Pfizermay sell its consumer health biz IN A NUTSHELL
The sale could fetch as much as $15 billion
Pfizer said on Tuesday it was considering the sale or spinoff of its consumer health care business, shaking up the industry and potentially putting a headache pill to lip balm operation worth some $15 billion up for grabs.
The move comes as Germany’s Merck KGaA is also looking to divest its non-prescription products, including brands such as Seven Seas vitamins, which could be worth around $4.5 billion.
As ageing populations and health-conscious consumers drive demand for self-medication, the fragmented consumer health sector has proved a fertile ground for deal-making in recent years.
Although consumer remedies sold over the counter have lower margins than prescription drugs, they are typically very long-lasting brands with loyal customers.
Pfizer’s consumer health care business, whose brands include painkiller Advil and lip balm Chapstick, had revenue of about $3.4 billion in 2016.
Industry experts said it could fetch some four times sales, implying a potential value of just under $14 billion, although two health care sector bankers said Pfizer was aiming for at least $15 billion.
People familiar with the matter said Swiss food giant Nestlé could be among those interested, along | The move comes as Germany’s Merck KGaAis also looking to divest its non-prescription products Pfizer’s consumerhealth care business, whose brands include painkillerAdvil and lip balm Chapstick, had revenue of about $3.4 billion in 2016 Swiss food giant Nestlé could be among those interested, along with existing manufacturers of over-the-counter treatments and private equity firms Established consumerhealth companies thatmay be interested in the Pfizer assets include Reckitt Benckiser, Procter& Gamble, GlaxoSmithKline, Johnson & Johnson and Abbott with existing manufacturers of over-the-counter (OTC) treatments and private equity firms.
Pfizer, whose shares were little changed in early trading, said it would decide on the future of its consumer unit during 2018. Reuters first reported last November that a divestment of the business was under consideration.
The Pfizer business includes two of the 10 top-selling consumer health care brands globally in Advil and the multivitamin line Centrum. It also has 10 brands that each exceeded $100 million in 2016 sales.
Established consumer health companies that may be interested in the Pfizer assets include Reckitt Benckiser, Procter & Gamble, GlaxoSmithKline, Johnson & Johnson and Abbott.
They could be joined by Nestlé, which is exploring the boundaries between food and health care. Nestlé’s new CEO Mark Schneider told investors last month it would keep identifying new opportunities and that 10 per cent of group sales could be ripe for portfolio adjustment.
A second person familiar with the matter said Pfizer expected a “broadening” of buyer interest to include Nestlé.