Consumer Drug Safety

Bayer Purchases Merck Consumer Business

One of the biggest deals to come out of the pharmaceutical world in recent weeks is the acquisition of Merck by the company Bayer, one of the largest pharmaceutical companies in the world. This acquisition now means that Bayer will own Merck’s brands, including the popular brands of Coppertone and Claritin. Bayer, a German company, will have control of these and other brands that are already quite popular in the United States. Most people know these brands, which are readily available in grocery stores and drug stores.

The acquisition, Bayer hopes, will help to expand these brands to areas outside of the United States. Even though the brands are quite popular in the U.S., they are not known very much outside of the country. Bringing these brands to market around the world should help to increase Bayer’s overall profits.

Other Big Changes in the Pharmaceutical World

This is only the latest combination of huge companies. It was only a short time ago that Novartis, GlaxoSmithKline, and Eli Lilly came together in a $28.5 billion deal. Pfizer, in the United States is currently attempting to take over AstraZeneca for $106 billion. This deal is not yet final, but it may be soon enough. Currently, AstraZeneca is saying that they do not feel it is a good deal for them yet. They are likely holding out for even more money.

The goal of these acquisitions and mergers that are coming out of the pharmaceutical world is to improve the overall market share for certain types of illnesses or diseases. Companies also want the ability to go global with the products, and it is more effective for them to purchase companies with brands that are already known and established.

Bayer’s Chairman of the Board of Management said, “Merck Consumer Care is a strong business with a portfolio of well-established product brands, such as Claritin, Afrin and Coppertone, that are leaders in their respective categories. “The combination of Merck Consumer Care’s complementary portfolio of products and geographic reach with Bayer’s will create a global consumer care business better positioned to serve consumers around the world.”

Ultimately, the sale might provide both companies – Merck and Bayer – with more strength. Merck wants to devote their time to developing other drugs to help people, and Bayer has been looking to get a larger part of the market for the over the counter consumer products, which they are getting from Merck in the form of those previously mentioned brands.

A statement from the chairman and CEO of Merck, Kenneth C. Frazier, went on to say, “The sale of our consumer care business is part of our efforts to ensure that assets within our portfolio align with our core strategy, have industry-leading potential and generate long-term shareholder value. By unlocking value in Merck Consumer Care, we’re able to further our goal of being the premier research-intensive biopharmaceutical company through targeted investments that strengthen our product portfolio and enhance our pipeline.”

The sale of the consumer care business should provide Merck with between $8 and $9 billion after taxes, and they plan to use this money to fund the business  areas that they feel have the largest potential for growth.

The unification of these large brands could prove to be good for consumers, but that all remains to be seen, as does the amount of competition these companies and brands will face. Competition is necessary for a thriving market full of new ideas and innovation, as well as price control. While it is certainly too early to tell what the positive and negative outcomes of these pharmaceutical deals might mean, it is certainly going to be interesting to watch.

Show Sources
  1. USA Today "Bayer buys Merck consumer business for $14.2B" May 6th 2014 http://www.usatoday.com/story/money/business/2014/05/06/bayer-merck-consumer-care-business/8756859/