From Portfolio Rationalisation to A Flurry of Spending: M&A in Consumer Health in 2021 and Beyond

June 2021

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.

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2020 WITNESSED A HISTORICALLY WEAK PERIOD OF M&A ACTIVITY

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.

 

FINANCIAL HEALTH OF THE INDUSTRY IS STRONG AND SUPPORTS 2021 M&A REBOUND

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.

 

LEADING CONSUMER HEALTH PLAYERS TO SEE CONSTRAINTS TO M&A IN 2021

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.

 

CPG MULTINATIONALS ARE INCREASING THEIR INROADS INTO CONSUMER HEALTH

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 THE BIGGEST ACQUISITION TARGET IN 2021

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.

Scope of the Report

Key findings

Recapping M&A During Covid-19

COVID-19 stifled M&A in consumer health in 2020
STADA was the leading buyer in 2020
GSK was the leading net buyer over the review period
Aside from GSK, OTC companies have cut back on M&A in recent years
CPG companies pounce on consumer health assets
VDS and sports nutrition leaders reluctant to grow through acquisitions
Supplement brands increasingly popular acquisition targets

Financial Performance of Leading Companies

A framework to gauge companies’ ability to acquire over the near term
2020 sales growth was muted for most of the market leaders
Starting with profitability ratios to determine company health
Liquidity ratios suggest narrower acquisition targets in 2021
Gearing ratios show that most leaders have space to acquire in 2021
Combining financial indicators to evaluate 2021 M&A opportunities
GlaxoSmithKline: Acquisitions unlikely as it readies for separation
Johnson & Johnson: The space but not the disposition for acquisitions?
Bayer: Debt to limit near-term acquisition planning
Sanofi: Divestment, not acquisitions, on the cards
The CPG giants: Waiting in the wings for further consumer health add-ons
The CPG Giants: A US-orientated acquisition strategy
OTC and CPG leaders to further converge

Planning for M&A in 2021

Should companies plan for an industry rebound?
Dietary supplements represents the biggest size of prize for acquisitions
The VDS marketplace is teeming with acquisition targets
Mid-tier companies outpacing global growth: VDS
At the category level, a sizable number of OTC brands are available
Mid-tier companies outpacing global growth: OTCs
Asia Pacific: Consumer health’s largest unconsolidated region
VDS targets in Asia and North America but OTCs still plentiful elsewhere
What to expect from regional players
Nestlé already dominating 2021 acquisitions
Investments in M&A in 2021 should have an eye on future trends
Dietary and health positionings point to trendy product developments
Considerable overlap between VDS and adjacent industries
Targets for M&A in 2021: US
Evaluating recent acquisitions
Targets for M&A in 2021: Western Europe
Areas to watch in 2021 within M&A

Appendix: Competitor Analytics

Competitor Analytics tool
Overview
Competitors
Market overlap
Treemap
Overlap matrices

Appendix: Via Pricing

About Via Pricing from Euromonitor International

Consumer Health

It is the aggregation of OTC, Vitamins and Dietary Supplements (VDS), Sports Nutrition, and Weight Management and Wellbeing

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