Mylan Rumored to be in Discussions to Buy Merck KGaA’s Consumer Health Business, but Mylan Denies It

Canonsburg, Pennsylvania-based Mylan is reportedly in top-level talks with Germany’s Merck KGaA to buy its consumer health business. However, Mylan has denied it.

Merck KGaA was also believed to be in talks with private equity groups for the division, but weren’t offering a price that Merck felt was attractive. Other companies also involved, but which have apparently dropped out of the bidding, include Nestle and Reckitt Benckiser. The value of Mylan’s bid is estimated to be between $4.3 and $4.9 billion.

Mylan acquired Merck KGaA’s generics business in 2007 for 5 billion euros. That acquisition included branded products such as EpiPen, for emergency treatment for allergic reactions, and DuoNeb to treat smoker’s lung.

However, according to Investor’s Business Daily, a Mylan spokesperson denied the rumors. The spokesperson told them, "Although it’s Mylan’s policy to not comment on rumors or speculation, given the egregious inaccuracy of reports issued this morning, the company is compelled to confirm that the Reuters article is untrue."

There is a trend of larger corporations unloading or attempting to unload their consumer products division. Pfizer has been trying to sell its consumer products division for several months. Most recently, GlaxoSmithKline, which had been a frontrunner, decided not to acquire it. Reckitt Benckiser also walked away from the bidding.

Pfizer’s consumer division includes brand name products like Advil, Robitussin, Chapstick lip balm and Preparation H. The division is valued between $15 and $20 billion.

And Swiss-based Novartis is buying out London-based GlaxoSmithKline’s portion of a joint consumer health venture for $13 billion. GSK is paying Novartis the money for its 36.5 percent stake in their joint venture, which was launched three years ago. That joint venture combined many of the two companies’ best-known brands under one company, including Exedrin for pain, NiQuitin to stop smoking, and TheraFlu for cold and flu. It was part of a complicated arrangement that included Novartis buying GSK’s oncology business.

Only two days ago, Mylan announced it was partnering with Fujifilm Kyowa Kirin Biologics to commercialize a biosimilar to Abbvie’s Humira (adalimumab) developed by Fujifilm Kyowa Kirin Biologics. Mylan will seek approval and commercialize the compound in Europe. The biosimilar is for the treatment of several chronic inflammatory conditions, including rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis, plaque psoriasis and others.

"Expanding access to biologics through the introduction of biosimilars around the world is a key area of focus for Mylan," said Heather Bresch, Mylan’s chief executive officer, in a statement. "Our partnership with Fujifilm Kyowa Kirin Biologics for an adalimumab biosimilar in Europe is an exciting advancement for Mylan and for patients who are living with chronic autoimmune conditions and need access to a high-quality, more affordable treatment option."

Although it seems likely that Mylan was at some point interested in Merck KGaA’s consumer health business—and perhaps still is—not all investors think it’s a good idea. Bloomberg notes, "The deal isn’t out of strategic left field. Mylan’s $9.97 billion acquisition of Meda in 2016 was an effort to diversify by adding a broader geographic presence and more exposure to over-the-counter products. Buying Merck KGaA’s consumer business would further that effort when the firm’s core generic business is under pressure. But it’s more questionable from a financial standpoint."

At least part of the concern is that Mylan had $14.7 billion in debt at the end of 2017, with only about $368 million in cash. Generally speaking, Merck needs cash to develop new drugs or buy new drugs. As a result, it’s probably not interested in a deal that involves a lot of equity.

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