Dr Reddy’s to buy Haleon’s nicotine replacement therapy portfolio outside US for £500 mn

Mumbai: Drug major Dr. Reddy’s Laboratories will acquire British pharma company Haleon's global portfolio of consumer healthcare brands in the nicotine replacement therapy category outside of the US for £500 million.

The Indian company's subsidiary Dr. Reddy's Laboratories SA will acquire the share capital of Haleon plc's arm Northstar Switzerland SARL for a total consideration of £500 million, Dr. Reddy's said in a statement on Wednesday. 

The payment comprises an upfront cash payment of £458 million and performance-based contingent payments of up to £42 million. The amounts are payable in 2025 and 2026, respectively. 

The transaction is expected to close in early Q4 of calendar year 2024 with operations transitioning in a phased manner, the company added.

“We see the acquisition of this global portfolio of consumer healthcare products led by the global brand Nicotinell as a logical extension of our efforts in consumer healthcare OTC in recent years, and of our purpose of ‘Good Health Can’t Wait’. We have been steadily building our OTC presence in various markets and investing in our capabilities,” said Erez Israeli, chief executive officer of Dr. Reddy’s said in the statement.

The Hyderabad-based company will inherit the global nicotine replacement therapy (NRT) brand Nicotinell with a footprint in over 30 countries spanning Europe, Asia including Japan, and Latin America, along with the brand Nicabate, Habitrol and Thrive in markets outside of the US.

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“…The portfolio is attractive for its customer loyalty, its global nature, and the access it provides to key customers,” said Israeli.

"We believe we can unlock more value, grow the portfolio further, and increase consumer access around the world to these global brands. Given these advantages, it is the ideal anchor around which to build a larger global OTC platform."

Nicotinell brand

The proposed acquisition, the company said, will be inclusive of all formats such as lozenge, patch, and gum as well as pipeline products, in all applicable global markets. The Nicotinell business had generated revenue of £217 million last year.

Nicotinell is the second biggest brand globally (excluding the US) in the NRT category. It holds the first or second position in 14 of the top 17 global markets, with the lozenge or mini lozenge format holding the top position.

NRT helps consumers stop smoking by replacing some of the nicotine they get from cigarettes.

“As a business, consumer healthcare is a growing and sustainable business with favourable long-term trends. The business to be acquired from Haleon has maintained steady sales and strong profitability over the years,” said Israeli.

Tobacco use causes eight million deaths globally every year from health consequences such as cardiovascular diseases, lung disorders, cancers, diabetes, and many other debilitating diseases, the company said.

“According to the World Health Organization (WHO), of the 1.3 billion tobacco users globally, as many as 60% have expressed the desire to quit; however only 30% have access to the tools to help them to do so successfully,” it continued.

In recent years, Dr. Reddy’s has increased its presence in consumer healthcare (nutrition and OTC wellness) in markets worldwide, including a recent joint venture with Nestlé India. 

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