Reckitt set to be major player as health industry consolidates

Speaking at the Reuters Consumer and Retail Summit yesterday, CEO Rakesh Kapoor predicted that the industry, which covers vitamins to over-the-counter medicines to condoms, will see a wave of deals.

“Consumer health is one of the most fragmented markets in the world, and that is a real issue-stroke-opportunity,” Mr Kapoor said. “This fragmentation will result in consolidation – the only question is who, when and how.”

Mr Kapoor, who has been in the top job for just over two years, added that: “My personal opinion is that RB will be in the camp of aggregators or consolidators.” RB, which is headquartered in Slough but has research and development and healthcare manufacturing operations in Hull, is still paying down debt from last year’s $1.4bn purchase of vitamin and supplements maker Schiff Nutrition, but could still do more.

“We have the capability to do interesting size M&A,” he said. Large pharmaceutical companies currently dominate the consumer health market but they are increasingly pruning their portfolios to unlock shareholder value.

Pfizer has led they way in such divestments but others are following suit, with Bristol-Myers Squibb selling RB the rights to market some of its non-prescription remedies in Latin America earlier this year.

GlaxoSmithKline this week agreed to sell its Lucozade and Ribena soft drinks to Suntory Beverage & Food, while some other drugmakers with consumer healthcare brands, including Novartis, are reviewing their portfolios.

RB still gets most of its sales and profits from cleaners and disinfectants like Lysol, Finish and Cillit Bang, but a string of deals in the health sector over the last decade means consumer healthcare now accounts for about a quarter of revenue.