators and implement a joint development and commercialization strategy. Bayer will lead the commercialization for Adempas in the Americas while Merck will lead the commercialization outside the Americas. For vericiguat and other potential investigational sGC modulators, Bayer will lead the commercialization outside the Americas while Merck will lead the commercialization in the Americas. Both companies will have the option to co-promote Adempas and the follow-on sGC modulators in each other’s territories.
Under their agreement, Merck will pay Bayer $1 billion upfront and sales-based milestone payments of up to $1.1 billion related to future sales of certain collaboration compounds including Adempas.
May 09, 2014
http://www.burrillreport.com/article-bayer_buys_merck%e2%80%99s_consumer_medicines_for_14_2b.html
