Bayer to buy Merck’s consumer care drug business for 14.2 billion

Joshua Burd//May 6, 2014

Bayer to buy Merck’s consumer care drug business for 14.2 billion

Joshua Burd//May 6, 2014

Bayer will pay $14.2 billion to acquire Merck & Co.’s consumer care business, the company said Tuesday, allowing it vault ahead in the over-the-counter drug market with the addition of brands such as Claritin and Afrin.The German pharmaceutical giant, whose U.S. offices are based in Hanover, said the cash deal will give it the “global number two position” in non-prescription products after other recent consolidations in the industry. For Merck, which is based in the Whitehouse Station section of Readington, it completes another move in the effort to reorganize its business model and reduce its footprint to cut costs.

Neither company detailed the impact on jobs in New Jersey, where the pharmaceutical industry has been changing rapidly. In a news release, Bayer said the merged business will be headquartered at its recently opened headquarters in Hanover’s Whippany section.

“This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business,” Bayer CEO Marijn Dekkers said in a prepared statement. “At the same time we are leveraging our capabilities in the cardiovascular therapeutic area.”

Bayer and Merck also will partner in developing and marketing a line of drugs to treat heart and lung diseases, the companies said. Merck will pay Bayer $1 billion under the terms of the deal and another $1.1 billion if sales milestones are met, while the companies will equally share the costs and profits from the collaboration.

The deal comes seven months after Merck’s announcement that it will cut 8,500 jobs worldwide and move its headquarters in Kenilworth, leaving behind sites in Whitehouse Station and Summit. The company said the plan, which follows other jobs cuts, will sharpen its research and development focus and yield about $2.5 billion in annual savings by the end of 2015.

“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,” Kenneth C. Frazier, Merck’s chairman and CEO said in a prepared statement. “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.”

Merck’s consumer care business also includes brands such as Coppertone, Dr. Scholl’s and MiraLAX. In 2013, the segment generated about 70 percent of Merck’s sales in the U.S., the news release said.

Merck said it expects to close the sale in the second half of this year.


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