Dr Reddy’s Expands Consumer Health with GBP 500M Haleon NRT Buy

Dr Reddy's Laboratories Ltd announced on Wednesday that it has entered into a definitive agreement with Haleon plc, a prominent consumer healthcare company. The deal involves purchasing shares of Northstar Switzerland SARL, a group company of Haleon, to acquire a global portfolio of consumer healthcare brands outside the United States for GBP 500 million.

Representative image

The acquisition includes Haleon's global portfolio of Nicotine Replacement Therapy (NRT) brands. This portfolio features Nicotinell, a leading brand in the NRT category with a presence in over 30 countries across Europe, Asia (including Japan), and Latin America. Additionally, local market-leading brands such as Nicabate in Australia, Thrive in Canada, and Habitrol in New Zealand and Canada are part of the acquisition.

Details of the Acquisition

Dr Reddy's will acquire Northstar Switzerland SARL's share capital for GBP 500 million. This amount includes an upfront cash payment of GBP 458 million and performance-based contingent payments up to GBP 42 million, payable in 2025 and 2026. The transaction is expected to close in early Q4 of 2024, pending regulatory approvals and other customary conditions.

The NRT business to be acquired is extensive, covering all formats like lozenge, patch, gum, and pipeline products in applicable global markets outside the United States. Nicotinell is the second-largest brand globally in the NRT category, excluding the United States. It holds the first or second position in 14 out of the top 17 global markets.

Market Position and Revenue

Nicotinell ranks among the top 15 OTC brands in Europe (excluding Russia and Italy) and is 32nd among all OTC global brands outside the US. The portfolio generated approximately GBP 217 million in revenue in 2023. The lozenge/mini lozenge format holds a top position globally.

The transaction will see Dr Reddy's acquiring the NRT business in all countries outside the United States. Operations will transition to Dr Reddy's gradually to ensure successful integration. Erez Israeli, CEO of Dr Reddy's, stated: "We see the acquisition of this global portfolio of consumer healthcare products led by the global brand Nicotinell as a logical extension of our efforts in consumer healthcare OTC in recent years, and of our purpose of ‘Good Health Can’t Wait.’"

Strategic Importance

The business being acquired from Haleon has shown steady sales and strong profitability over the years. Israeli added that the portfolio is attractive due to its customer loyalty, global reach, and access to key customers.

Upon completion of this transaction, Dr Reddy's will significantly expand its consumer healthcare portfolio. This move aligns with their strategic goals and enhances their market presence globally.