- 16 constituents
- 12.8% 1y performance
- 15.5% volatility
GSK will not bid for the Pfizer over-the-counter consumer health products, leaving the company without declared candidate as Reckitt Benckiser had also withdrawn a few days earlier
The development may well confirm our hypothesis that pharmaceutical companies anticipate more competition in distribution channels to which they have less access – a trend that might be expected to impact their profitability
Packaged food conglomerates, such as Procter & Gamble , Reckitt Benckiser or Nestlé can be expected to pursue their expansion in the consumer health sector but they apparently reject price estimates optimistically based on past performance of the segment, as both Merck KgA and Pfizer must recognize
Johnson & Johnson , with global sales of $76.4bn in 2017 and a very large consumer health division (17.8% of total), manages to protect margins for now… but undoubtedly, JNJ monitors the trend closely. The segment ($13.6bn in 2017) is growing moderately (+1.3% ex-currency impact) with acquisitions in Beauty and over-the-counter health contributing to sales. Commenting on margins, JNJ confirms pressure due to ‘increased advertising and promotional spending'
More on JNJ in our note on medical devices