Bidding starts for Nestle Skin Health

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According to a Reuters report, private equity companies Cinven and Advent have teamed up to table a joint bid for Nestle Skin Health, which sources believe values the company at CHF7bn (US$7bn). It is reported that other private equity companies, including Blackstone, KKR and Carlyle, are likewise poised to make bids, while sources also say that Merz Pharma is interested and looking for private equity partners. 

In terms of the timeline, Nestle’s Board of Directors decided to explore strategic options for the skin health business in September 2018, after concluding that future growth opportunities lay increasingly outside the group’s strategic scope. Information memos on the sale, being run by Credit Suisse and Evercore, are expected to be sent by the end of this month and first-round bids are likely to be submitted in early March.

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Nestle Skin Health divides its portfolio into two units – its range of largely Rx “medical solutions” marketed under the Galderma umbrella and its “consumer solutions”.  Differin Gel is one example of a Galderma Rx skin care medicine which has been switched to OTC status, gaining FDA approval in 2016 and launched in the US in early 2017. Despite being the first genuinely new allopathic treatment in the acne category, Differin sales only reached US$17mn in the brand’s first full year since switch, leading Nestle to revamp the brand in late 2017 with line extensions and packaging updates.

Nestle Skin Health’s key consumer brands are Cetaphil, Loceryl and Benzac, as well as the home treatment acne programme Proactiv. Cetaphil is its key OTC brand, according to DB6, thanks to its expansive range and wide skin care positioning, from eczema & psoriasis to acne and anti-itch. Cetaphil Dermacontrol and Cetaphil Restoraderm are both well-established in the US market, while Cetaphil also has a strong presence in Australia, Brazil, Germany and several Middle Eastern countries.

Nicholas Hall’s recent report, Dermatologicals: Trends, Innovations, Opportunities, analyses the Derma market from the global level down to individual category-by-category reviews. This key report also examines medical devices, cosmeceuticals and much, much more. It covers launch activity, innovations and emerging niches, spanning a range of categories, including eczema & psoriasis, cold sore treatments and wound care. To purchase your copy or to find out more, please contact melissa.lee@NicholasHall.com.

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NHC’s 40th Anniversary in 2018

New Year’s message from our Chairman & CEO Nicholas Hall:nh

The start of a new year, and already there is a big ripple of activity in the global CHC market. MM&M NewsBrief ran a story on Tuesday headlined: “CPG companies Nestle and Kellogg court OTC”. It is an interesting notion that Kellogg could buy into the mainstream CHC market as their previous forays have focused on functional foods. But it seems a stretch to me, although there would be a certain neatness if Steve Cahillane, the new CEO of Kellogg and formerly Nature’s Bounty President & CEO would bid for Pfizer Consumer, where Paul Sturman was President. And where is Paul now? — Steve’s replacement at Natures Bounty.

So, it’s possible but unlikely that Steve will become a New Friend (or more properly a Friend Reunited), but our New Friend at FDA, Scott Gottlieb, is making interesting noises that could potentially liberalise the rather static US market. Could this include a new 3rd Class, about which I have been a lone voice in the wilderness for almost all of my time in the CHC industry (more on that later)? CHPA and other stakeholders (apart from retail pharmacy) say “No” as this is illiberal. Mmm, I think the other way. Switching more Rx products under the personal supervision of a pharmacist is very liberal, and will certainly lower costs, which is empowering for consumers — a key test of liberalism. And rounding up the last of our New Friends in this New Year issue, let’s welcome Amazon as a CHC brand marketer, not just an online platform. Some would say, who needs friends like Amazon? Well, I would rather have Amazon as a Friend than an Enemy!

Two prominent association leaders are leaving the industry, the Departing Doctors Gerald Dziekan and Hubertus Cranz. They have done amazing work, as my Good Friend Birgit Schuhbauer relates below, and will be very much missed. I hope the NHC Group will have good or possibly even better relations with their successors. Another Departing Friend who will be particularly missed is Senator Orrin Hatch, who did so much to override FDA when we had no friends there at all. Former presidential candidate Mitt Romney will probably succeed to the Utah seat of Senator Hatch. I hope that the man who made millions at Bain will be as — or even more — sympathetic to CHC.

What about Remaining Friends? Well, that’s us. I almost can’t believe it, but we set up NHC in January 1978. Indeed, a few minutes ago one of my Very Best Friends sent congratulations on our 30th Anniversary. Obviously we were having too much fun to count! I still have clients and colleagues from that era, including the redoubtable Gilbert (Sans Frontieres) Mertens, who still comes to our conferences and last year was our guest in Singapore. 40 years is an amazing length of time, but we at NHC are all about the Future.

