Bayer, Merck enter into a strategic pharma collaboration in the area of cardiovascular diseases
LEVERKUSEN, Germany — In a related transaction to Tuesday morning’s acquisition of Merck’s OTC portfolio, Bayer also agreed to enter into a strategic pharma collaboration in the area of cardiovascular diseases with a focus on sGC modulation.
There remains high medical need due to various diseases such as certain forms of pulmonary hypertension or heart failure. Novel modulators of the sGC pathway may have the potential to address this need. However, major development efforts and clinical programs are required to fully explore the benefits of these novel compounds. This collaboration brings together two leading companies in this field.
“Merck’s expertise and global presence in the cardiovascular therapeutic area make it a collaboration party of choice for our sGC programs,” stated Bayer CEO Marijn Dekkers. “We truly believe that this collaboration increases our chances of bringing new medicines to more patients, in line with Bayer’s mission ‘Science For A Better Life’”.
“We are now joining forces in the area of sGC modulation to implement a joint development and commercialization collaboration that allows both companies to better explore the medical potential of the novel sGC modulators,” commented Merck’s chairman and CEO Kenneth Frazier.
The collaboration includes Adempas (riociguat), which is already approved for the treatment of certain classifications of pulmonary hypertension and is being developed in additional life cycle indications, as well as vericiguat, an investigational compound that is currently being developed in two Phase IIb studies in worsening chronic heart failure. Furthermore, the parties agreed that sGC modulators presently in earlier stages of research and development may be included in the collaboration.
Bayer and Merck will equally share costs and profits from the sGC modulators and implement a joint development and commercialization strategy. Bayer will lead the commercialization for Adempas in the Americas while Merck will lead the commercialization outside the Americas. For vericiguat and other potential investigational sGC modulators, Bayer will lead the commercialization outside the Americas while Merck will lead the commercialization in the Americas. Both companies will have the option to co-promote Adempas and the follow-on sGC modulators in each others’ territories. “This collaboration demonstrates our commitment to sGC modulators, allowing us to better explore the potential of these promising cardiovascular compounds,” Brandicourt said.
Merck will make payments to Bayer of up to $2.1 billion, comprising an up-front payment of $1 billion and sales milestone payments of up to $1.1 billion related to future collective sales of certain collaboration compounds including Adempas.
Bayer acquires Merck’s OTC portfolio for $14.2 billion
LEVERKUSEN, Germany — Bayer on Tuesday agreed to acquire the consumer care business of U.S. pharmaceutical company Merck for a purchase price of $14.2 billion.
“This acquisition marks a major milestone on our path toward global leadership in the attractive nonprescription medicines business," stated Bayer CEO Marijn Dekkers. “At the same time we are leveraging our capabilities in the cardiovascular therapeutic area.” In a related transaction, Bayer has entered into a global co-development and co-commercialization agreement with Merck in the field of soluble guanylate cyclase modulators, for which Merck will make an up-front payment to Bayer of $1 billion, with substantial additional sales milestone payments.
The OTC acquisition will give Bayer the global No. 2 position in nonprescription products following recently announced consolidations in this growing healthcare industry segment, and will significantly enhance Bayer’s business across multiple therapeutic categories and geographies. Merck's consumer care business includes leading such brands as Claritin, Coppertone and Dr. Scholl’s. Pro forma sales of the combined businesses in 2013 amounted to $7.4 billion with Merck’s business contributing approximately $2.2 billion. “We are adding significant scope and earnings power to a business that is already delivering strong margins and stable cash flows,” added Dekkers.
“With this transaction, we are acquiring leading product brands that will make Bayer the OTC leader in North America and Latin America and also move us into top global positions in key OTC product categories,” said Olivier Brandicourt, CEO of Bayer HealthCare. “The strong Bayer brand will help to further leverage the already successful product brands worldwide. We expect particularly strong growth in key countries outside the U.S. where our superior commercial presence will drive sales of the combined business.”
Upon completion of the acquisition, Bayer is expected to achieve global leadership positions in dermatology and gastrointestinals and advance to the No. 2 position in the cold, allergy, sinus and flu category. Bayer will remain No. 2 in nutritionals and No. 3 in analgesics.
