Procter & Gamble's High Hopes for Joint Venture

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- Procter & Gamble(PG) recently concluded the deal with Teva Pharmaceuticals(TEVA) to form a consumer health care joint venture, PGT Healthcare, after receiving approval from anti-trust authorities.

Procter & Gamble, which is seeking double-digit growth opportunity in the OCT drugs business, competes with Unilever(UL), Kimberly-Clark(KMB) and Colgate-Palmolive(CL) in the beauty, personal care and consumer goods category. It also will compete with Johnson & Johnson(JNJ) in the OTC segment.

See our complete analysis for Procter & Gamble's stock here.

PGT Healthcare, which will focus on developing and selling branded over-the-counter (OTC) medicines, was first announced in March 2011 and recently received approval from anti-trust regulators in North America and Europe.

In addition to operating in markets outside of North America to develop branded OTC drugs, it will also develop new brands for the North American market. PGT Healthcare will kick off with $1.3 billion in annual sales from the companies' existing products and expects to achieve double-digit annual growth rates to reach $4 billion in sales by 2020, by expanding into new markets and product categories. For more, read here.

In its most recent quarterly report, P&G said it continues to face significant downward pressure on its gross margins because of higher input commodity inflation that is weighing over pricing measures. Yet, it maintained or improved market share in majority of its product categories. Read here for more.more here.

We have Procter & Gamble with a $71.56 Trefis price estimate of its stock , (link: https://www.trefis.com/company?hm=PG.trefis), almost a 10% premium to its current market price.

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