Merck’s Consumer Brands Portfolio Could Fetch Up to $10B

Merck

Merck & Co. Inc.’s (NYSE:MRK) plan to sell its portfolio of consumer brands is drawing a lot of attention. The portfolio, which includes household names like Coppertone sunscreen and Claritin allergy medicine, is expected to draw bids from health care industry players of more than $10 billion, according to sources who spoke with the Wall Street Journal on Wednesday.

The company’s consumer-brands portfolio also includes Afrin, a nasal decongestant; MiraLAX, a constipation medicine; Lotrimin and Tinactin antifungal treatments; and the Dr. Scholl’s lineup of foot care products and insoles.

It’s rumored that Merck has already received several preliminary offers for its portfolio, the Journal reports, and will begin meeting with potential buyers next week. Final bids, sources said to the publication, will most likely be due at the end of the month.

In 2013, Merck reported global consumer-brand sales of $1.9 billion, which is approximately 4 percent of the company’s total revenue of around $44 billion. Claritin is the company’s biggest seller of the bunch, accounting for $471 million in sales last year, per the Wall Street Journal.

The sale comes in the wake of a continuing struggle at Merck to develop new drugs — the company hasn’t produced any important new medicines in eight years. As reported earlier last month, the company has made moves to revive and restructure its research and development team, including appointing a new chief of research and development, Roger Perlmutter, a veteran who has worked for Merck in the past.

Merck is currently faced with a slowing demand for diabetes drugs and an aging pipeline, and Merck CEO Kenneth Frazier has announced plans to cut the company’s workforce by 20 percent. Currently, the company’s leading product is Januvia, a diabetes treatment. Worldwide, however, sales of diabetes drugs are down 2 percent from last year, or about $4 billion, according to the Wall Street Journal.

The sale of Merck’s consumer brands marks an important step in its effort to refocus on the therapeutic areas in which it feels strongest, such as drugs for cancer and diabetes, as well as vaccines. In other words, it seems the company is eager to start developing new therapies.

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