Hyderabad based Dr. Reddy’s acquires Haleon’s global nicotine replacement therapy Portfolio for £500 million

In a significant move to expand its consumer healthcare offerings, Dr. Reddy’s Laboratories has announced the acquisition of Haleon’s global nicotine replacement therapy (NRT) portfolio outside the United States for £500 million. The acquisition, managed through Dr. Reddy’s subsidiary, Dr. Reddy’s Laboratories SA, includes the share capital of Haleon plc's Northstar Switzerland SARL.

Deal Structure and Payments

The acquisition agreement stipulates an upfront cash payment of £458 million, supplemented by performance-based contingent payments of up to £42 million. These contingent payments are scheduled for 2025 and 2026. Dr. Reddy’s expects the transaction to close in early Q4 of 2024, with a phased transition of operations following the closure.

Strategic Expansion in Consumer Healthcare

Dr. Reddy’s CEO, Erez Israeli, emphasized the strategic significance of the acquisition, describing it as a natural progression of the company’s efforts in consumer healthcare and over-the-counter (OTC) products. The acquisition is expected to bolster Dr. Reddy’s OTC presence and capabilities, aligning with its mission to improve global health access and outcomes.

“We see the acquisition of this global portfolio of consumer healthcare products, led by the global brand Nicotinell, as a logical extension of our efforts in consumer healthcare OTC in recent years, and of our purpose of ‘Good Health Can’t Wait’. We have been steadily building our OTC presence in various markets and investing in our capabilities," said Israeli.

Global Nicotine Replacement Therapy Market

The deal includes the globally recognized Nicotinell brand, which is prominent in over 30 countries, spanning Europe, Asia (including Japan), and Latin America. Dr. Reddy’s will also acquire other NRT brands like Nicabate, Habitrol, and Thrive, excluding the US market.

Nicotinell is the second-largest NRT brand globally (excluding the US) and holds a leading position in 14 of the top 17 markets worldwide. The acquisition covers all product formats such as lozenges, patches, gum, and pipeline products.

In 2023, the Nicotinell business generated £217 million in revenue. The brand is particularly strong in the lozenge and mini lozenge formats, where it holds a leading market position. NRT products help individuals quit smoking by providing a controlled dose of nicotine to ease withdrawal symptoms.

Market Growth and Consumer Demand

Israeli highlighted the portfolio’s appeal due to its strong customer loyalty, global reach, and access to key markets. He noted that Dr. Reddy’s plans to further develop and expand the portfolio, increasing consumer access to these critical health products globally.

The global tobacco epidemic remains a major public health issue, causing approximately eight million deaths annually due to conditions like cardiovascular diseases, lung disorders, cancers, and diabetes. According to the World Health Organization (WHO), out of 1.3 billion global tobacco users, 60% express a desire to quit, yet only 30% have access to effective cessation tools.

Future Outlook and Strategic Goals

Dr. Reddy’s has been actively enhancing its consumer healthcare presence, including a recent joint venture with Nestlé India, which focuses on nutrition and wellness products. The acquisition of Haleon’s NRT portfolio represents a significant step in strengthening its global OTC platform and expanding its reach in the consumer healthcare market.