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.
This report comes in PPT.
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.
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.
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.
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.
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.
It is the aggregation of OTC, Vitamins and Dietary Supplements (VDS), Sports Nutrition, and Weight Management and Wellbeing
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