Novartis Purchase Of Bristol OTCs Has Excedrin Written All Over It

Novartis will enter the U.S. over-the-counter analgesics market with Excedrin as part of the purchase of Bristol-Myers Squibb's OTC portfolio.

Novartis is acquiring rights to Bristol's North American brands for $660 mil., the firms announced July 14.

The deal includes production and marketing rights to Bristol's U.S. and Canadian brands and related sales in Latin America, Europe, the Middle East and Africa.

Novartis cited Excedrin in particular as providing the firm "greater critical mass" in the U.S. market.

The aspirin/acetaminophen/caffeine combination and its line extensions posted 2004 U.S. sales of $160 mil.

The timing and product formulation may prove advantageous for the Swiss firm's entry into analgesics, as non-steroidal anti-inflammatory drug marketers are working to comply with new cardiovascular and gastrointestinal risk labeling.

Makers of ibuprofen and naproxen products were asked by FDA in June to revise labeling language to reflect NSAID class effect concerns raised by the agency's review of COX-2 safety issues (¹ (Also see "Requested OTC NSAID Labeling Includes Cardiac Risk, Front Panel Changes" - Pink Sheet, 20 Jun, 2005.), p. 5).

Excedrin sales have been flat, Bristol reported earlier this year, and may benefit from new warnings on competitors (² (Also see "Bristol Consumer Unit Suitors Tasked With Determining Value Of Excedrin" - Pink Sheet, 17 Jan, 2005.), p. 8).

Excedrin provides "a strong platform" to develop its OTC business, Novartis said, pointing to the brand's positioning as "the Headache Medicine" to differentiate it within the competitive analgesic market.

The line includes a QuickTab formulation launched in 2002, an aspirin-free tension headache offering and the first approved OTC migraine product.

Novartis sees Bristol's complete OTC package as complementary to its current line-up, which includes the cough/cold line Theraflu , the antifungal Lamisil and Maalox antacids in the U.S.

Bristol's portfolio includes the Comtrex cold and flu line, Bufferin aspirin, No-Doz caffeine pills, the Keri skin care line, 4-Way nasal decongestants, Vagistat antifungal products and Mineral Ice topical analgesics.

Combined, Bristol's OTCs sold $258 mil. in 2004, roughly 90% of which was in the U.S. market.

The acquisition also balances Novartis' global OTC business, which has been more heavily focused in Europe.

In Europe, Novartis nonprescription brands include Nictonell smoking cessation products, the anti-inflammatory Voltaren , Calcium Sandoz and Benefiber supplements and Otrivin nasal decongestants, as well as Lamisil and TheraFlu.

The expanded U.S. consumer presence also improves Novartis' Rx-to-OTC switch capabilities, the firm says.

Novartis Consumer Health CEO Paul Choffat said the acquisition makes the firm a "more attractive partner" for switches.

For example, the agreement builds Novartis' business with "key trade customers" who also purchase the firm's prescription medications and other consumer health products.

Novartis has kept an eye on switch opportunities lately. The firm announced a co-promotion agreement with Procter & Gamble July 6 for Novartis' overactive bladder treatment Enablex , including rights for a potential switch (³ (Also see "Novartis/P&G Enablex Deal Offers OTC Switch Option" - Pink Sheet, 11 Jul, 2005.), p. 4).

However, the Bristol deal only includes existing OTCs, according to the firm, and excludes any royalties on a possible OTC version of its statin Pravachol .

Bristol announced its intention to sell the OTC unit in January and initially indicated that possible Pravachol royalties would likely be part of the deal.

Bristol sold OTC marketing rights for a potential Pravachol switch to Bayer in December and still is pursuing a switch NDA program, though it has not yet filed an application, the firm says.

The Novartis transaction is expected to close by the end of the third quarter, pending customary regulatory approval.