M&A in Consumer Health in 2023: Opportunities in a Transitional Year

July 2023

In the face of a worsening macroeconomic environment in 2022, M&A activity shrank compared to the strong performance in 2021, and that slower trend is likely to continue in 2023. Investors are waiting for global economic trends and consumer health category sales to improve before making big bets; muted expectations for rebounding rates of M&A will persist until at least the first half of 2024. That said, there are some areas for optimism, especially around new Rx-to-OTC switches.

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Key findings

Expectations for M&A in 2023 and into 2024 will remain muted

After a strong year of mergers and acquisitions (M&A) in 2021, the rate of transactions in 2022 shrank considerably, as the year was defined by macroeconomic instability, reduced purchasing power, and tepid sales across consumer health categories.

Leading OTC multinationals continue to wait on the sideline, instead pursuing their own spinoffs

As the year progressed, the global macroeconomic picture worsened, with inflation rates spiking across markets, all but drying up the pace of acquisitions in the second-half. The largest purchase by far was in the first half, with Mondelez taking over the leading global protein/energy bar brand Clif.

The first half of 2022, led by Mondelez’s purchase of Clif, was considerably stronger than the second half

After the industry-shaking spinoff of GlaxoSmithKline’s consumer healthcare division in 2022 into the public entity Haleon, Johnson & Johnson followed suit in 2023 with the establishment of its own independent consumer company called Kenvue. Sanofi isn’t far behind, with its own spinoff likely for 2024.

2022 saw diminished M&A transactions due to macroeconomic headwinds and flat growth in consumer health

The first half of 2023 saw the slowest rates of acquisitions in years, with slow activity expected at least until 2024, as investors wait for the global economy to improve and, just as importantly, wait to determine the emerging areas for future industry growth.

Rx-to-OTC switches have buoyed M&A activity in 2022 and 2023; are there more opportunities moving forward?

Aggressive Rx-to-OTC switches in recent years have led to widening opportunities for fast-growth acquisitions in the mould of Perrigo’s purchase of HRA Pharma and its OTC contraceptive portfolio in 2022 and Haleon’s bet on the newly switched erectile disfunction brand MED3000 in 2023.

Key findings
M&A activity slowed considerably in 2022
Inflation and the macroeconomic effects on M&A in 2022
Deceleration in consumer health sales in 2022 contributed to harsh setting for acquisitions
CPG companies continued their interest in consumer health brands in 2022
OTC multinational leaders continue not to pursue acquisitions in 2022
Among CPG leaders, Nestlé and Mondelez stand out
2022 acquisitions underline the movement towards active nutrition
An improved inflationary environment meets worsening borrowing conditions
Despite near-term headwinds, consumer health brims with potential acquisition opportunities
Expect future acquisitions to touch on areas of industry innovation and development
Future industry growth: Sustainability a key locus of differentiation moving forward
Future industry growth: The widening concept of health is leading to blurring categories
Future industry growth: The emergence of lifestyle considerations
2023 acquisitions lag 2022 over the first half of the year
Divestments continue to restrain leading companies’ bandwidth for large acquisitions
Case study: Is Haleon ready to renew acquisitions?
Case study: Kenvue , newly independent, remains quiet on acquisition front
Case study: Bayer builds through targeted additions
Case study: Sanofi continues to offload brands in anticipation of consumer health spinoff
Case study: Perrigo sees immediate success with HRA Pharma acquisition
Case study: STADA Arzneimittel undertakes local acquisition strategy
Targets for M&A: Despite slowdown, select US VDS companies are still enticing opportunities
What to expect in M&A in consumer health in 2023/2024

Consumer Health

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

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