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Bayer AG picks up Merck Consumer Care unit for $14.2B

Merck has three manufacturing plants in Puerto Rico, where it employs 1,000 people.  (Credit: © Mauricio Pascual) Merck has three manufacturing plants in Puerto Rico, where it employs 1,000 people. (Credit: © Mauricio Pascual)

Two pharmaceutical giants, Bayer AG and Merck, announced this morning a deal through which the first has agreed to pay $14.2 billion for the latter’s Consumer Care Unit, picking up global trademark and prescription rights for a number of recognized brands, including Claritin and Afrin.

Although the exact impact of the deal upon local operations for both companies has yet to be disclosed, Merck will reportedly use a portion of Bayer’s proceeds to make significant investments in oncology, which would directly benefit Merck’s Puerto Rico operations, Merck spokeswoman Vanessa Lugo confirmed.

“The investment in oncology is good news because any investment for innovation is beneficial for Puerto Rico, because one of the only two plants that Merck has for global product launches is in Las Piedras,” Lugo said. “This plant not only manufactures products, but also finishes the research and development phase.”

Merck has 1,000 employees in Puerto Rico, where all of its corporate divisions — consumer care, manufacturing, global human health, research laboratories, and animal health — are represented. However, the company’s scope is expected to shrink later this year, when the company will close its Barceloneta operations, shifting production to Las Piedras, where the company has invested more than $100 million in recent upgrades and improvements.

“The sale of our consumer care business is part of our efforts to ensure that assets within our portfolio align with our core strategy, have industry-leading potential and generate long-term shareholder value,” said Kenneth C. Frazier, chairman and chief executive officer, Merck.

“By unlocking value in Merck Consumer Care, we’re able to further our goal of being the premier research-intensive biopharmaceutical company through targeted investments that strengthen our product portfolio and enhance our pipeline,” he said.

Meanwhile, the acquisition will give Bayer the global number two position in non-prescription (over-the-counter, OTC) products following recently announced consolidations in this highly attractive and growing healthcare industry segment, and will significantly enhance Bayer’s business across multiple therapeutic categories and geographies.

“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,” he said.

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