Berlin/London: Pfizer Inc’s Advil and Centrum aren’t as desirable as the US drug giant expected.

The company was left without a potential buyer for its consumer-health unit on Friday as UK drugmaker GlaxoSmithKline Plc withdrew from bidding, after Reckitt Benckiser Group Plc withdrew dropped out earlier this week. The development left the US company with dwindling options to dispose of a business valued at as much as $20 billion (Dh73.4 billion).

Glaxo, Bayer AG, Sanofi and other makers of over-the-counter health products have experienced pressure on prices as drugstores and online retailers vie to get shoppers. Merck KGaA is exploring options for its consumer division and has yet to find a buyer. The sector’s environment is changing as stores push their own brands and consumers become more budget-conscious, said Michael Leuchten, a London-based analyst with UBS Group AG.

“The world has changed, and Glaxo has said that, Bayer has said that, Sanofi has said that to some extent,” Leuchten said in a telephone interview. “That means these businesses or assets probably won’t be able to fetch the multiples they have in the past.”

CEO’s Shakeup

Glaxo Chief Executive Officer Emma Walmsley Walmsley has been shaking up the drugmaker, focusing on developing promising new drugs. Glaxo’s investors balked last year when she mentioned interest in the Pfizer unit, fearing that it might endanger Glaxo’s dividend.

“While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation,” Glaxo said in a statement Friday. The shares surged as much as 5.9 per cent in London, their biggest intraday gain in four years.

Pfizer said in an emailed statement that it’s evaluating potential strategic alternatives for the business, which include a spin-off, a sale or other transaction, or retaining the business. The company expects to make a decision in 2018.

The sale’s fate “tells you about big pharma’s attitude toward consumer health — the brutal reality is that consumer health is not as profitable as the pharma business,” said John Rountree, a partner at consulting firm Novasecta Ltd. in London. ”There’s something inherently unattractive about consumer health from a profitability point of view.”

Justifying prices

Companies may be able to justify paying higher prices for assets like gene therapies and other potential breakthrough medicines where “there’s a tremendous chance of something big,” he said. While consumer health offers the potential for cost savings, it doesn’t offer the same upside, he said.

Amazon.com Inc. and other online retailers also pose a significant challenge in consumer health, offering low prices and home delivery. Bayer AG cited an “Amazon effect” last year on its consumer unit last year, saying that as brick-and-mortar stores closed, internet sales were slicing into its share.

Pfizer’s business sells popular brands such as the pain reliever Advil and Centrum, a dietary supplement. A purchase by Glaxo would have been complicated by its joint venture in consumer health with Swiss drug giant Novartis AG, which has been reluctant to dive further into over-the-counter health products, people familiar with the matter have said.

The drugmaker might not have been willing to let its asset go on the cheap, said Daniel Mahony, a partner with Polar Capital in London.

“I think the CEO has been clear that they don’t need the cash,” he said in an email. “I suppose if no one is prepared to pay their asking price, then why sell it?”