Merck KGaA mulls sale of undersized consumer health unit

Merck kgaa
Merck KGaA earlier this year agreed to sell off its biosimilars unit to Fresenius Kabi.

Biosimilars may not be the only business Merck KGaA divests in 2017.

The German drugmaker is weighing options for its consumer health business, it said Tuesday, and a partial or full sale is on the table. The company is also open to strategic partnerships, it said.

The reason? “We expect increasing internal constraints to fund the business to reach the required scale,” Belén Garijo, the company’s healthcare CEO, said in a statement, adding that “any possible proceeds from a potential transaction would be used to deliver on the company’s overall financial targets.”

That doesn’t mean the business wouldn’t make a strong asset for someone else, the company insists. Garijo touted a “solid position in attractive markets,” as well as a profitable growth pattern for the business, which last year racked up sales of €860 million on the back of products including nasal decongestant Nasivin and pregnancy supplement Femibion.

The way Merck sees it, it has “consistently shifted toward becoming a leading science and technology company” in recent years. Its 2015, $17 billion buyout of lab supplies maker Sigma-Aldrich helped it in that direction, and more recently it scored a win through its Pfizer immuno-oncology partnership with the first approvals for Bavencio.

And to that end, it earlier this year decided to hive off its biosimilars unit, divesting the business to fellow German company Fresenius Kabi for €170 million upfront and up to €500 million in milestone payments.

Meanwhile, the sale talk has a different tune than Merck has sung in the past; in late 2014, Uta Kemmerich-Keil, the company's consumer CEO, said that when it comes to OTC, "it's not important how big the overall business is." Since then, though, some of its competitors have worked on bulking up in the consumer arena. GlaxoSmithKline and Novartis, to name a couple, teamed up on an industry-leading joint venture, but even with bigger size they have seen consumer sales a challenge this year. 

RELATED: Bayer, GlaxoSmithKline find consumer health is not the sure safe haven they expected

This isn’t the first time Merck has thought about dropping consumer health, either, Reuters reports. The news service’s sources say the company’s management has scouted potential buyers multiple times, but that its founding familywhich owns 70% of the drugmakerwasn’t into the idea.