Bayer Buys China’s Dihon to Gain OTC and Herbal Therapies

Bayer AG (BAYN) agreed to buy Dihon Pharmaceutical Group Co. to gain Chinese over-the-counter products and traditional herbal treatments as drug companies expand in Asia.

“This acquisition moves us into a leading position amongst multinationals in the OTC industry in China,” Marijn Dekkers, chief executive officer of the German drugmaker, said today in a statement. “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.”

Dihon’s brands include Kang Wang for dandruff, Pi Kang Wang antifungal cream and Dan E Fu Kang for women’s health. The deal underscores interest from large drugmakers in over-the-counter health products, with Merck & Co.’s consumer health business expected to fetch about $5 billion in a potential asset trade with Novartis AG, people familiar with the matter said last month. Financial terms of Bayer’s purchase weren’t disclosed.

The world’s biggest drug companies have increasingly been interested in herbal treatments, including Paris-based Sanofi, which is developing related diabetes and cancer therapies. Sanofi bought Beijing-based BMP Sunstone Corp. for $520.6 million in October 2010.

Bayer fell 0.5 percent to close at 99.85 euros in Frankfurt, giving the company a market value of 82.6 billion euros ($156 billion).

Bayer agreed to buy all shares in closely held Dihon, which also sells products in Nigeria, Vietnam, Myanmar and Cambodia. The company, based in Kunming, capital of China’s Yunnan province, generated sales of 123 million euros last year and has 2,400 employees. Bayer said it expects the deal to close in the second half of the year, pending regulatory approval.

To contact the reporter on this story: Allison Connolly in London at aconnolly4@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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