News Feature | October 3, 2014

Bayer Completes Purchase Of Merck's OTC Business For $14.2B

By Estel Grace Masangkay

Bayer announced that it has completed its acquisition of fellow pharma giant Merck’s consumer care business after receiving the necessary antitrust approvals.

Merck auctioned off its over-the-counter (OTC) business this May, including in mix the global rights to Claritin and Afrin. Merck’s consumer care business was also responsible for marketing drugs to treat colds, allergies, sinus and flu, and dermatology needs. The most prominent of these are Dr. Scholl’s, Coppertone, and MiraLAX, in addition to Claritin and Afrin. Bayer, which, according to Reuters, reportedly beat out other rival bidders including pharma goliaths Sanofi and Novartis, said that the acquisition complements its own OTC business, which already includes Aspirin and Aleve.

The integration of Merck’s unit with Bayer’s positions the latter as the leading OTC, dermatology, and gastrointestinal treatments provider in North and Latin America. Bayer also advanced to the number two spot in the colds and flu category while remaining the third leading provider of analgesics in the region.

“This acquisition is a milestone for Bayer and we intend to continue the expansion of our attractive over-the-counter business both through organic growth and bolt-on acquisitions,” said Bayer CEO Dr. Marijn Dekkers. Bloomberg News reports that the company sold $7 billion worth of bonds in order to fund its $14.2 billion purchase of Merck’s unit. It also obtained a $12.2 billion bridge facility and a $2 billion term loan in June. Bayer said it expects to generate around $200 million in profits per year by 2017 as a result of its acquisition.

Meanwhile, Merck said it has plans for expansion and additional transactions after the sale of its unit. “The proceeds from this sale, combined with our strong operating cash flow, give us greater flexibility to invest in opportunities that augment the company’s pipeline and product portfolio, such as the purchase of Idenix to strengthen our hepatitis C portfolio, while at the same time continuing to return capital to shareholders,” commented Kenneth C. Frazier, chairman and CEO of Merck.

In addition to the transaction, the companies have entered into collaboration to develop and market soluble guanylate cyclase (sGC) modulators, which includes Bayer’s Adempas (riociguat) indicated for pulmonary arterial hypertension (PAH) and chronic thromboembolic pulmonary hypertension (CTEPH). Merck will pay Bayer up to $2.1 billion which includes an upfront fee of $1 billion under the terms of the sGC collaboration.