Five key transaction trends in consumer healthcare

Five key transaction trends in consumer healthcare
The influence of private-equity extends far and wide in the consumer healthcare industry, says Deborah Wilkes, founder and editor & publisher of OTCToolbox

22 February 2022 - Alaric Waterson

Five key transaction trends in consumer healthcare have been identified by Deborah Wilkes, founder and editor & publisher of OTCToolbox.

Speaking at the OTCToolbox 2022 Consumer Healthcare BD&I Event, Wilkes said pharmaceutical companies announcing plans to spin off their consumer healthcare businesses was one of most important trends over the past two years.

Wilkes said an analysis of deals on the OTCToolbox Transactions Database showed that portfolio streamlining by leading consumer healthcare players was a second key trend and was releasing assets for small- and medium-sized companies (click here to find out more about the OTCToolbox Transactions Database).

A third significant trend was the way vitamins, minerals and supplements (VMS) assets were changing hands at a rapid pace, she continued, while a fourth trend was the way private-equity firms were buying and selling consumer healthcare and OTC assets.

The fifth trend highlighted by Wilkes was the way the consumer healthcare industry was keen to strengthen its presence in e-commerce, personalisation and other digital areas.

FIVE KEY CONSUMER HEALTHCARE TRANSACTION TRENDS

  • Pharmaceutical companies spinning off consumer healthcare businesses
  • Portfolio streamlining by leading consumer healthcare/OTC players is releasing assets
  • Vitamins, minerals and supplements (VMS) assets are changing hands at a rapid rate
  • Private-equity groups buying and selling consumer healthcare/OTC assets
  • Interest in e-commerce, personalisation and other digital technology assets

Discussing the trend for pharmaceutical companies to spin off their consumer healthcare businesses, Wilkes pointed out that all of the leading global OTC players – with the exception of Perrigo – were currently part of multi-business companies.

But that was set to change, said Wilkes, as GlaxoSmithKline (GSK) and Johnson & Johnson (J&J) had both recently announced plans to separate their consumer healthcare businesses.

GSK has just announced that Haleon will be the new name for GSK Consumer Healthcare following the planned demerger in mid-2022 (click here to read the News story).

Wilkes said it remained to be seen how the story would end for GSK Consumer Healthcare and J&J Consumer Health.

In January of this year, GSK revealed it had rejected three Unilever takeover offers for its Consumer Healthcare business, including one worth GBP50 billion. The company said all three offers fundamentally undervalued the Consumer Healthcare business and its future prospects (click here to read the News story).

For its part, Unilever said consumer health was an attractive strategic option, and GSK Consumer Healthcare would be a strong strategic fit.

However, Unilever faced a backlash from investors, and the company has since said it will not increase its offer for GSK Consumer Healthcare above GBP50 billion (click here to read the News story).

Portfolio streamlining

Moving on to portfolio streamlining, Wilkes noted that several of the leading global consumer healthcare players had been busy streamlining their portfolios including Bayer Consumer Health, GSK Consumer Healthcare, J&J Consumer Health, Reckitt and Sanofi Consumer Healthcare.

One of the best examples in 2021, continued Wilkes, was Sanofi Consumer Healthcare which announced a year ago that it intended to divest 60% of its brands over the next two years. The business said the move would reduce its portfolio from more than 250 brands to roughly 100 (click here to read the News story).

In the year since the announcement, Sanofi has struck deals with a number of companies including Brazil’s Hypera Pharma and Germany’s Stada.

Julie Van Ongevalle – the worldwide head of Sanofi Consumer Healthcare – said recently that Sanofi Consumer Healthcare had now divested and pruned 111 non-core brands, representing a reduction in brands of 40%. The business has reduced its trademarks by 50% and its domain names by 30% (click here to read the News story).

VMS assets changing hands rapidly

Wilkes also talked about the trend for VMS assets to change hands at a rapid rate. This was not a new trend, she said, as these assets had been changing hands at a rapid pace for a few years.

“Plenty of owners have been willing to sell and plenty of acquirers have been willing to buy,” observed Wilkes.

She highlighted one transaction in 2021 which saw Nestlé acquire The Bountiful Company’s core VMS brands from private-equity firm KKR for USD5.75 billion (click here to read the News story).

The deal, which was announced in April 2021, gave Nestlé the Nature’s Bounty and Solgar brands. The business is now part of Nestlé Health Science.

Wilkes noted that Nestlé had become a major player in the VMS market in recent years through a series of acquisitions including Atrium Innovations, IM HealthScience, Nuun, Persona and Vital Proteins.

Private-equity’s influence

Moving on to private-equity firms, Wilkes said their influence extended far and wide in the consumer healthcare industry.

She pointed out that many companies were building their consumer healthcare businesses through acquisitions with the support of private-equity firms. Noting that Stada was one of the biggest examples, she also highlighted Arcadia Consumer Healthcare, Bridges Consumer Healthcare, Cooper Consumer Health, Havea, Karo Pharma, Vision Healthcare and Wellbeam Consumer Health.

Wilkes said Vision Healthcare was also a good example of the fifth trend – interest in e-commerce, personalisation and other digital technology capabilities.

Vision Healthcare – which is now backed by private-equity firm Avista Capital Partners – says its strategy is to build a health-tech platform for direct-to-consumer sales of a range of consumer products in Europe. The products include VMS, beauty and personal care products.

Wilkes said Vision Healthcare had been extremely active on the acquisition front as it transformed itself into an omnichannel player. Recent acquisitions included Medivital, N2 Natural Nutrition, Nutriment, Sensilab, Vitamaze and VitaminExpress.

Watch Deborah Wilkes' presentation at the OTCToolbox 2022 Consumer Healthcare BD&I Event

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