Whitehouse Station, NJ
908.298.4000
www.merck.com

Sales: $582 million for sun and foot care products. Corporate sales: $44 billion. Net income: $4.5 billion.

Sales dipped 3% for sun and foot care products last year. But the big news at Merck is that the company is getting out of the consumer products business in order to focus on its vast pharmaceutical empire. As a result, this is the last year that Merck will appear in The Top 50.

In May, Merck entered into a definitive agreement to sell its consumer care business to Bayer AG for $14.2 billion. Under the terms of the agreement, Bayer will acquire Merck’s existing OTC business, which includes the global trademark and prescription rights for products like Claritin and Afrin, as well as the company’s venerable Coppertone sun care brand, Lotrimin OTC itch products and Dr. Scholl’s foot care. The transaction is expected to close later this year. Bayer will pay for the acquisition with a $14 billion loan from 23 banks.

“Merck Consumer Care is a strong business with a portfolio of well-established product brands, such as Claritin, Afrin and Coppertone, that are leaders in their respective categories,” said Dr. Marijn Dekkers, Bayer AG chairman of the board of management. “The combination of Merck Consumer Care’s complementary portfolio of products and geographic reach with Bayer’s will create a global consumer care business better positioned to serve consumers around the world. We look forward to having the talents of the Merck team, with their track record of innovation, joining our strong Consumer Care team at Bayer HealthCare.”

According to Bayer, the accord, which also includes other pharma-related dealings, will significantly enhance Bayer’s consumer position, propelling it to leadership spots in new categories. Upon completion of the acquisition, Bayer is expected to achieve global leadership positions in dermatology and gastrointestinals, two of the five most important non-prescription health care product categories, and advance to the No. 2 position in the cold, allergy, sinus and flu category. Bayer will remain No. 2 in nutritionals and No. 3 in analgesics.

“We are adding significant scope and earnings power to a business that is already delivering strong margins and stable cash flows,” said Bayer CEO Dr. Marijn Dekkers.

Until that deal is done, Coppertone will keep doing what it does best—protect consumers from UV and warn them when enough is enough. Coppertone kicked off the second year of the Making the Sunscreen Grade program, which empowers parents, teachers and camp counselors to set strong examples for children by integrating healthy sun habits. According to results of an Australian survey, parents who use sunscreen while outdoors with their children increased the odds of their children practicing sun-smart behaviors.

Whitehouse Station, NJ
908.298.4000
www.merck.com

Sales: $600 million for sun and foot care products. Corporate sales: $47.3 billion. Net income: $6.2 billion.

Coppertone, a registered trademark of MSD Consumer Care, Inc., a subsidiary of Merck & Co., Inc., is a US market leader in sun care. It launched the “Making the Sunscreen Grade” program this May, which provides tools to help educate parents on the importance of sun protection during the school day and year-round. The “Making the Sunscreen Grade” initiative also invites parents to partner with their child’s school to make sun protection and sunscreen reapplication a priority.

For fiscal 2012, Merck overcame significant challenges and delivered strong results by successfully growing its businesses, expanding geographically and reducing expenses.

According to Kenneth C. Frazier, chairman and chief executive officer of Merck, “As we begin 2013, we are well-positioned to further execute on our business strategy. We remain committed to investing for future growth and innovation to deliver value over the long term. Merck is rapidly advancing many compounds that are potentially first-in-class or best-in-class. Additionally, we will continue to pursue external opportunities that have the potential to deliver value to the company and its shareholders.”

Full-year 2012 worldwide sales fell 2% to $47.3 billion. However, consumer care sales rose 6% to $1.95 billion, led by the Dr. Scholl’s franchise and higher sales of Coppertone. Fourth-quarter global sales of consumer care rose 9% to $395 million.

In the first quarter of 2013, global sales of consumer care at Merck rose 3% to $571 million. The sales increase was primarily due to Coppertone sun care products, according to the company.

In May, just in time for the summer sun season, Consumer Reports evaluated 12 sunscreens for their effectiveness at protecting against UVA and UVB rays. One of the top-scoring products was Coppertone Water Babies 50 lotion, which was rated very good overall.

Coppertone will announce new sun care products in January 2014, according to the company.

Whitehouse Station, NJ
908.298.4000
www.merck.com
Sales: $583 million for foot, skin and sun care products; corporate sales: $48 billion.
Net income: $6.2 billion.

While corporate sales advanced 4% in 2011, consumer product sales, which includes sun care, foot care and baby care products, rose just 1% last year. Merck blamed the lackluster results, in part, to a decline in Coppertone sales.

While Coppertone’s sales may have been down, it wasn’t for lack of trying. During the year, the brand rolled out several new products that boasted new technology. For example, Coppertone Sport Pro Series now includes DuraFlex, a dual-polymer system that is said to offer more flexibility and holds sunscreen on the skin as it allows the skin to breathe, according to Coppertone researchers. New polymer technology is also driving expansion of Coppertone’s “wet skin” application products. Wet ‘n Clear Kids SPF45+ has a new polymer system that addresses certain skin issues such as feelings of dryness or tightness, according to Dr. Patricia Agin, scientific affairs leader, Coppertone Solar Research Center.

“The more convenient and more aesthetic you can make a product, the more likely consumers are to use it and to reapply it,” she said.

Agin told Happi that when formulated correctly, sunscreens can provide even more benefits to skin.

