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Merck KGaA to streamline business with $1bn healthcare sale

Published on 05/09/17 at 09:09am

Merck KGaA has revealed that it is looking to sell its consumer healthcare business, in order to refocus the business on becoming ‘a leading science and technology company’. The company announced that it is assessing its options but these could include a full or partial sale of the business.

The sale would be expected to raise around $1 billion and would mean a shift in focus for the company. The company, like its German counterpart Bristol-Myers Squibb, is family owned and has tended to be more conservative in strategy. The family had, until now, expressed a desire to keep the company’s portfolio diversified, which has meant that the slow growth it experienced in consumer healthcare has been an accepted part of the business until now.

Merck’s healthcare unit had lower than predicted second quarter earnings from its Q2 report, with net sales up by 1.65%. This picture should change as its immunotherapy treatment, which it developed alongside Pfizer, starts to gain ground in the area and the recent approval for its MS treatment, Mavenclad, begins to reap sales.

“Our Consumer Health portfolio has been continuously enhanced over the past years. We have maintained a solid position in attractive markets, and demonstrated a pattern of profitable growth. We expect increasing internal constraints to fund the business to reach the required scale. Fully anticipating this, we are preparing strategic options,” said Belén Garijo, Member of the Executive Board of Merck and CEO Healthcare.

The move chimes with a similar strategy by UK company, GSK, that has seen Emma Walmsley look to divest parts of its consumer healthcare business, such as its Horlicks brand and MaxiNutrition, in order to streamline the business.

Investors responded positively to the news, with shares rising by as much 2.9% on the release of the news.

Ben Hargreaves

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