With its $14 billion buyout of Merck's consumer health unit two years ago, Bayer Healthcare picked up some brands that analysts said didn’t quite fit with the Bayer portfolio, like Coppertone sunscreen products. Bayer said it liked them nonetheless but now has hit a manufacturing glitch that is necessitating a recall of thousands of bottles of a sunscreen product.
According to the FDA Enforcement Report, Bayer is voluntarily recalling 37,512 bottles of the Clearly Sheer, Broad Spectrum SPF50 Coppertone Sunscreen Lotion. The report says there is a labeling issue and that it contains an undeclared API, oxybenzone. The recall began in May, even as the prime season for sunscreen was beginning.
When Bayer announced the deal with Merck ($MRK) in 2014, analysts thought for sure that Bayer would sell off the Coppertone and Dr. Scholl's foot product brands. They seemed like they didn't mesh with Bayer products--like allergy med Claritin and laxative MiraLAX--that it was getting from Merck, which were being joined with Bayer aspirin, Canesten antifungal creams and the company's other OTC lineup.
But the Coppertone and Dr. Scholl’s brands also produced about $1 billion each in sales a year, making up 27% of the Merck consumer brand revenues at the time. And Marijn Dekkers, who was CEO then, said it wouldn't help the German pharma achieve top-tier status in the consumer arena if it unloaded a couple billion-plus sellers. He said having them might boost the German pharma’s bargaining power with U.S. drugstore chains like Walgreen Co. ($WBA) and CVS Caremark ($CVS), which prefer to deal with suppliers that can put large amounts of empty shelf space to use.
Of course, Bayer now has a new CEO, Werner Baumann, who has his own ideas for growing Bayer, having launched an unsolicited $42 billion bid for U.S. seed and chemical maker Monsanto ($MON). And there are those who think he might sell off some assets to help fund a buyout of Monsanto. Bayer’s animal health unit has been mentioned but a couple of outlier consumer brands that could fetch a handsome price might also be tempting to unload.
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