While BMS shops emerging markets brands, GSK wraps $900M buy in India
Two consumer health deals, two Big Pharma approaches toward emerging markets. While Bristol-Myers Squibb ($BMY) is looking around for buyers for a portfolio of consumer brands in Latin America, GlaxoSmithKline ($GSK) has staked another $900 million on the consumer health market in India.
Bristol-Myers is in the late stages of auctioning off a collection of products sold in Mexico and Brazil, The Wall Street Journal's sources say. A "small handful" of drug and consumer companies are still in the running for the assets, which fetch as much as $150 million in annual sales. Sale price: As much as $750 million. That's about 5 times sales, the WSJ points out, a premium price that shows just how much some companies want consumer brands in emerging markets.
Obviously, Bristol-Myers is no longer one of them. Mexico and Brazil are two of the fastest-growing emerging markets. But unlike other Big Pharmas, the company hasn't pushed aggressively into developing countries. As the WSJ notes, Bristol-Myers counted only 15% of its sales from markets outside the U.S. and Europe--and that includes Japan and South Korea. Meanwhile, Novartis ($NVS) and Bayer HealthCare, for two, have built up emerging markets sales to 24% and 32% of their global totals, respectively. Consumer drugs are a key part of that growth.
Emerging markets are key to GSK's growth plans. And consumer health is key to its emerging markets plans. Forking over $900 million to amass a 72.5% stake in its publicly traded consumer health subsidiary in India? That's one more step forward. That business generated about $500 million in sales in 2011, with annual growth of 19% over the past 5 years. Not too shabby.
The deal amps up Glaxo's interest in products such as health drinks Horlicks and VitaHealth, as well as its own brands of OTC drugs. "We are very pleased with the outcome of this transaction, which will further increase our exposure to a key emerging market," said David Redfern, GSK's chief strategy officer. "It is a significant vote of confidence in the long-term growth prospects of our consumer healthcare business in India."
GSK generated 38% of its sales outside the U.S. and Europe in 2011, with £5.3 billion, or about $8.35 billion) in sales from emerging markets. In consumer health alone, about one-third of the division's £5.2 billion in sales came from emerging markets in 2011, with Africa and the Middle East both up 22%--and India up 19%. At the same time, consumer health sales in developed markets were flat.
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