Germany's Merck aims to grow, not sell $1 billion consumer health arm

November 30
10:11 AM 2014

Merck KGaA (MRCG.DE) aims to keep hold of its consumer healthcare unit, it said on Friday, pledging to develop a business that is expected to generate 2014 sales of $1 billion for the German drugs and chemicals company.

The non-prescription market has seen a wave of consolidation this year and a $17 billion deal for Merck to buy laboratory supplies business Sigma-Aldrich (SIAL.O) has prompted some bankers to speculate it might consider selling the consumer unit.

But the family-controlled company insists it has no intention of quitting.

"We really want to stick to that business," Uta Kemmerich-Keil, chief executive of Merck Consumer Health, said during a media briefing in London highlighting the unit's strengths. 

"Our strategy is a pure growth strategy and by the end of this year we will hopefully hit the $1 billion sales mark."

Consumer health is smaller than Merck's other businesses selling prescription drugs, high-tech chemicals and laboratory equipment but has strong brands like Seven Seas vitamins and Bion probiotics.

It also received a boost in January from the transfer of Neurobion and Floratil, for muscle soreness and diarrhoea, from the prescription drug unit Merck Serono.

Kemmerich-Keil said she aimed to have at least three leading brands with a minimum 3 percent market share in key target countries, which include a number of emerging markets, like Brazil, where demand for self-medication is growing strongly.

While securing strong positions in local markets could involve small bolt-on acquisitions or licensing deals, she sees no need for large-scale acquisitions, despite recent moves by leading players Bayer (BAYGn.DE) and GlaxoSmithKline (GSK.L) to boost their OTC footprints.

"OTC is a local play, so you need to make sure in the markets you are in that you are strong," she said. "It's not important how big the overall business is."

This year's deal-making has seen Bayer acquire the OTC business of Merck's U.S. namesake Merck & Co (MRK.N), following a fiercely contested auction also involving Reckitt Benckiser (RB.L). GSK has also clinched a complex deal for a stake in Novartis's (NOVN.VX) consumer products, while Perrigo (PRGO.N) has agreed to buy Belgian OTC firm Omega Pharma.

Following the deals, Germany's Merck now has a No. 11 position in consumer health.

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