The Procter & Gamble Co's $3.1 billion sale of its prescription drug business is in line with its recent strategy of shedding products to focus on areas with the best growth and profitmargin prospects.
The deal announced on Monday with Warner Chilcott PLC will take away $2.3 billion in annual revenues, including the billion-dollar brand Actonel, an osteoporosis treatment. Last year, P&G sold another billion-dollar brand, Folgers coffee, to J.M. Smucker Co for some $3 billion.
"We know that our shareholders don't reward us ... for absolute size; they reward us for growth," Bob McDonald, who became P&G's CEO on July 1, told analysts in a conference call.
"And we are going to do what we have to do to get the right portfolio of businesses together."
P&G, the world's largest consumer products maker, reported on Aug 5 that its fourth-quarter profit fell 18% and sales 11%. Its revenue for the fiscal year that ended June 30 was $79 billion.
McDonald said Monday's deal would allow P&G to concentrate more resources on consumer health care, including overthe-counter medicines such as Vicks and Prilosec OTC, feminine care products such as Always, and oral care led by the Crest toothpaste brand.
He said P&G had plenty of room to increase sales in the consumer health care market, which has grown 5 to 6%per year and has good margins and solid potential.
P&G, also targeting beauty and grooming, has recently acquired the upscale men's skin care line Zirh and men's grooming business The Art of Shaving.
Analysts think P&G eventually could sell such major brands as Braun appliances, Duracell batteries and Pringles snacks.
Among satisfied buyers of P&G businesses has been Smucker, which earlier bought Jif peanut butter and Crisco shortening from P&G.
The Orrville, Ohio-based company reported last Friday its fiscal first-quarter profit more than doubled and beat expectations, mainly because of increased sales from Folgers.
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