Johnson & Johnson in $16.6 billion deal for Pfizer OTC business

Johnson & Johnson reached an agreement to purchase Pfizer’s consumer healthcare business for $16.6 billion in cash, both companies announced yesterday. The transaction is expected to close by the end of 2006. J&J emerges from the deal as the world’s largest consumer health care product company. “Our consumer business has a long tradition of outstanding performance and a proven track record in growing consumer brands at above-category levels through innovation,” said J&J CEO William Weldon in a statement. “This acquisition builds upon our broad base in healthcare products and our leadership objectives in the consumer, pharmaceutical and medical devices and diagnostics markets.” Pfizer billed the transaction as a way for the company to increase shareholder value in the company. “By obtaining excellent value for our consumer business, we have taken another important step to create value for our shareholders while transforming our company,” said Pfizer CEO Hank McKinnell in a statement. “We will now be in an even stronger position to capitalize on the many opportunities we see in our core pharmaceuticals business, as well as enhance returns to our shareholders.” McKinnell said Pfizer would use the proceeds from the sale to focus on priorities in its prescription drugs business including internal research and pipeline development and continuing to acquire products and technology. Pfizer’s consumer healthcare global business, with sales of OTC products including Listerine, Lubriderm, Visine, Neosporin, Sudafed, Zantac and Benadryl, achieved sales of $3.9 billion in 2005. Under the terms of the agreement, J&J will also acquire the US OTC switch rights to Pfizer antihistamine Zyrtec upon patent expiration. J&J’s consumer OTC brands include Band-Aid, Tylenol, Reach, Splenda and the Clean & Clear, Aveeno and Neutrogena skin-care brands.