Introducing PGT Healthcare, a JV of PG and Teva that was announced in Mar 2011 and will focus on OTC and prescription branded generics in countries other than the US.
NOVEMBER 3, 2011, 5:53 P.M. ET By BEN FOX RUBIN And NATHALIE TADENA
Procter & Gamble Co. and Teva Pharmaceutical Industries Ltd. unveiled details of their new joint venture to develop and sell branded generic medicines.
P&G, a consumer-goods giant, sold off its prescription-drugs business two years ago, but now will be expanding its drug offerings with Teva, the world's largest generic-drug maker. The companies in March announced the plan for the joint venture, which will be called PGT Healthcare.
The venture is expected to start with about $1.3 billion in annual sales, with the potential to grow to $4 billion toward the end of the decade. The companies also said they expect the venture to post double-digit sales growth, as P&G brings its branding and design expertise to Teva's pharmaceutical development capabilities. P&G's Vicks, Metamucil and Pepto-Bismol brands will be included in the partnership.
Also Thursday, Procter & Gamble boosted its full-year earnings guidance to include contributions from the new venture, a one-time gain from the coming sale of its Pringles brand and incremental restructuring plans.
"This unique and transformational partnership creates one of the broadest and deepest (over-the-counter) product portfolios and geographic footprints in the industry," Teva Chief Executive Shlomo Yanai said. "Each company's leading brands will experience tremendous growth by combining our strengths. We will be better together."
The consumer health-care partnership will be based in Switzerland and operate in markets outside of North America, though it will also develop brands to be sold in North America.
P&G now sees full-year earnings of $4.52 to $4.83, up from its prior view of $4.17 to $4.33. It continues to see sales growth of 3% to 6%. For the fiscal second-quarter, P&G projects earnings of $1 to $1.11, which includes a non-core restructuring spending of zero to 5 cents a share. Excluding this cost, core earnings per share is consistent with the company's previous guidance. But, given the timing of the transaction, the company said the deal will not have a significant impact on its fiscal 2012 results.
P&G said Thursday it expects the net one-time gain on the Pringles sale to be 55 cents to 65 cents a share, though the closing of the transaction has been delayed until the second half of the company's fiscal year. The company reiterated plans to spend $700 million to $800 million after-tax on restructuring projects in fiscal year 2012.
Rising commodities costs have been a persistent drag on results from consumer-goods companies like P&G in recent quarters. Like its peers, P&G has sought to offset the cost pressures through ramped up cost-cutting and higher prices for its products. Last week, the company said its fiscal first-quarter earnings slipped on pressure from commodities prices.‹
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