P&G agrees to buy Merck’s consumer healthcare business

PROCTER & GAMBLE has agreed to buy German drugmaker Merck’s consumer healthcare unit for €3.4bn (US$4.1bn).

P&G says the deal fills gaps in its existing healthcare portfolio, adding products such as Seven Seas and Neurobion supplements to a suite of brands that currently includes Oral B toothpaste and Vicks ointment.

Announcing the deal, P&G said Merck’s brands “relieve muscle, joint and back pain, colds and headaches, as well as supporting physical activity and mobility, many of which are treatment areas not currently addressed in P&G’s portfolio”.

Merck’s consumer healthcare business grew 6% last year, which The Financial Times noted is faster-growing than its household products, which include Pampers nappies and Gillette razors. P&G unveiled quarterly results – organic sales climbed 1% in Q3 – that fell short of analysts’ predictions and saw its share price drop 2.7%.

Its purchase came alongside news that it has mutually agreed to end its healthcare joint venture with Teva in July. The companies have concluded that their priorities and strategies are no longer aligned and will take back their assets into their respective groups.

Merck said the sale is an important step in its strategy to focus on its pharmaceutical and performance materials businesses.

P&G’s moves come amid a wider restructuring of the consumer healthcare market. In March, GSK agreed to pay US$13bn to take full control of its consumer healthcare venture with Novartis. This came hot on the heels of Pfizer’s stalled sale of its own consumer healthcare business after GSK joined Reckitt Benckiser and Johnson & Johnson in walking away from a potential deal.