Germany's Bayer plans to buy Merck & Co's consumer care business for $14.2B
Bayer CEO Marijn Dekkers addresses the media during the annual balance news conference of the chemical giant Bayer AG in Leverkusen, Germany, Friday, Feb. 28, 2014.(AP / Frank Augstein)
David McHugh And Geir Moulson, The Associated Press
Published Tuesday, May 6, 2014 6:41AM EDT
Last Updated Tuesday, May 6, 2014 8:49AM EDT
FRANKFURT, Germany -- Germany's Bayer has agreed to buy Merck & Co.'s non-prescription medicine and consumer care business for $14.2 billion, gaining products such as Claritin allergy pills, Coppertone sun lotion and Dr. Scholl's footcare products.
Bayer said the deal would make it the leader in over-the-counter products in North and Latin America. Bayer already has a major non-prescription division whose brands include Aleve pain reliever, Alka-Seltzer and One-A-Day vitamins. Bayer also makes prescription drugs, industrial materials and farm chemicals.
Marijn Dekkers, Bayer's CEO, said the deal, which is subject to regulatory approval, "marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business."
Bayer said it also has entered an agreement with Merck to co-operate on developing and selling drugs known as sGC modulators, which have potential for treating heart failure and pulmonary hypertension. Merck would initially pay Bayer $1 billion, with further payments contingent on sales.
Merck CEO Kenneth C. Frazier said the sale was part of an effort to align the company's businesses with its strategy of being the premier research intensive drug company. Merck said it would use the money from the sale to invest in business areas with the highest growth potential and augment its drug pipeline with "external assets."
Merck, like other major drugmakers, has seen its pharmaceutical sales slide due to the onset of cheaper generic versions of several drugs that once raked in billions annually. Those include the asthma and allergy pill Singulair, the allergy spray Nasonex and the blood pressure drugs Cozaar and Hyzaar.
Merck, which is headquartered in Whitehouse Station, New Jersey, reported a 7 per cent rise in first-quarter earnings late last month. But that was mainly thanks to steep cuts to administrative and marketing expenses and research spending. It reduced its global workforce by 2,000 in the quarter to 74,000.
The company has said it plans to rely on its pipeline of experimental drugs for future sales, which would make it an exception to the trend among many other drugmakers, which are pursuing big acquisitions to keep sales growing.
Earlier this month, a Food and Drug Administration panel voted against a Merck proposal to sell the drug maker's one-time bestseller, Singulair, as an over-the-counter allergy medication. Sales of the drug have plummeted since its patent expired in mid-2012.
Bayer AG, which is based in Leverkusen, Germany, said the combined consumer care business would be headquartered at a Bayer site in Whippany, New Jersey. Merck's consumer business has about 2,250 employees and is headquartered in Summit, New Jersey, about 15 kilometres (10 miles) away from Whippany.
About 113,200 people work for Bayer worldwide, while Merck has about 74,000 employees.