8
The Consumer Health division manufactures and markets over-the-counter pharmaceuticals. Consumer Health focuses on a number of well-known strategic brands, e.g. Neurobion®, Bion®3, Nasivin®, Femibion®, Seven Seas®, Sangobion®, Floratil®, Cebion®, Sedalmerck® and Kytta®. The division contributed 7% to Group sales and 5% to EBITDA pre one-time items (excluding Corporate and Other) in the second quarter of 2014. The division has high market penetration in Europe, Latin America as well as Southeast Asia. The division is also generating strong growth in Russia and Emerging Markets, particularly in India, Indonesia and Brazil, which have firmly established themselves among the division’s top-ten markets in terms of sales.
Global megatrends favor future growth of Consumer Health. People are becoming more health-conscious and concerned with their own physical well-being. Preventive health care is becoming increasingly important – in both established and emerging markets, characterized by a growing middle class with specific needs.
As of January 1, 2014, two product groups were transferred from the Merck Serono division to the Consumer Health division. These are Neurobion®, a leading global franchise in the vitamin B segment, and Floratil®, a leading brand in the probiotic antidiarrheal segment in Brazil. As a result, the division has become significantly larger.
With the transferred sales of € 265 million, divisional sales grew on a pro forma basis by 55% to € 742 million. The transfer of the two strong brands makes better use of the potential of the consumer-oriented business model of Consumer Health. In addition, it increases the division’s exposure in Emerging Markets. This is a step in the division’s journey towards having at least three leading brands and achieving a market share of at least 3% in each of its key markets. The share of Consumer Health sales accounted for by Emerging Markets increased from 26% (unadjusted year-earlier figure) to 54% in the second quarter of 2014 mainly as a result of the transfer. The effects of the product group transfers on Consumer Health’s figures for 2013 are shown in the table below.
Transfer of Neurobion® and Floratil® from Merck Serono
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Consumer Health | Adjusted |
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2013 reported |
2013 adjustment |
2013 adjusted |
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€ million |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
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Total revenues |
116.3 |
116.8 |
131.4 |
115.1 |
65.5 |
63.3 |
70.2 |
66.3 |
181.8 |
180.1 |
201.7 |
181.4 |
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Sales |
116.1 |
115.6 |
131.0 |
114.2 |
65.5 |
63.3 |
70.2 |
66.2 |
181.7 |
178.9 |
201.2 |
180.4 |
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Operating result (EBIT) |
11.8 |
18.1 |
21.1 |
11.2 |
25.0 |
16.1 |
34.0 |
24.8 |
36.8 |
34.2 |
55.1 |
36.0 |
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Margin (% of sales) |
10.1 |
15.7 |
16.1 |
9.8 |
– |
– |
– |
– |
20.2 |
19.1 |
27.4 |
20.0 |
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EBITDA |
14.4 |
20.4 |
23.1 |
13.2 |
25.0 |
16.1 |
34.0 |
24.8 |
39.4 |
36.5 |
57.1 |
38.0 |
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Margin (% of sales) |
12.4 |
17.7 |
17.6 |
11.5 |
– |
– |
– |
– |
21.7 |
20.4 |
28.4 |
21.1 |
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EBITDA pre one-time items |
14.3 |
19.3 |
24.2 |
14.6 |
25.0 |
16.1 |
34.0 |
24.8 |
39.3 |
35.5 |
58.2 |
39.4 |
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Margin (% of sales) |
12.3 |
16.7 |
18.4 |
12.8 |
– |
– |
– |
– |
21.6 |
19.8 |
28.9 |
21.9 |
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Business free cash flow |
6.7 |
25.3 |
12.3 |
39.5 |
14.1 |
25.6 |
24.6 |
24.3 |
20.8 |
50.9 |
36.9 |
63.8 |
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2013 reported |
2013 adjustment |
2013 adjusted |
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€ million |
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Jan.- |
Jan.- |
Jan.- |
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Jan.- |
Jan.- |
Jan.- |
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Jan.- |
Jan.- |
Jan.- |
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Total revenues |
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233.1 |
364.5 |
479.6 |
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128.8 |
199.1 |
265.4 |
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361.9 |
563.6 |
745.0 |
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Sales |
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231.8 |
362.7 |
476.9 |
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128.8 |
199.1 |
265.2 |
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360.6 |
561.8 |
742.1 |
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Operating result (EBIT) |
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29.9 |
51.0 |
62.2 |
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41.1 |
75.1 |
99.9 |
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71.0 |
126.1 |
162.1 |
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Margin (% of sales) |
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12.9 |
14.1 |
13.0 |
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– |
– |
– |
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19.7 |
22.4 |
21.8 |
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EBITDA |
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34.8 |
57.9 |
71.1 |
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41.1 |
75.1 |
99.9 |
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76.0 |
133.0 |
171.0 |
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Margin (% of sales) |
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15.0 |
16.0 |
14.9 |
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– |
– |
– |
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21.1 |
23.7 |
23.0 |
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EBITDA pre one-time items |
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33.6 |
57.8 |
72.5 |
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41.1 |
75.1 |
99.9 |
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74.8 |
132.9 |
172.4 |
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Margin (% of sales) |
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14.5 |
15.9 |
15.2 |
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– |
– |
– |
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20.7 |
23.7 |
23.2 |
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Business free cash flow |
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32.1 |
44.4 |
83.9 |
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39.7 |
64.3 |
88.6 |
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71.8 |
108.7 |
172.5 |
Effective May 15, 2014, Uta Kemmerich-Keil took over the leadership of the Consumer Health division, thus succeeding Udit Batra as President and Chief Executive Officer of Consumer Health. Kemmerich-Keil was previously CEO of Allergopharma, the Allergy business unit of the Merck Serono division.