“We want to add antioxidants to replenish the skin,” she explained. “There are lots of antioxidants to choose from, but we are looking at those that are most compatible with sunscreen systems. Some antioxidants are better than others in terms of reducing free radicals in the skin.”

For the first quarter of 2012, corporate sales rose 1% to $11.7 billion. Consumer care sales were up 7% to $554 million, due to strong sales of Coppertone and Dr. Scholl’s products.

Whitehouse Station, NJ

908.298.4000

www.merck.com

Sales: $580 million

Sales:

$580 million for foot and sun care products. Corporate sales: $46 billion. Net income: $982 million.

New Foaming Lotion Coppertone Oil Free.

Merck acquired Schering-Plough in early 2009 for $41 billion, and the innovators at Coppertone are working to prove that their brand should remain in the mix. Global sales of consumer care products were $1.3 billion during 2010 reflecting strong performance of a number of key brands including Dr. Scholl’s and Coppertone, according to Merck’s 2010 annual report. Consumer care product sales were $149 million for the post-merger period in 2009.

In December 2010, Merck announced that its board had elected Kenneth C. Frazier, then Merck’s president, as chief executive officer and president, as well as a member of the board, effective Jan. 1, 2011. Frazier succeeds Richard T. Clark, who will continue to serve as chairman.

The Coppertone Solar Research Center has published key insights from its Suncare 2020 Symposium held in New York City last summer. The event convened selected thought leaders from government, medicine, academia, advocacy and industry to initiate dialogue and capture vision around the best ways to educate the public in today’s evolving sun care environment.

Four critical themes emerged from the symposium:

• Create information to prompt behavior change.

• Help educate the public on navigating expected sunscreen labeling and product performance rules.

• Separate myth from reality (inconsistent messages in the media about topics such as tanning, vitamin D, sunscreen ingredients and good sun protection habits).

• Tailor education efforts to resonate with generational and cultural needs.

Prompted by the symposium’s call to action, the Coppertone Solar Research Center created a checklist to “RAISE” public awareness. The move came prior to the Food and Drug Administration’s release of the final rules for sunscreen labeling (see p. 46). The RAISE elements include:

• Rating UVA Protection—New UVA information will likely berequired on sunscreen labels in addition to SPF.

• Anti-Aging—Products with SPF may be further limited in making claims related to premature skin aging.

• Ingredients—New active ingredients or active ingredientcombinations could be approved.

• SPF Cap: SPF values may be capped.

• Expression of Claims: Claims language on sunscreen labels could change, according to Coppertone.

Sales of suntan lotion and oil jumped more than 10% last year to $685.2 million, according to data from SymphonyIRI Group. Coppertone is among the leading brands with a variety of new rollouts this season especially.

New products include the Coppertone Oil Free Foaming Sunscreen Lotion SPF 75+ and Water Babies Sunscreen Foaming Lotion SPF 75+.

“We’ve done something innovative by creating two new foams,” explained Patricia Agin, a fellow at Coppertone’s Solar Research Center, told Happi. “There is a continuing trend to create products that have a convenience feature to them.”

According to Agin, the foams offer an alternative to consumers who don’t want to use alcohol-based sprays or traditional lotions which can be more difficult to rub in compared to foams.

“We experimented with emulsion systems and came up with one that works well, is compatible with sunscreen ingredients and has a delightful feel,” she explained.

Other rollouts include Coppertone Sport High Performance Sunscreen Lotion SPF 100, formulated for active adults, and Water Babies Pure & Simple Sunscreen Lotion SPF 50 that provides tear-free, broad-spectrum sun protection in a 2oz. size that Coppertone maintains is ideal for the diaper bag. The formula is oil- and fragrance-free and is said to be extremely gentle to babies’ delicate skin and eyes. Dr. Scholl’s latest innovation for summer is Dr. Scholl’s For Her Jelly Soak Therapy, a lavender-scented soothing treatment for tired feet.

Whitehouse Station, NJ
908.298.4000
www.merck.com
Sales: $540 million

Sales:
$540 million (estimated) for sun care and foot care products. Corporate sales: $27.4 billion. Net income: $12.9 billion

There’s a new name in The Top 50 with some familiar brands; Merck acquired Schering-Plough in early 2009 for $41 billion. The two companies already conducted business together, co-marketing the cholesterol drug Vytorin, which combined S-P’s Zetia with Merck’s cholesterol drug Zocor.

“We are creating a strong, global healthcare leader built for sustainable growth and success,” said Merck chief executive officer Richard Clark. “The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly in high-growth emerging markets. The efficiencies we gain will allow us to invest in strategic opportunities, while creating meaningful value for shareholders.”

But where does that leave Coppertone, one of the best-known sun care brands in the world, as well as Schering-Plough’s foot care products such as Lotrimin and Dr. Scholl’s and popular skin care treatment A+D Ointment? Without much marketing power behind them, sales of both foot care and sun care products fell last year. Foot care sales declined 7% to an estimated $332 million and sun care sales were off 13% to $208 million.

Coppertone, however, capitalized on the “healthy” angle in sun care with a variety of new products this season. Its Coppertone Kids Continuous Sprays SPF 50, 70+ and Sunscreen Lotion SPF 70 with Protective Vitamins contain a “specially selected” antioxidant vitamin blend to supplement the natural defenses of children’s skin, according to the company. The brand is also going back to basics with zinc oxide in its Coppertone Sensitive Skin Sunscreen Lotions SPF 50 for Faces and Body as well as Coppertone Kids Pure & Simple SPF 50—both new for summer 2010.