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P&G and Teva form consumer health care partnershipP&G and Teva form consumer health care partnership

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P&G and Teva form consumer health care partnership

The Procter & Gamble Co. and Teva Pharmaceutical Industries Ltd. have created a new partnership and joint venture (JV) in consumer health care. The JV, to be named PGT Healthcare, will be headquartered in Geneva, Switzerland and will operate in essentially all markets outside of North America. The partnership between P&G and Teva will also develop new brands for the North American market.


PGT Healthcare, a new model in the industry, will focus on best-in-class development and state-of-the-art commercialization of branded over-the-counter (OTC) medicines. The JV will bring together each company's complementary capabilities and existing OTC medicines. As a result, PGT Healthcare expects to accelerate growth for its parent companies and compete for leadership in the fast-growing, $200 billion consumer health care industry. The partnership will start from a solid base of approximately $1.3 billion in annual sales with the potential to grow to $4 billion in annual sales towards the end of the decade.


"This unique and transformational partnership creates one of the broadest and deepest OTC product portfolios and geographic footprints in the industry," says Shlomo Yanai, Teva's president/CEO. "Each company's leading brands will experience tremendous growth by combining our strengths. We will be better together."


Combined capabilities for faster growth

PGT Healthcare blends both companies' core strengths and capabilities to facilitate rapid expansion into new countries and categories. P&G and Teva believe the combination of each company's strengths positions the JV well for double-digit sales growth—ahead of the market and beyond what each company alone was expecting to deliver.


"P&G's partnership with Teva creates a combined set of capabilities that is unmatched in the industry, " says Bob McDonald, chairman of the board, president and CEO of P&G. "Starting today our combined consumer health care business will now offer more branded OTC products to more consumers in more parts of the world."


Entry into more markets, more categories

To begin accelerating growth immediately, and to reach the potential $4 billion in annual sales towards the end of the decade, with continuous strong growth beyond, the companies plan to:


Optimize the base business of approximately $1.3 billion in sales by joining each company's industry-leading capabilities with the other company's existing brands and operations. P&G will bring best-in-class consumer understanding, branding, design and in-store merchandising to Teva's leading brands, such as ratiopharm. Teva will bring deeper, broader pharmacy distribution, including its pharmacy sales force and strong pharmacy relationships, broader regulatory capabilities and new technologies to P&G's leading brands, which include Vicks, Metamucil and Pepto-Bismol.

Expand the product and brand portfolio of each company's current businesses into more of the largest, fastest-growing countries in the OTC industry. Teva and P&G's combined geographic footprint will now cover most key markets. Among the largest, fastest growing OTC markets in the world, P&G has a strong presence in the U.S., Canada, Brazil, Mexico, India, Indonesia, Australia, Italy, France and the U.K. Teva is strong in Russia, Poland, Ukraine, Germany, Japan, the Scandinavian countries, Venezuela, Chile, Peru and Israel. PGT will leverage the combined capabilities to expand into whitespaces such as China. Additionally, some of the existing Teva brands are local leaders and offer global or regional expansion potential.

Expand into new OTC categories. Today, P&G has a strong category presence in cough/cold, digestive wellness and women's diagnostics. Teva's portfolio includes many technologies and leading brands in other key OTC categories such as vitamins, minerals and supplements, analgesics, medicated skin, and potential Rx-to-OTC switches. Several of the existing Teva brands are local leaders and offer global or regional expansion potential. Further, some of Teva's technologies can be used almost immediately to expand P&G's portfolio into new sub-categories all around the globe, including in the U.S. For example, Teva's technology portfolio includes most of the world's leading allergy compounds. This could enable the expansion of Vicks into allergy treatment.

Drive scale and cost synergies by leveraging each company's industry leading scale and operational efficiencies. For example, P&G will bring media purchasing synergies to the venture given its position as the world's leading advertiser. Teva will bring scale and efficiency to product development and manufacturing, capitalizing on its position as the leading supplier of medicines worldwide.


PGT Healthcare will be led by a management team comprised of experienced senior leaders from both companies, including CEO Briain de Buitleir from P&G, and COO Eli Shani from Teva Pharmaceutical Industries. A supervisory board representing both parent companies will govern the venture. Tom Finn, P&G's president of Global Health Care, will be chairman of this supervisory board.


In connection with the formation of this JV, P&G has sold its OTC plants in Greensboro, NC, (Vicks production) and Phoenix, AZ, (Metamucil production) and transferred the employees of both plants to Teva. As part of the partnership, Teva will be the manufacturer and supplier for the PGT Healthcare business and P&G's North American OTC business.

Source: The Procter & Gamble Co.



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