Supplier News Breaks Archives
P&G, Teva team up in health care
November 4th, 2011
CINCINNATI & JERUSALEM – Procter & Gamble Co. and Teva Pharmaceutical Industries Ltd. have formed a partnership and joint venture in consumer health care.
The companies said Thursday that they will develop new over-the-counter medicine brands. The joint venture, to be called PGT Healthcare, will be based in Geneva, Switzerland, and operate in markets outside North America. The partnership will focus on brand development for the North American market.
Described as "a new model in the industry," PGT Healthcare will focus on best-in-class development and state-of-the-art commercialization of branded OTC medicine, according to P&G and Teva. The venture will unite each company's complementary capabilities and existing OTC medicines.
P&G and Teva said PGT Healthcare expects to spur growth for its parent companies and compete for leadership in the $200 billion consumer health care industry. The partnership will start from a base of about $1.3 billion in annual sales, with the potential to grow to $4 billion toward the end of the decade.
"This unique and transformational partnership creates one of the broadest and deepest OTC product portfolios and geographic footprints in the industry," Shlomo Yanai, Teva's president and chief executive officer, said in a statement. "Each company's leading brands will experience tremendous growth by combining our strengths. We will be better together."
PGT Healthcare will be led by a management team comprised of experienced senior leaders from both companies, including CEO Briain de Buitleir from P&G and chief operating officer Eli Shani from Teva Pharmaceutical Industries. A supervisory board representing both parent companies will govern the venture. Tom Finn, P&G's president of Global Health Care, will be chairman of this supervisory board.
In connection with the joint venture's formation, P&G has sold its OTC plants in Greensboro, N.C. (Vicks production), and Phoenix (Metamucil production) and transferred the employees of both plants to Teva. As part of the partnership, Teva will be the manufacturer and supplier for the PGT Healthcare business and P&G's North American OTC business.
P&G and Teva noted that the combination of each company's strengths positions the venture for rapid expansion into new nations and categories as well as for double-digit sales growth — ahead of what each company alone was expecting to deliver.
"P&G's partnership with Teva creates a combined set of capabilities that is unmatched in the industry," stated Bob McDonald, chairman of the Board, president and CEO of P&G. "Starting today, our combined consumer health care business will now offer more branded OTC products to more consumers in more parts of the world."
At the start, P&G and Teva they plan to optimize the base business of approximately $1.3 billion in sales by joining each company's capabilities with the other's brands and operations. P&G stands to bring best-in-class consumer understanding, branding, design and in-store merchandising to Teva's leading brands, such as ratiopharm, while Teva will bring deeper, broader pharmacy distribution, including its pharmacy sales force and strong pharmacy relationships, broader regulatory capabilities and new technologies to P&G's leading brands, which include Vicks, Metamucil and Pepto-Bismol.
The two firms also aim to expand the product and brand portfolio of each company's current businesses into more of the largest, fastest-growing countries in the OTC sector. Teva and P&G's combined geographic footprint will now cover most key markets, they said. P&G has a strong presence in the United States, Canada, Brazil, Mexico, India, Indonesia, Australia, Italy, France and the United Kingdom. Teva is strong in Russia, Poland, Ukraine, Germany, Japan, Scandinavia, Venezuela, Chile, Peru and Israel. PGT will leverage the combined capabilities to expand into areas such as China. Also, some of the existing Teva brands are local leaders and offer global or regional expansion potential.
Another key focus is growing into new OTC categories. P&G currently has a strong category presence in cough/cold, digestive wellness and women's diagnostics, while Teva's portfolio includes many technologies and leading brands in other key OTC categories such as vitamins, minerals and supplements, analgesics, medicated skin and potential Rx-to-OTC switches. Several of the existing Teva brands are local leaders and offer global or regional expansion potential.
Further, the companies pointed out, some of Teva's technologies can be used almost immediately to expand P&G's portfolio into new subcategories all around the globe, including in the United States. For example, Teva's technology portfolio includes most of the world's leading allergy compounds, which could enable the expansion of Vicks into allergy treatment.