Amid the uncertainty of COVID-19 in 2020, consumer health companies scaled back on mergers and acquisitions, instead focusing on portfolio rationalisation and cost cutting. In 2021, the industry is expecting a strong bounce back to historic rates of M&A activity, especially in categories with many emerging brands, like vitamins and dietary supplements. This briefing evaluates the industry’s expected buyers in 2021 and examines the products that are most likely to change hands.
In the face of uncertainty during the Coronavirus (COVID-19) pandemic, the consumer health industry markedly scaled back investments in M&A in 2020, with aggregate sales falling considerably lower than the average over the review period. Many companies focused efforts instead on portfolio rationalisation and cost cutting.
In terms of profitability and the ability to meet short-term obligations and long-term commitments, the consumer health industry is well-placed to ramp up M&A in 2021. The industry is awash with midsized brands that will be attractive targets as the industry emerges from the COVID-19 acquisition freeze.
The leading consumer health multinationals will find it hard to engage in the M&A that is likely to surge in 2021. These companies, from GlaxoSmithKline to Bayer to Sanofi, have considerations that will constrain their acquisition ambitions this year, leaving outreach to other competitors.
In their place, large CPG companies like PepsiCo, Nestlé and Unilever are ready to extend their investments in consumer health, with a particular eye on nutritional areas that complement their existing product portfolios.
Vitamins and dietary supplements are likely to be the most in-demand component of consumer health, due to unprecedented sales growth during the COVID-19 pandemic, sustained consumer demand around prevention, nutrition and self-care, and expected innovations around natural ingredients, personalisation and lifestyle-orientated products generated in the face of the pandemic.
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