Bayer/Merck Consumer Health

Bayer/Merck Consumer Health
Deal value: $14.2 billion
Deal status: Closed

It's no secret that Bayer CEO Marijn Dekkers wants his company at the top of the OTC food chain; he's said as much multiple times. So it was no surprise when the German pharma went after Merck's ($MRK) consumer health unit, a division the New Jersey pharma decided to shed as it fully embraced pharma's slim-down craze.

But Bayer wasn't the only company interested. The race, which at one time reportedly included recent consumer health buyer Sanofi ($SNY), eventually came down to a contest between Bayer and British consumer specialist Reckitt Benckiser. And while some expected a trench battle to ensue, Reckitt unexpectedly dropped out of the running, leaving Bayer to claim a victory.

Many industry-watchers had expected Bayer to hand over its animal health unit as part of the deal, which would have helped Merck build up an area CEO Kenneth Frazier has said he wants to bolster. But instead, the two companies agreed to develop and market a group of cardio drugs known as sGC modulators--including Adempas, a new pulmonary arterial hypertension drug that Bayer has pegged for stardom.

Merck CEO Ken Frazier

Bayer will still have to do more if it wants to fulfill its globe-leading OTC ambitions; the pickup created a business that netted $7.4 billion in combined 2013 sales, with Merck's unit kicking in $2.2 billion of that haul. But when Novartis ($NVS) and GlaxoSmithKline's ($GSK) multibillion-dollar asset swap closes--creating a powerhouse consumer health JV--Bayer will find itself in second place.

As for Merck, the transaction did exactly what the company wanted it to do, according to Frazier. If it hadn't unloaded consumer health to focus on its core areas of strength, its new cancer immunotherapy Keytruda--which the company is already preparing to submit to the FDA for a label expansion--wouldn't be where it is today, he said at January's JP Morgan Healthcare Conference.

For more:
Merck CEO Frazier credits Keytruda success to slim-down strategy
Bayer aims to crush consumer health rivals with $14B Merck unit buyout
Reports: Bayer closing in on deal for Merck OTC unit with Reckitt out of the way
Sources: Bayer offers animal health biz, cash for Merck's OTC unit
Merck CEO: We'll decide fate of animal health, consumer biz by year's end

--Carly Helfand (email | Twitter)

Bayer/Merck Consumer Health