The Whitehouse Station, N.J.-based company said Monday it would consider separating its animal health and consumer businesses, either through a spinoff, outright sale or other option.
The move follows similar ones made by rivals Pfizer (PFE) and Abbott Laboratories (ABT). The split of three Pfizer units went effective Jan. 1 after the New York pharma giant last year spun off its animal health division, Zoetis, into a separately traded company. Abbott Park, Ill.-based Abbott Labs (ABT) in January 2013 completed a spinoff of its research-based pharmaceutical business AbbVie (ABBV) to rid itself of a more capital-intensive business.
Merck first suggested a separation into three segments -- pharmaceuticals, animal health and consumer products -- in November. After two months of internal debate, the company has decided to consider breaking ties with the animal health and consumer businesses but not the pharma operations.
Merck's over-the-counter consumer business, which includes Coppertone sunblock and Claritin allergy medication, had sales of $1.95 billion in 2012. Meanwhile, Merck's animal health division, which produces pharmaceutical and vaccine products for all major farm and companion animals, reported sales of $3.4 billion in 2012.
While the separation of these assets would make Merck a leaner, more focused operation and could also help offset a 2013 where Merck missed sales targets every quarter, Mark Schoenebaum of New York-based ISI Group said any breakup is just one of a number of potential growth drivers for Merck in 2014.