So after many years of some change and a lot that’s still the same, good or bad, it is with very great pleasure that all of us at NHC Group wish our contacts a Happy New Year for the 40th time. May it be one of good health, great happiness, peace, success and prosperity. We will be here for another 40 years (at least corporately) and we hope you will be too!!

MAT Q3 2017: Trends to look out for in 2018

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Intense work is underway to complete the Q3 2017 update early next week, which will provide OTC DASHBOARD subscribers with the latest trend info and analysis on the performance of the global OTC market. In the meantime, taking a closer look at the latest news and data does reveal a few trends that are likely to characterise the OTC space in 2018, not least:

The growing power of the Emerging Markets

A coming shake-up of the global Top 10 OTC marketers

As this week’s infographic demonstrates, Turkey was one of the leading contributors to OTC growth in the MAT Q3 2017 period. Over recent years, both Turkey and South Africa have emerged as global Top 20 OTC markets, powered by high growth (though the trend in South Africa did show signs of slowing in Q3 2017). In No.21 spot, Algeria looks poised to enter the Top 20 in the very near future, thanks to continued high growth (+10% MAT Q3 2017). To keep up with the latest trends in the Middle East & Africa, OTC DASHBOARD remains your best port of call.

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Top 3 Middle East & Africa markets, according to MAT Q2 2017 data

As for the leading OTC marketers, the big news in 2017 was Pfizer’s October announcement that it would be starting a bidding war for its consumer healthcare division, with RB, J&J and GSK all widely cited as possible suitors. However, there were at least two other major developments in 2017 that could cause a shake-up of the global Top 10 in the coming years – in October 2017, Novartis announced that plans to spin off its Alcon eye care business, following a strategic review, would be delayed until H1 2019 at the earliest, while in the same month the FT reported that Merck KGaA was pressing ahead with the sale of its consumer healthcare unit.

Nestle has been cited as a potential suitor for Merck KGaA’s OTC business and will be one of the companies to watch next year. Last week, Nestle agreed to acquire Canadian-based Atrium Innovations from investors led by Permira Funds for US$2.3bn cash. Atrium will become part of Nestle Health Science upon closing, which is expected in Q1 2018. Atrium’s largest brands are Florida-based Garden of Life, which manufactures certified organic, non-GMO supplements sold in health food stores and online in the US, and the Pure Encapsulations line of hypoallergenic, research-based dietary supplements sold in the US via healthcare practitioners, online and in pharmacies in several European markets. The portfolio also includes specialty brands such as Wobenzym, an oral enzyme combination containing proteolytic enzymes + bioflavonoid for osteoarthritis pain. 

If Nestle were to also acquire the Merck KGaA OTC business next year, and continue on its path of strong M&A growth, it could soon break into the global OTC Top 10. In addition, Merck KGaA would not only be a good fit with Nestle’s strategy of expanding in the field of high-quality vitamins, minerals & supplements, but would also give the company a strong foothold in the Emerging Markets, where Merck KGaA currently generates around half of its global Consumer turnover.

OTCs in Action Episode 49: Cholesterol targeted in Brazil; Fatigue fought in Italy

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OTCs in Action in Brazil and Italy help consumers fight high cholesterol and low energy with dietary supplements. Abbott’s phytosterol-based Duplostat lowers cholesterol when taken twice daily, coupled with the adoption of a healthy lifestyle. The 800mg softgel capsules help reduce the absorption of LDL-cholesterol from the third week, according to Abbott.

Additionally, when used in conjunction with statins, the efficacy in cholesterol reduction is the equivalent of doubling the statin dosage without any adverse affects. Research undertaken by the Ministry of Health (quoted by Abbott) indicates that around 35% of Brazilians aged 65 years or over are affected by high cholesterol.

For more new products from Latin America, click below:

Nicholas Hall’s OTC INSIGHT LATIN AMERICA, OCTOBER 2015

In Italy, Nestlé Health Science has served up Meritene Vitachoco, Swiss chocolate squares with 12 vitamins (including A, B6 and B12) and five minerals (including zinc and iron). The product is positioned to revitalise adults and older consumers in times of fatigue and stress, especially those with insufficient dietary intake.

For more new products from Europe, click below:

Nicholas Hall’s OTC INSIGHT EUROPE, OCTOBER 2015