Bayer has said it can pump an extra $400 million in revenue out of the OTC portfolio it acquired from Merck ($MRK) last year. And with that target in mind, new launches are on the agenda.
The German pharma plans to achieve that $400 million goal "primarily" through launching Merck brands--like Claritin and Dr. Scholl's--outside the U.S., with a focus on Latin America, Bernstein analyst Ronny Gal wrote in a recent note to investors after meeting with company management.
"Merck simply did not have the infrastructure to execute on those," he wrote.
Bayer does. The Leverkeusen-based drugmaker has proven itself a top player in emerging markets, and it has deep footprints in several developing nations; last year, it boasted 16,900 employees in Latin America, Africa and the Middle East combined, which helped it pull in €7.06 billion in revenue across those regions.
And it's got other plans, too. For instance, its Coppertone sunscreen brand "can be extended to year-round skin protection," Gal noted.
All things considered, those revenue synergies will probably begin trickling in next year and accelerate after that, he wrote--and they'll probably end up eclipsing the $400 million mark. It's "probably conservative, but obviously they don't want to overpromise," he wrote.
That's good news for Bayer, which has seen its OTC sales lag behind analysts' expectations for the Merck merger. As the company prepares to divest its plastics unit and become a life-science focused company, it's looking to consumer health to grow by an average of 4% per year through 2017 to more than €10 billion, it said in March.
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| Bayer CEO Marijn Dekkers |
The way CEO Marijn Dekkers sees it, though, that goal has always been attainable, despite the slow start. It's a "transition situation" he said in February, pointing out that "[i]n OTC, critical size actually makes a difference."
"You go into a drug store and it's about shelf space," he told Bloomberg TV at the time. "Now, we have products like Claritin, Aleve and Aspirin all next to each other, and that is a tremendous advantage."
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