|Dr. Marijn Dekkers, Bayer CEO--image courtesy of Bayer|
You can't accuse Bayer of lacking diversity. Its pharma business has cousins in plastics and agricultural chemicals, just to name two. But CEO Marijn Dekkers wants to broaden his drug unit's horizons, too. Hence the $1.2 billion buyout of U.S. vitamin-and-supplement maker Schiff Nutrition International.
It's a move akin to Sanofi's ($SNY) consumer health expansion, typified by its 2010 buyout of U.S.-based Chattem. With that deal, Sanofi got Gold Bond foot powder, IcyHot salve and Bullfrog sunscreens, in addition to OTC drugs. GlaxoSmithKline ($GSK) has a big presence in sports drinks, and Valeant Pharmaceuticals ($VRX) recently snapped up a Brazilian supplements maker.
These diversification-minded drugmakers have pumped up their consumer health operations to help offset prescription-drug patent losses. As Reuters points out, vitamins and other consumer products aren't as profitable as branded prescription drugs, but they're also not as risky or as volatile.
Schiff brings the Airborne brand of cold-prevention products, which it recently purchased, plus the joint supplement Move Free and Tiger's Milk nutrition bars, among others. The company said sales would rise by up to 46% this year on the Airborne buy; for its most recent fiscal year, Schiff brought in $259 million in revenue.
"This transaction represents an excellent strategic fit for our health-care business," said Dekkers said in a statement. "The Schiff business significantly enhances our presence and position in the U.S., which accounts for more over-the-counter and nutritional products sales than any other country in the world."
Dekkers has been on the acquisitions trail for some time, and the Schiff deal fits right in. Bayer snapped up Teva Pharmaceutical's ($TEVA) animal health business last month, for instance, for up to $145 million. More deals are on the way, Dekkers says. But no megadeals.
"In our life science divisions we are mainly interested in smaller to medium-sized acquisitions. There is no upper limit but our aim is bolt-on acquisitions and not necessarily a very large acquisition and that's what I believe can be seen in our track record," Dekkers told journalists in a conference call on Tuesday (as quoted by Reuters).