Procter & Gamble & TEVA Form Consumer Healthcare Partnership

The Procter & Gamble Company and Teva Pharmaceutical Industries Ltd. recently announced the signing of a master agreement to create a partnership in consumer healthcare by bringing together both companies’ existing OTC medicines and complementary capabilities to accelerate growth.

This new business model combines P&G’s strong brand-building, consumer-led innovation and go-to-market capabilities with Teva’s broad geographic reach, its experience in R&D, regulatory, and manufacturing and its extensive portfolio of products.

“This unique partnership positions P&G and Teva to be a leading player in the consumer healthcare industry,” said Bob McDonald, Chairman of the Board, President, and Chief Executive Officer of P&G. “This is a remarkable opportunity to accelerate growth for both companies’ OTC businesses. Together, we will serve more consumers in more parts of the world, more completely, by increasing access to high-quality, affordable OTC medicines.”

“We are extremely pleased to be joining forces with Procter & Gamble, a world leader in brand building and innovative go-to-market capabilities,” said Shlomo Yanai, Teva’s President and Chief Executive Officer. “This partnership will create value by immediately expanding the number of channels and geographies in which each company’s OTC products will be sold. Together, we will develop a new platform with the potential to reshape the entire global OTC market.”

The partnership will include a joint venture that combines the companies’ OTC businesses in all markets outside of North America. The markets included in the joint venture generated sales of more than $1 billion in 2010. Teva will provide access to its unparalleled portfolio of medicines and global R&D and manufacturing expertise and infrastructure. As part of the partnership, the companies intend for Teva to take global responsibility for manufacturing to supply the joint venture markets and P&G’s existing North American business.

OTC healthcare medicines offer significant growth potential for both companies in developed and emerging markets. The companies expect to stimulate faster growth in the nearly $200-billion OTC market as the global population continues to age, consumers increasingly focus on quality-of-life and wellness and more consumers personally manage their family’s healthcare choices and rely on trusted brands. In addition, economies in emerging markets continue to grow quickly, and consumers are gaining purchasing power. All of these factors will contribute to continued strong growth of the global consumer healthcare market.

This partnership will enable both companies to generate greater value from their existing OTC businesses. By broadening its OTC product offerings, Teva will further strengthen its position with major pharmacy customers around the world. For P&G, the partnership will accelerate global expansion of its leading OTC brands, such as Vicks, Metamucil, and Pepto-Bismol. In addition, the partnership will exploit opportunities to develop Rx-to-OTC switches to create new trusted brands to be marketed worldwide, including in North America. The transaction is expected to close in the fall of 2011 subject to receipt of required regulatory approvals.