Bayer acquires OTC drug firm Dihon for $586 million

Germany-based drugmaker Bayer AG said it has completed the acquisition of privately held Dihon Pharmaceutical Group Co Ltd in Kunming, capital of Yunnan province, for 3.6 billion yuan ($586 million), which will help it become the world's largest non-prescription medicine group.

Bayer will hold 100 percent of Dihon, which specializes in over-the-counter skin products and herbal traditional Chinese medicine products for women.

"This acquisition ... is further evidence of our aim to strengthen our life sciences portfolio with strategic bolt-on acquisitions," said Marijn Dekkers, chief executive officer of Bayer.

"This acquisition moves us into the leading position in the OTC industry in China. It also brings a portfolio of well-known consumer brands, which will allow us to provide consumers with an even broader range of self-care options."

China's healthcare expenditures are forecast to nearly triple to $1 trillion by 2020, consultancy McKinsey & Co Inc has forecast.

More Chinese consumers are turning to health supplements and OTC health treatments, which will support the health and wellness market in the country. The Boston Consulting Group has forecast that China's consumer health and wellness market will approach $70 billion by 2020.

"By bringing Dihon into the Bayer family, we will greatly enhance our ability to provide consumers with a very broad range of self-care options," said Erica L. Mann, president of Bayer's consumer care division.

She said that Bayer will continue to invest in the Dihon business and its locations in Yunnan and the rest parts of China.

Mann said: "I have been told that Yunnan has more than 6,500 herbal medicine species. The vast resources, coupled with Yunnan's commitment to the pharmaceutical industry, make this province the perfect place for new drug and TCM development."

Dihon employs about 2,400 people in research and development, manufacturing, sales and marketing. Its brands are also sold in Nigeria, Vietnam, Myanmar and Cambodia.