Next deal up for Merck: Selling $15 billion worth of older brands

Merck headquarters

With its consumer unit apparently on the verge of a sale, Merck is weighing its next asset disposal. Reuters sources say that the U.S.-based drugmaker may unload $15 billion worth of older drugs, in a move that would mirror previous sell-offs by GlaxoSmithKline--and an in-the-works Sanofi deal.

Merck ($MRK) is working with an investment bank on the proposed sale, which would wrap up a variety of off-patent brands. Many are sold in emerging markets, the news service notes.

Merck's potential brand sale would join a couple of others in the industry. On Wednesday, news reports said that Sanofi ($SNY) is marketing a portfolio of older drugs, in a deal that could be worth $7 billion to $8 billion. GlaxoSmithKline ($GSK) sold off two of its cardiovascular drugs to Aspen Pharmacare last year, after disposing of a laundry list of consumer meds in 2012, in two separate deals.

And Pfizer's ($PFE) established products business, one of three internal units CEO Ian Read created last year, is widely expected to be the first of those divisions to go on the block as the company proceeds with its long-term sell-off plans. If Pfizer buys AstraZeneca ($AZN), however, hiving off established products would have to wait till AZ's products are added to the mix.

Early this year, generics makers Actavis ($ACT) and Mylan ($MYL) were said to be weighing bids for Pfizer's established products unit, if and when it goes on sale. Valeant Pharmaceuticals ($VRX), always in line for a deal, was also said to be interested. All three could be potential buyers for Merck's drugs--and Sanofi's for that matter. If Pfizer's AstraZeneca bid fails, it might be interested in the two companies' older brands, to add heft to that established products unit in anticipation of a future sale or spinoff.

Merck's sale plans are part of an industrywide restructuring, as companies sell and trade businesses to focus on their strengths--or simply bulk up for economies of scale and other cost savings. Novartis ($NVS) and Glaxo announced a swap last week that will leave Novartis with Glaxo's cancer drugs and Glaxo with Novartis' vaccines--and put both companies in a joint venture in consumer health. Pfizer has hived off its animal health and nutrition units, and says it's considering a larger-scale breakup. And last week, AstraZeneca said it was considering selling off its anti-infective and neurosciences business, which could together fetch $15 billion.

- read the Reuters story

Special Reports: Top 10 pharma companies by 2013 revenue - Merck | Pharma's top 10 M&A deals of 2013

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