Reckitt Benckiser, rumored to be eyeing a bid for Pfizer’s OTC unit, is making some big changes to its own consumer health operations.
The company is splitting (PDF) its business into two units, one of which will be dubbed RB Health, the company said. The division, which will comprise the recently acquired Mead Johnson nutrition business, will have its own management team, which will take over first thing next year. CEO Rakesh Kapoor will serve as its president in addition to his current role.
The new consumer unit, whose revenues will tally about $7.5 billion and account for 60% of the group’s top-line haul, “will be a global leader in consumer health and the only one really focused on the broader consumer health market beyond just over the counter medicines,” Kapoor told investors during the company’s third-quarter earnings call.
But that doesn’t mean he’s not interested in adding more OTC medications into the fold. Kapoor has been eyeing Pfizer’s lineup since at least 2015, and the company is preparing to bid for the unit if it comes up for auction, the U.K.’s Sunday Times reported earlier this week.
While Reckitt may be enthusiastic, however, its shareholders might have an issue with another big buy in the wake of the £13.2 billion Mead Johnson transaction. Since the deal, Reckitt has suffered a sales slowdown, a cyberattack and four executive-committee exits. Adding more debt to the picture may leave investors wary.
Whether or not the company can land the Pfizer asset, Kapoor is convinced that devoting more attention to the consumer space is the way to go. The way he sees it, developed markets feature aging populations who are spending more on health and well-being. And in emerging markets, he expects to see higher spending in those fields as the middle class grows.
On top of that, people are growing more proactive about taking preventative measures to manage their health.
“All this macro and irreversible trends make this category very attractive from a growth point of view,” he said. “The category is competitively advantaged.”