Bayer's OTC growth march continues with pickup of China's Dihon

Bayer CEO Marijn Dekkers

Bayer already has a big footprint in China, where it's been selling drugs since the 1930s. But that footprint is about to get a bit bigger. The company is set to buy out China's Dihon Pharmaceutical Group, a company that specializes in OTC drugs--making it just the kind of pickup the German drugmaker's been scouting for.

As Bayer announced Thursday, it will acquire all of Dihon's shares for an as-yet-undisclosed sum, and the company expects to close the deal in the second half of this year, pending regulatory clearance. With Dihon generating €123 million ($168 million) in 2013 sales, the buyout will power Bayer CEO Marijn Dekkers toward his goal of €2.5 billion ($3.4 billion) in pharma sales in China by 2015. It should pad the company's emerging market sales outside of China, too, with Dihon currently selling its brands in countries like Nigeria, Vietnam, Myanmar and Cambodia.

"This acquisition moves us into a leading position amongst multinationals in the OTC industry in China," Dekkers said in a statement. "It also brings a portfolio of well-known consumer brands, which will allow us to provide consumers with an even broader range of self-care options."

Those brands range from dandruff treatment Kang Wang to antifungal cream Pi Kang Wang, the company said. But Dihon also produces a number of herbal Chinese medicines, which makes up about half of China's OTC segment, Bayer HealthCare CEO Oliver Brandicourt said in a statement. Those products should fit right in with others Bayer acquired with last year's acquisition of German herbal medicine specialist Steigerwald Arzneimittelwerk.

Both deals are part of Bayer's plans to bolster its consumer health business through bolt-on acquisitions; analysts at Equinet Bank told The Wall Street Journal they see the Dihon buy as consistent with Bayer's strategy of becoming the leading OTC company. As Reuters reported last week, the company is also in the mix for Merck's ($MRK) consumer unit, which could draw bids of up to $12 billion. And the German drugmaker is not alone in its quest to beef up OTC offerings. Big Pharma peer Novartis ($NVS) has made a lot of noise over the Merck unit as well, and Sanofi ($SNY) has been building away ever since its 2009 buyout of Chattem.

That's not to say Bayer hasn't been active in other spaces, too. Just Wednesday, the company announced a successful takeover offer for Norway's Algeta, a cancer drug specialist with which it shares development and commercialization of prostate cancer treatment Xofigo.

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Special Reports: Top 10 Drugmakers in Emerging Markets - Bayer HealthCare | Top 10 pharma companies by 2012 revenue - Bayer Healthcare

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