‘For sale’ sign could soon hang over Pfizer’s consumer healthcare business
NEW YORK — Pfizer on Tuesday might be putting its $3.4 billion consumer healthcare business on the sales block, noting that all scenarios would be considered during a strategic review of its options, which include a full or partial separation of the business from Pfizer through a spin-off, sale or other transaction.
Of course, Pfizer may ultimately determine to retain the business, the company added.
“Pfizer Consumer Healthcare is a leading player in the largest OTC categories, with iconic brands, robust retail partnerships, global reach and strong fundamentals,” stated Ian Read, Pfizer chairman and CEO. “By exploring strategic options, we can evaluate how best to fuel the future success and expansion of Consumer Healthcare while simultaneously unlocking potential value for our shareholders.”
One key question that would accompany a decision to sell the business would be whether the list of likely suitors would come from the echelon of top-10 OTC manufacturers.
According to Kline Group, based on 2016 sales Bayer (8.2% market share), Johnson & Johnson (7.5%) and GSK Consumer Healthcare (6.5%) were all bigger than Pfizer (6.2%), which stood at No. 4 on that list, followed by Procter & Gamble (4.5%), Sanofi (4.4%), Reckitt Benckiser (4%), Prestige Brands (1.9%), Church & Dwight (1.2%) and Carlyle Group (1%). The marketshare figures are attributable to Kline & Company’s latest "Nonprescription Drugs USA" study.
Many of the companies that fall below Pfizer on that top 10 list got to where they are today through acquisition. That would inlclude Reckitt Benckiser, which ranked ninth in OTC sales in 2010 but by 2016 leapfrogged into becoming the seventh-largest competitor after acquiring the Schiff and Airborne businesses.
Sanofi acquired Chattem in 2010 and then used that platform to switch OTC blockbusters Allegra and Nasacort. Sanofi also acquired the OTC rights to the erectile dysfunction remedy Cialis. If they were to successfully switch that remedy, Pfizer's Viagra would be ready for the OTC market by 2020. And last year, Sanofi executed an asset swap and acquired the consumer health business of Boehringer Ingelheim.
Prestige Brands and Church & Dwight, neither of which appeared in the top 10 OTC companies in 2010, ranked eighth and ninth, respectively, six years later in 2016.
Prestige Brands has grown by way of acquisitions, adding 17 OTC brands from GSK Consumer Healthcare. Also, its acquisition of Insight Pharmaceuticals brought the Monistat feminine product franchise and, earlier this year, the company added Summer's Eve, Fleet and Pedia-Lax to its product portfolio through the acquisition of C.B. Fleet.
Meanwhile, Church & Dwight has growth significantly following its acquisition of the Vitafusion line of vitamins.
And in the "for what it's worth" department, it was only a month ago that KKR's Nature's Bounty onboarded 30-year consumer healthcare vet Paul Sturman, who until recently captained Pfizer's OTC business.
Pfizer Consumer Healthcare markets two of the 10 best-selling consumer healthcare brands globally — Centrum and Advil. In addition, the business has 10 brands that each exceeded $100 million in 2016 sales, and several local brands that are top-ranked in their respective markets, the company reported.
Pfizer's major categories and product lines include:
Dietary Supplements: Centrum, Caltrate and Emergen-C;
Pain Management: Advil and Thermacare;
Gastrointestinal: Nexium 24 Hour and Preparation H;
Respiratory: Robitussin and Advil Cold and Sinus; and
Personal Care: ChapStick and Anbesol
“Consumers are taking more ownership of their health and wellness through OTC products, preventative treatments and alternative health paths,” said Albert Bourla, group president, Pfizer Innovative Health. “Pfizer Consumer Healthcare is playing an important role in changing the world’s well-being. Our colleagues are passionate about empowering consumers around the world to improve their health and wellness through our trusted brands, innovation, and thought leadership.”
Pfizer has engaged Centerview Partners, Guggenheim Securities and Morgan Stanley & Co. as financial advisors for the strategic review process. Pfizer expects that any decision regarding strategic alternatives for Pfizer Consumer Healthcare would be made during 2018. The company does not plan to make any further statements about the strategic review process until a decision has been reached or upon the completion of the strategic review.