Dr. Reddy's To Acquire Haleon's Nicotine Replacement Therapy Brand For 500 Million Pounds
The transaction is expected to close by early fourth quarter of calendar year 2024, according to an exchange filing.
Dr. Reddy’s Laboratories Ltd. will acquire British firm Haleon Plc's consumer healthcare brand of nicotine replacement therapy for 500 million pounds, or about Rs 5,290 crore. Subsidiary Dr. Reddy's Laboratories SA has signed a definitive agreement with Haleon to buy Northstar Switzerland SARL, which consists of Nicotinell, a global leader in the NRT category.
The company will shell out an upfront cash consideration of 458 million pounds and additional performance-based contingent cash payments of up to 42 million pounds in 2025 and 2026. The transaction is expected to close by early fourth quarter of calendar year 2024, according to an exchange filing.
Nicotinell is the second biggest brand globally (excluding the United States) in the NRT category and holds the first or second position in 14 of the top 17 global markets, the company said.
Nicotine replacement therapy is a medically approved way to treat people with tobacco use disorder, by taking nicotine through means other than tobacco. NRT is recommended by the ‘World Health Organization Model List of Essential Medicines’ for nicotine use disorders.
Through the acquisition, Dr. Reddy's aims to gain access to a global over-the-counter anchor brand. It is seen as a potential vehicle to build the company’s global consumer healthcare OTC business.
Big Market Reach
The intellectual property, business contracts, dossiers and other assets related to the portfolio being acquired will reside in Northstar Switzerland or its fully owned step-down subsidiaries.
The portfolio had net revenue of 217 million pounds in 2023.
The product line consists of brands including Nicotinell, Nicabate, Habitrol and Thrive available in gum, lozenge and patch forms, which are sold in 31 countries. The top 12 countries are UK, France, Sweden, Denmark, Finland, Norway, Australia, New Zealand, Canada, Japan, Germany and Netherlands, which amounted to nearly 80% of revenue last year.
"The business to be acquired from Haleon has maintained steady sales and strong profitability over the years," said Dr. Reddy’s Chief Executive Officer Erez Israeli. "The portfolio is attractive for its customer loyalty, its global nature, and the access it provides to key customers."
Dr. Reddy’s will acquire Haleon's NRT business in all countries outside of the United States. However, operations will transition in a phased approach to ensure successful integration of the business, the company said.
Haleon said the divestment will allow it to exit the NRT category outside of the US and reduce complexity across the business, allowing increased focus on strategic growth areas. "Whilst this business has great brands, these are not core for us," said Chief Executive Officer Brian McNamara.
Shares of Dr. Reddy's closed down 0.14%, as compared with a 0.62% advance in the NSE Nifty 50 on Wednesday.
