The Telegraph
Wednesday , May 7 , 2014
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Bayer to buy Merck unit for $14.2bn

Drug dose

Frankfurt, May 6 (Agencies): Merck & Co has agreed to sell its consumer care business to Germany’s Bayer AG for $14.2 billion, adding to a string of major cross-border health care deals.

Merck on Tuesday also announced a worldwide clinical development collaboration with the German firm.

The two companies have entered into a definitive agreement under which Bayer AG will acquire Merck’s over-the-counter business, including the global trademark and prescription rights for Claritin (anti-allergy) and Afrin (nasal spray).

“This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business,” Bayer’s chief executive Marijn Dekkers said in a statement.

“The sale of our consumer care business is part of efforts to ensure that assets within our portfolio align with our core strategy, have industry-leading potential and generate long-term shareholder value,” Merck chairman and CEO Kenneth C. Frazier said.

Merck said it expected after-tax proceeds of between $8 billion and $9 billion from the sale, which is expected to close in the second half of 2014.

Reckitt Benckiser Group, one of the final contenders in the auction, said on April 30 it was no longer in active talks to buy the Merck business, leaving Bayer in pole position to win the business.

The transaction, the largest in the German health care industry since Bayer bought rival Schering in 2006, will make Bayer the second biggest over-the-counter drugs maker after Johnson & Johnson.

Bayer, the inventor of aspirin and maker of Bepanthen skin care products and Canesten antifungal creams, has repeatedly said it wanted to overtake J&J in the rankings.

Bayer has also entered into a pact 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 has seen its pharmaceutical sales slide because of the onset of cheaper generic versions of drugs that once raked in billions annually.

J&J commands about 4 per cent of the consumer health market — worth nearly $200 billion at the retail level — followed by Bayer and GlaxoSmithKline (GSK). Merck has around 1 per cent with brands, including Coppertone sunscreen and Claritin.

The fractured industry is consolidating fast. Novartis and GSK will form a joint venture in consumer healthcare as part of their agreement last month.