December 16, 2015 / 11:13 AM / 5 years ago

Bayer consumer health still looking to bulk up after Merck deal

BASEL (Reuters) - Bayer will keep looking for takeover targets in the consumer health market even as it digests the $14 billion purchase of Merck & Co businesses, to stay at least among the top three players in the industry.

“I’m always interested in acquisitions,” the German drugmaker’s divisional head Erica Mann told journalists at an event in Basel, Switzerland.

“Consolidation is going to happen. We have to do strategic acquisitions which make sense, such as the Merck acquisition.”

Major pharmaceuticals groups such as Johnson & Johnson, GlaxoSmithKline and Pfizer also offer consumer health brands despite lower margins compared with prescription drugs because customers’ brand loyalty typically prevails even after patent protection runs out.

Sanofi said on Tuesday it is in exclusive talks to swap its animal health business for Boehringer Ingelheim’s consumer health operation, which would make it the largest player in non-prescription drugs.

Industry rankings can differ when they use a broader market definition to include consumer products such as mouth wash, sunscreen or insoles that are often sold alongside medical products.

Mann said that Bayer — the inventor of aspirin and maker of Bepanthen skin care products and Canesten antifungal creams — would not be put under pressure by Sanofi’s move but acknowledged that Bayer would seek to keep up with the pace of consolidation in the still fragmented market.

“You have to be under the top three, with the consolidation we have to make sure that we stay relevant. It gets increasingly difficult for the smaller companies to get better. Scale is really critical going forward.”

Even after the Sanofi-Boehringer deal, the four largest players in the more than 100 billion euro ($109 billion) non-prescription drug industry will each command less then 5 percent in market share.

For now, Bayer’s net debt of 19.3 billion euros at the end of September, is holding back Germany’s largest drugmaker.

“We need to pay off the debt, we are working very hard to do that,” Mann said.

Reporting by Patricia Weiss; Writing by Ludwig Burger; Editing by Maria Sheahan

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