Print“The decision to divest our ophthalmics business is part of our ongoing strategy to sharpen our commercial focus and improve our operational effectiveness, says Jay Galeota of Merck.”
Amid a flurry of M&A activity, many big pharmaceutical companies are shedding non-core assets in an effort to become more focused and efficient as they position themselves in a global healthcare environment where drug pricing is a growing concern.
Merck followed up the $14.2 billion sale of its consumer products division to Bayer by offloading its ophthalmology products in Japan and key markets in Europe and Asia Pacific to Japanese pharmaceutical Santen for $600 million upfront and sales-based milestone payments. These products brought in annual sales of approximately $400 million.
“The decision to divest our ophthalmics business is part of our ongoing strategy to sharpen our commercial focus and improve our operational effectiveness,” says Jay Galeota, president, Hospital and Specialty Care, Merck.
Merck divested its U.S. ophthalmology business to Akorn Pharmaceuticals in 2013 and 2014. It still markets them in Latin America, Canada, Australia, Africa, the Middle East, and other markets.
Bayer, which just increased its focus on over-the-counter consumer products, sold its peripheral interventional products division to Boston Scientific for $415 million in cash. The division, which offers technologies to treat coronary and peripheral vascular disease, generated sales of $120 million in 2013.
And GlaxoSmithKline sold the U.S. rights to its migraine drug Treximet to Pernix Therapeutics for $250 million plus royalties as its focuses its efforts in respiratory diseases, vaccines, and consumer products.
These deals follow the recent multi-billion dollar swap of assets between Novartis and GlaxoSmithKline in which they sold divisions where they were not leading players in order to beef up areas where they can be the dominant player in the global market. Novartis also sold its Animal Health unit to Eli Lilly for $5.4 billion.
After weathering several years of diversification as the way forward for sustained revenue growth in the face of billions of dollars in revenue losses due to patent expirations, Big Pharmas are rethinking that strategy, concentrating on their core areas of expertise, and jockeying for the best strategy in the face of a changing healthcare landscape.
May 16, 2014
http://www.burrillreport.com/article-shedding_non_core_assets.html
