P&G to acquire 52% in Merck India for Rs 1300cr

On April 19, 2018, Merck KGaA announced that it has signed an agreement to sell its global Consumer Health business to Procter & Gamble (P&G) for approximately Euro 3.4 billion in cash, or approximately USD$4.2 billion at current exchange rates. About 77 per cent of the revenues are generated by the pharma or consumer healthcare business.

Prescription-free remedies offer stable sales owing to customers' brand loyalty, albeit at lower margins than pharmaceuticals. Earlier, it was reported that Merck's consumer health division had made price demands of almost 4 billion Euros that had deterred firms such as Perrigo, Bain, Cinven, and Nestle, the initial bidders for the business, from going ahead with the purchase. The business pulled in new sales of around $911 million previous year.

The transaction is part of Merck KGaA's strategy to actively shape its product portfolio and focus on innovation-driven business.

Fueled by demand for Olay skin care products and its SK-11 brand, its net sales jumped 4.3% to US$16.3bn from the year-ago quarter, which came in above Wall Street analysts' forecast of US$16.2bn.

In September 2017 Merck had said that it was preparing strategic options for its consumer health business, including a potential full or partial sale of the business as well as strategic partnerships.

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Merck has stated that the proceeds from the acquisition deal will help the firm minimize its debt, thereby offering more flexibility in running the company's operations. PGT accounts for almost all of P&G's personal healthcare sales outside of the US.

Merck said the divestment of its consumer health business did not change its goal of keeping net sales of its established prescription drugs, such as cancer treatment drug Erbitux, organically stable until 2022.

The acquisition replaces and improves upon the PGT healthcare joint venture P&G had with Teva Pharmaceutical Industries which will be terminated 1 July 2018, the press statement read. P&G will buy Merck over-the-counter OTC (OTC) dietary supplement brands such as Femibion women's health supplements, Seven Seas omega-3 fish oil, and Bion 3 immune-health supplements.

Part of the deal includes P&G's purchase of a majority stake in Merck's consumer health care business in India, Merck Ltd. Pfizer is reviewing its options after the sale of its consumer-health business fizzled in March, with potential suitors such as Reckitt bowing out.

  • Rita Burton