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On 15 December 2015 Sanofi made the announcement of the acquisition of Boehringer Ingelheim OTC division worth US$6.7 billion in a move that reconfirms the significant consolidation trend that the consumer health industry has been experiencing for the past five years. The deal is part of a swap of operations where Sanofi’s Merial Animal Health Division will be swapped for Boehringer-Ingelheim OTC Division.
This announcement does not come up as surprise since previous consolidation of other big players, such as Bayer-Merck & Co and GlaxoSmithKline/Novartis have put a significant competitive stress on other competitive players. If the deal goes through, the potential ranking of the top players would look like this:
The competitive prize for Sanofi will be solid brands in the respiratory space, such as Mucosolvan, with strong presence in Europe, Latin America, and Russia, but being absent in the largest market of North America. Mucosolvan nicely aligns with Sanofi’s portfolio given its robust and consistent brand image across markets, along with well-established sales strategy based on push via pharmacists and the general practitioner recommendation.
Alternatively, Buscopan opens the possibilities of expansion in pain management for Sanofi since it will complement its current portfolio of key brands such as Doliprane, Dorflex and Icy Hot. It would also give Sanofi the opportunity to tap into the antispasmodic global market with strong presence in Europe, Latin America, Australasia, parts of Africa, and Russia.
Euromonitor International’s Competitor Analytics tool allows for rapid comparisons between any two competitors in an industry. As we can see in the country-category map and matrix below, Boehringer Ingelheim’s consumer health operations are a natural acquisition target for the larger Sanofi. The relatively low level of portfolio overlap in major consumer health markets like the US, Brazil, Italy and Germany should assuage any regulatory scrutiny of the deal. It will also substantially bolster Sanofi’s scale in important regions like Western Europe and categories like digestive remedies, analgesics, and cough, cold and allergy (hay fever) remedies.
The graphic below shows size boxes representing combined company sales in the country-category combination. The colour of the box represents 2010-2014 growth of overlapping sales, according to scale on right.
The image below depicts the market overlap of the two companies. That is, the sum of the smaller company’s retail value sales in each of the common country-category combinations.