Teva Pharmaceutical Industries is joining the parade of drugmakers looking to pump up in consumer healthcare. The Israeli company has teamed up with Procter & Gamble in a joint venture, which will combine well-known P&G over-the-counter brands such as Vicks and Pepto-Bismol with Teva's OTC cold, cough, pain and digestive meds.
Together, the product mix generated more than $1 billion in sales outside North America, which is where the JV will operate. The companies are eyeing $4 billion in sales within the decade. Indeed, within the next two years, Teva expects its OTC sales of $650 million to grow by 50 percent, and P&G believes the JV will add $500 million to $600 million to its top line during the first year, Reuters notes.
Just how do P&G and Teva intend to grow sales that much? As the Wall Street Journal points out, P&G has a strong retail presence and great expertise in brand-building, while Teva's strengths are more behind-the-scenes in distribution and manufacturing. Plus, with many top drugs going off patent in the near term, there's the opportunity to convert some of Teva's copycat meds to OTC sales.
"It is a new business model, taking the best of two market leaders to create a new leader in consumer health care," P&G CEO Bob McDonald said in an interview (as quoted by the WSJ). Under the joint venture, Teva will take control of several U.S. manufacturing facilities from P&G and will handle supplying all the JV's markets, as well as P&G's OTC business in North America.