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RHONE-POULENC RORER LOOKING FOR 50-50 PARTNERSHIP TO SUPPORT MAALOX

This article was originally published in The Tan Sheet

Executive Summary

RHONE-POULENC RORER LOOKING FOR 50-50 PARTNERSHIP TO SUPPORT MAALOX and possibly the rest of the company's OTCs, RPR Chief Operating Officer Michel de Rosen told securities analysts in New York City on Dec. 17. RPR does "not want to divest because we think [OTCs are] part of our mission," de Rosen said. Instead, he said that RPR is "looking for a 50-50 partnership with a partner who would bring us value and we will bring him value." De Rosen said the company has decided that "it is time to strike a deal and we'll work on this quite seriously in these weeks and months." Acknowledging that OTCs have become "sort of a second business" at RPR, de Rosen said the company wants "to increase the competitiveness of our OTC business." Although "we had a great brand with Maalox in the U.S.," de Rosen continued, the firm's market share "is not big enough. We want to be one of the big ones." The RPR exec indicated that Maalox has "now refound a good pace of growth" following somewhat sluggish sales in recent years. 1n 1992, worldwide sales of the firm's gastroenterology products, which are primarily Maalox items, decreased 7% to $ 303 mil. ("The Tan Sheet" June 7, In Brief). The company attributed the sales decline to "ongoing competitive challenges coupled with reductions in wholesaler inventory levels." The Maalox line is being shopped around for the second time in recent years. In 1990, RPR announced a deal with Procter & Gamble under which P&G would have received exclusive U.S. marketing and distribution rights to Maalox, the analgesic Ascriptin and the laxative Perdiem. However, the Maalox agreement was terminated after the Justice Department filed a lawsuit challenging P&G's right to assume direct or indirect control of Maalox on antitrust grounds given P&G's already powerful position in the same market category with Pepto-Bismol. RPR recently bolstered its Maalox offerings in the U.S. with a number of new line extensions, including Maalox Anti-Gas, Maalox Anti-Diarrheal and Maalox Daily Fiber Therapy ("The Tan Sheet" March 15, p. 1). In addition, the company has been aggressively promoting the brand through its long-standing "Maalox Moments" advertising campaign. The three newest Maalox products were slated to receive approximately $ 15 mil. in television advertising support in 1993.
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