The daily chemical giant P&G has made new progress in the field of big health again. On December 4, the reporter was informed that P&G has completed the acquisition of the consumer health business under the German Merck Group. For P&G, whose performance is not bright in recent years, it may be a new growth point. However, in the face of the big cake in the Chinese market, it is not the P&G family. This means that the challenge that P&G faces is not only from the rapid deployment of the post-acquisition business, but also from the “sniping” of many giants.

Preliminary treatment field

  On December 4, the reporter learned from the relevant person in charge of P&G that P&G has completed the acquisition of the consumer health business under the German Merck Group.

  It is worth noting that after the acquisition of the consumer health business of the Merck Group in Germany, P&G will be able to expand its business footprint, expand its brand portfolio and enrich its product categories in the 15 largest OTC healthcare markets worldwide. Many of them are in the field of treatment that P&G has not yet set foot on, and the business will be launched in Europe, Latin America and Asia.

  In this regard, an industry insider who did not want to be named analyzed that, at present, P&G will focus on the big health business in Asia in the Chinese market, and it is highly likely that it will be given priority.

  At present, P&G has brands such as Vickers, Midas, Pepto-Bismol, Crest and Oral B in the field of consumer health. The Merck Group's consumer health business covers more than 900 products in 44 countries around the world. The data shows that the consumer health business of the German Merck Group has reached US$1 billion, an increase of 6% over the past two years.

  In this regard, Tom Finn, president of P&G's global personal healthcare business, said: "This will mark the beginning of a new era of P&G's personal healthcare. We are now working hard to realize the huge potential of the combined business. To this end, we have also created a new one. Healthcare organizations enable consumers to lead a better life and drive further growth in sales and profits."

Performance pressure

  "Because of the decline in product prices caused by e-commerce and market competition, P&G has experienced slow sales growth and shrinking profit margins in recent years, and it is necessary to find new profit growth points." Senior marketing person and founder of Zhiyuntu brand consulting company Jiang Xiaofeng believes that Procter & Gamble The strategic intent of the Merck Group's consumer health business is clear.

  Throughout the development of P&G in the global market, sales have rarely increased in the past ten years. As a development market that P&G values very much, China's performance during this period is not satisfactory. Looking back at 2016, it is the most difficult year for P&G. In FY2016, P&G revenue fell 7.7% year-on-year to US$65.299 billion. At that time, Ke Xinghua, who had just served as vice president of P&G Greater China, took over the previous Lin Xiaohai, which was the fourth responsible for P&G in China within four years. People, for Lin Xiaohai's resignation, the outside world rumors that "performance pressure."

  By FY 2018, P&G's global revenue increased by 2.73% year-on-year to US$66.832 billion. As operating costs increased by 5.33% year-on-year to US$34.268 billion, net profit decreased by 36.01% year-on-year to US$9.861 billion. In the first quarter of fiscal year 2019, P&G revenue growth narrowed again to 0.22% to US$16.69 billion.

  Procter & Gamble also felt the decline, tried many actions to boost performance, and successively acquired many brands. At its peak, P&G has more than 300 sub-brands. However, after the big-handed "buy and buy", P&G's performance failed to grow as scheduled. Subsequently, P&G had to start divesting its small brands with sales of less than $100 million. According to the plan, this year, P&G continued to accelerate the “slimming” of rectification, further simplifying the management structure and improving the agility and accountability of P&G.

  In this regard, Jiang Xiaofeng also pointed out that the cut-off of the brand or business contraction is actually adjusted in the original business, can only improve, but it is difficult to solve the big problem; but this acquisition is equivalent to another. “Accelerating the layout of the big health field is more from the perspective of the capital market.” Senior brand expert Zhang Bingwu said that the layout of the big health field can theoretically help companies to enrich the brand matrix and broaden the channel and business scale, but in fact From a financial perspective, more is to help companies expand revenue and net profit.

  In fact, this is not the first time P&G has been involved in the field of big health. In 2011, P&G and Teva Pharmaceuticals co-founded the PGT Healthcare Joint Venture, which owns 51% of the shares, but the PGT Healthcare Joint Venture was terminated on July 1, 2018 through regulatory approval. In this regard, P&G also pointed out in the announcement that the acquisition of the Merck Group consumer health business in Germany will replace and surpass the previous PGT healthcare joint venture.

  P&G, who had experienced a failure, still hopes to enter a big health market with great potential.             According to the research report, in 2014, the global consumer health care product market was about 233 billion US dollars; in 2017, China's health care product market is approaching 150 billion yuan. It is estimated that China's health care products market will reach 181.6 billion yuan in 2020.

  The Chinese market is a huge cake: although the big health industry is still in the early stages of development, there is huge room for development. According to statistics, in 2017, China's large-scale health industry reached 6 trillion yuan. It is estimated that by 2020, China's medical and health industry will reach 8 trillion yuan.

  However, in Jiang Xiaofeng's view, “OTC products have their own unique business and supply chain models compared to P&G's existing daily necessities. They also require higher R&D and technology, and the corresponding barriers and premium space will be greater. For P&G, this move will improve P&G's OTC business unit strength."

  It is not only P&G that has seen dividends in this area. Taking the Chinese market as an example, Unilever and Swisse parent company Jianhe Group have also started to layout. In March of this year, Unilever announced plans to acquire the consumer health nutrition business of British pharmaceutical giant GlaxoSmithKline. The data shows that the total turnover of the GlaxoSmithKline HFD portfolio in 2018 is about 550 million euros.

  Zhao Heng, founder of Latitude Health, told reporters that although the market potential in the big health sector is huge, if competition is not easy, the competition will be fierce.

  However, some insiders pointed out that after the completion of the acquisition, the most important problem facing P&G is the integration of its business, because P&G has not been involved in the treatment field before, and the control of the market still needs detailed planning. However, at this time, many companies have entered the field of big health, and the effect of P&G's entry is still to be seen.