J&J Purchases Pfizer's OTC Division
Drug Maker Grabs Listerine, Other Brands in $16.6 Billion Deal
NEW YORK (AdAge.com) -- Johnson & Johnson has solidified its standing as the world's largest consumer health-care company following its $16.6 billion agreement to purchase Pfizer's over-the-counter division.
With already-strong brands such as Tylenol, Band-Aids and Reach toothbrushes, J&J's consumer division generated sales of $9.1 billion in 2005. The acquisition of Pfizer products such as Listerine, Visine, Neosporin, Zantac and Nicorette, among others, would give Johnson & Johnson a $13 billion portfolio -- about a quarter of the $52 billion consumer health-care market.
A better balance
J&J Chairman-CEO William Weldon said the deal will boost the company's consumer health-care division to 25% of revenue, creating a better balance with its prescription-drugs (40%) and medical-device (35%) units.
Pfizer said it was selling its $3.9 billion consumer health-care products line to better concentrate on its prescription-drug business.
While some Pfizer products represent an overlap with existing J&J products, such as skin lotions Lubriderm and Neutrogena, the deal gives J&J some new advertising and marketing venues and a chance to combine others. The anti-smoking Nicorette line will be new for the company. But J&J can also pair Pfizer's antibiotic medicine Neosporin with its Band-Aid line, or use Pfizer's Visine to enhance its successful Acuvue contact lens products.
Johnson & Johnson said it has no plans at this time to discontinue any Pfizer products and has not made any decision regarding the various ad agencies that handle the brand accounts. Interpublic Group of Cos. has a major portion of J&J business, with McCann Erickson on Band-Aid and Acuvue brands and Deutsch handling Tylenol. Most of Pfizer's over-the-counter brands are with WPP Group's dedicated shop, [email protected] JWT.
Regulatory approval is expected later this year.