Of course, every one of these statements comes so heavily veiled, in qualifiers and hedging lead in language — and exit — language. . . not too much of anything, really, can be said with any conviction, here.
But, even so. . . Mr. Kellogg’s remarks — in Scottsdale, yesterday afternoon — seemed to shade a little bit closer to a divestiture, partner or spin off related to non-North American Consumer Health businesses, at a minimum. And if I might step a bit further out on the limb, here, his remarks relative to Animal Health might be read as “Merck could potentially shed all of Consumer Health” — before any of Animal Health would be on the block. But I could certainly be wrong. Here is the Credit Suisse hosted bit of “chin-waggle,” in context:
. . . .Merck EVP & CFO Peter N. Kellogg:
. . . .And so, specifically, to the Animal Health and the Consumer business is these are, as you know, and I think you’ve highlighted as well, very attractive businesses both in terms of Animal Health and Consumer being in very exciting areas. But likewise, our businesses, I think, are very well positioned.
The Animal Health business is number two in the industry, has a tremendous portfolio of innovative vaccines and therapeutics. We do very strongly in the production animal space, everything from fish farms all the way up to cattle. We are not quite as strong in the companion animal space, but we have a very strong pipeline of innovation there that we think actually will play out quite well in the next few years.
So in that case, obviously, we’re thinking about how do we maximize the value of that very strong business that has a global footprint? Are there opportunities to expand it? Are there opportunities to partner it or do other things? And so, we’ll look at all options there. But we have always said that we think that’s a really good business and we really like it, and it’s a very strong performing business for us, both the topline and the bottom line. . . .
The consumer business, likewise, is a very good business. I would just highlight that it had very strong brand and performance in North America over the last few years, despite the fact that in three out of the four years, we’ve had a very strong competitive launch of a new product against Claritin. First, we had Zyrtec and then we had Allegra launching against it. So in many ways, if you look at the revenue performance, which has been good over the last few years, that’s in the face of a very strong competitive series of launches that have gone against us. But yet, we’ve still held our position and grown with those businesses.
However, what’s one thing that I think we’ve always recognized is that it is — while it’s very strong and outstanding performance in North America, outside of North America and the rest of the world, it’s not quite as strong. Certainly, we have businesses in Russia, and China, and Brazil, and all the other countries. But it’s not quite the same scale as we have in North America. So I think that has provoked some evaluation and people have thought about it, and I think certainly there’s a lot of interest in consumer assets around the world. So we are currently evaluating that. . .
As ever, we will keep you posted. But I’d say — on balance, Merck is thinking more deeply about a transaction (divestiture/spin-off) in the Consumer Health businesses, than the Animal Health ones, at least from Mr. Kellogg’s “Body English“, yesterday in Arizona. [My 2011 era backgrounder, here.]