The purchase price of $14.2 billion includes a payment associated with sales of Claritin and Afrin in certain countries where these products are still prescription-only. The purchase price represents a 2013 pro forma EBITDA multiple of 21x.
In 2013, Merck’s consumer care business generated approximately 70% of its sales in the US, where it also holds leading brand positions. The business is primarily comprised of products in the cold, allergy, sinus & flu, dermatology (including sun care), foot health and gastrointestinal categories. The most important brands are Claritin (allergy), Coppertone (sun care), Dr. Scholl's (foot health), MiraLax (gastrointestinal) and Afrin (cold).
The merged business is to be headquartered at the Bayer site in Whippany, N.J.
Staying one step ahead with packaging
With advertising and other forms of traditional media playing a less dominant role in how consumers interact with brands, breaking through with packaging is more significant than ever. In many cases, packaging is the first moment of truth – it provides consumers with an opportunity to touch, feel, smell, hear and experience the brand. Whether it's meant to grab attention at shelf, assist in compliance, or make a personal statement, if it's done well, packaging can have a huge benefit on marketing and serve a variety of purposes.
In constantly evolving categories like over-the-counter, personal care, or food/beverage, the value of packaging is particularly high, as new introductions, line extensions and more specialized players routinely hit the shelves and impact the line up. As a brand design agency that spends much of our time in drug and mass, we have observed several consistent themes with our clients regardless of brand or product. We have distilled our observations into five topline trends to keep in mind as you assess your own packaging for today’s retail environment:
1. More straightforward messaging. At best, consumers have just a few seconds to make their selection in the aisle. Add in a few energetic toddlers, a list of things to do yesterday, and the possibility that s/he isn’t feeling well, and you can cut those few seconds in half. Simple messaging/claims and a front of pack that’s used for what’s most important is a trend we are pleased to ride. It’s easy to forget packaging has multiple panels with additional real estate to use for secondary information, and a clear, concise message on the primary display can make or break that moment of choice.
2. Balancing clinical with friendly. Communicating efficacy is often a prime objective, especially in OTC. But ensuring brands successfully balance a clinical tone with emotional appeal is more prevalent than ever. Unsavory before photos, stringent medical claims and complicated “systems” at one time were effective, but with so many products offering similar functional benefits, these days it comes down to which brand ultimately makes a better connection with the shopper, while delivering on results.
3. Graphics as a powerful communicator. Larger portfolios often have similar SKUs with slight variations – i.e. daytime/nighttime, with/without acetaminophen, for infants/for children, tablet/capsule, etc. There is no greater way to diminish loyalty than for a consumer to arrive home and realize s/he did not purchase (or worse yet, use) the intended product. Whether it’s with colors, shapes, or typography, more and more brands are using design as a powerful tool to communicate and call out those variations in a way that telegraphs quickly and eliminates room for confusion.
4. Add value where you can. Is the container beautiful enough to leave on the vanity? Can the box be maintained for product storage once opened? Might one consider using the empty bottle as a vase for flowers? There are a variety of brands that use packaging to enhance the brand experience and keep consumers engaged beyond product usage. This added value only helps to increase consumer loyalty and set you apart from the pack.
5. Bravo for humor! While it doesn’t fit every brand, today’s consumers certainly appreciate a bit of humor and levity where appropriate. Whether you’re selling diaper rash cream, acne cleanser or deodorant, we’ve discovered telling it like it is, even (especially) with the embarrassing stuff, is a universal way to break through. Gone are the days of speaking in code and dancing around awkward topics. Consumers respond best to authenticity and a lighthearted tone can be the most effective way to achieve that.
While trends shouldn’t dictate your actions, keeping an eye on changes in the marketplace is an important practice. And they may provide you with the impetus to think differently, embrace new approaches or even break old habits.
About the Author
Crystal joined Little Big Brands as a partner in 2011, leading the firm’s business development efforts. Prior to LBB, she spent many years at CBX and Sterling Brands. A self-proclaimed brand fanatic, Crystal is inspired by how people relate to different brands, how they make their choices, and what those selections say about them. She’s also a true client advocate – ensuring that each project’s goals are met and exceeded – and working hand-in-hand to maximize project success with creative and account management teams.