The consumer products giant could sell off some or all of its pharma brands as it shifts its portfolio toward what P&G execs say are faster-growing and more profitable product categories,The Business Courier of Cincinnati reports.
At an analyst briefing today, ceo AG Lafley says P&G will halt research into new drugs and, instead, manage its four key pharma brands through their respective product lifecycles, and that P&G will "consider divestiture of some or all of these brands.” These include the Actonel osteoporosis med, the Intrinsa testosterone patch for female sexual dysfunction, the Enablex drug for overactive bladders and the Asacol treatment for Crohn's disease.
Lafley says the regulatory environment for pharmaceuticals has grown more difficult and that it takes much longer to get a product to market, which translates to higher investments at a time of rising competition. “There is significant downward pricing pressure,” he says that erodes margins.
When P&G was at its peak of investment in pharmaceuticals, in late 1990s and early 2000s, the margin was trading at the high multiples, while now it is at or near consumer product levels, he complains. "So, we decided to de-emphasize pharma and focus on consumer health brands."