Want to buy a Big Pharma consumer health unit? You may well get the chance. Merck's ($MRK) newly minted CEO Kenneth Frazier (photo) told investors at a Goldman Sachs conference that he's weighing options for his consumer health ops. He wouldn't go so far as to specify a potential sale, spin-off or what have you, but when CEOs say they're considering "all the options," a sale usually makes the list.
Merck's consumer division is mostly made up of ex-Schering-Plough operations, acquired in their 2009 merger. As Dow Jones reports, it generates about 3 percent of the company's total sales. Frazier said the unit lacks enough global firepower, and to grow internationally, Merck would need to invest some capital up front.
"We will look at all the options," Frazier said (as quoted by Dow Jones). "We have to look at it to see what role it can play longer term. Is there a plan for organic growth or a value-creating opportunity, either to build on it or to do something else to maximize shareholder value?"
Our advice: Weigh carefully. Big Pharma rivals such as Sanofi-Aventis and GlaxoSmithKline have been diversifying into consumer health as a way to hedge losses to generic competition. And Pfizer, which sold off its consumer division to Johnson & Johnson in 2006, lived to regret it.
- see the Dow Jones story
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