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German Bayer AG buys Merck’s consumer care biz

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Last Updated: Aug 9, 2016

Germany-based pharmaceutical giant Bayer AG will be get more popular US brands as it acquires Merck’s consumer care business for $14.2 billion.

Merck’s consumer care brands include Claritin, Coppertone, and Afrin. This means Bayer will have more popular US brands in pharmacies, groceries, and other retails stores. This will open up an opportunity for the giant German company to expand in a broader global market. The majority of Merck brands are sold in the US market, but it already sold all over the world.

Besides Bayer and Merck, another giant fusion in the drug industry happened last month with the $28.5 billion team up of Eli Lilly, GlaxoSmithKline and Novartis. Another is US-based pharmaceutical giant Pfizer trying to acquire British drugmaker AstraZeneca for an on going $106 billion prize. One more significant pharmaceutical move is hedge fund manager billionaire Bill Ackman helping Valeant Pharmaceuticals to try and acquire Botox maker Allergan at $46 billion.

These ties and acquisition attempts have common goals – that is to focus on a few key products left, expand on a larger market, and lead the competition. They want to focus on a few core diseases to increase their scale in raise shareholder value.

According to Fitch Ratings analyst Megan Neuburger, these deals are very strategically focused. The companies want to gain bigger footprints, wider geographic exposure, and stronger pricing power. For example, Bayer announced Tuesday that it aims to expand their over-the-counter products in the consumer care business. That trend was also the strategy in the Novartis-Glaxo, Eli Lilly tie up. Now, Novartis is more focused on cancer treatment products, Glaxo is more focused on vaccines, while Eli Lilly is more focused on animal health. If Ackman’s plan of combining Valeant and Allergan happens, it would have total control over the eye-care and skin-care industry in the world.

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