Procter & Gamble wants to bail out of the pharmaceuticals business, so it has hired Goldman Sachs to find buyers for its drug brands--or figure out another way to make a graceful exit, the Financial Times reports. Known primarily for its consumer goods, P&G also has a pharma unit that brings in about $2 billion a year. Its drugs are clustered around women's health, gastrointestinal problems and musculoskeletal disorders.
The move isn't a huge surprise; P&G told analysts back in December that the company had stopped investing in drug development and would consider selling off some of its pharma brands. Back in the 1990s, when P&G started putting big bucks into pharma, returns had dwarfed those in consumer products, CEO A.G. Lafley (photo) said. That's not the case now: "Today, pharma companies trade at multiples at or below consumer products."
Plus, pharma has to contend with a harsher regulatory environment nowadays, and generics makers have grown increasingly aggressive about competing with branded meds, so the payoff from R&D isn't as certain as it once was, he said.
- read the FT story