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Merck & Co. Sells Consumer Products Unit To Bayer

Firm to sell unit for $14.2 billion, another ground shift for pharmaceuticals

by Lisa M. Jarvis
May 9, 2014 | A version of this story appeared in Volume 92, Issue 19

In the latest big pharma move to slim down, Merck & Co. will sell its consumer care business to Bayer for $14.2 billion. In a related transaction, Merck will also give Bayer $1 billion up front to codevelop a class of cardiovascular drugs.

Merck announced in January that it was considering its options for both its consumer care and animal health units, adding to a growing industry trend to trim businesses viewed as tangential to the development of innovative drugs. Other moves include Pfizer’s 2012 spin-off of its animal health unit and sale of its nutrition business; Abbott Laboratories’ spin-off last year of its innovative medicines business, AbbVie; and Novartis’s sale last month of its animal health unit to Eli Lilly & Co., a deal that coincided with it combining its consumer health businesses with that of GlaxoSmithKline, with whom it also traded its vaccines unit for GSK’s oncology products.

“The tsunami of deals sweeping the life sciences industry promises to reshape the competitive playing field,” says Jeffrey Greene, global life sciences transaction advisory services leader at Ernst & Young, who expects more multi-billion-dollar sales and swaps this year.

With the side deal, Merck gains access to Bayer’s modulators of soluble guanylate cyclase (sGC), a critical enzyme in a signaling pathway that is impaired in cardiovascular disease. The partners will equally share costs and profits from molecules developed through the pact, which includes Adempas, approved by FDA last year as a treatment for pulmonary hypertension.

For Bayer, the purchase comes amid rumors that it is interested in selling its plastics unit, which could garner more than $10 billion, to focus more on its health care business.



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