Reckitt Benckiser looks to continue feeding organic growth through innovative product launches, as discussion of the company's acquisition search has quieted in recent months.

Executives discussed the U.S. launch of the Lysol No-Touch Hand Soap System, which automatically dispenses antibacterial soap upon sensing the user's hand, during the U.K. firm's fiscal 2009 fourth-quarter earnings call Feb. 10.

CEO Bart Becht called the dispenser "one of the most complex innovations we've ever launched," and said initial sales are "very encouraging." The Lysol system retails for $24.99 on drugstore.com and comes with four AA batteries.

Other launches planned for the first half of 2010 include, in the U.K., Strepsils Handy Tube - another package-driven innovation that offers sore throat relief on the go - and a line of Clearasil Overnight products in multiple markets.

Mucinex Soars But Generics In The Wings

Becht praised the Mucinex expectorant line, which helped Reckitt's health and personal care business grow revenues 13 percent at a constant exchange rate to £567 million ($885.6 million under Feb. 10 exchange rates) during the October-December period.

The unit generated net sales of $3.25 billion during the full fiscal year, a 14 percent gain, Reckitt reported.

Mucinex is "a fantastic product, and it's a patent-protected product" for which Reckitt continues investing in line extensions, Becht said.

However, following Reckitt's earnings call, private labeler Perrigo was awarded summary judgment in a patent infringement case regarding the Mucinex guaifenesin molecule (¹ Also see "Watson Files ANDA For Mucinex DM, Gets In Line For Generic Guaifenesin" - Pink Sheet, 27 April, 2009.).

With that legal hurdle cleared earlier than expected, Perrigo now awaits FDA's approval of its abbreviated new drug application, which it expects by March.

Collins Stewart analyst Louise Chen said in a Feb. 11 research note that she expects Perrigo to launch a Mucinex equivalent during its current fiscal year, which ends in June.

Additionally, Reckitt's citizen petition aimed at delaying private label competition through strict bioequivalence standards was rejected by FDA (² Also see "FDA Denial Of Mucinex Petition Stops Reckitt's Bid To Delay Generics" - Pink Sheet, 18 January, 2010.).

Acquisitions On Standby

Reckitt remains focused on organic growth, Becht said, and only seriously will consider a brand or company acquisition when the right deal emerges.

"M&A is, basically, strategy meeting opportunity," he said. "We have a clear strategy, we have clear targets, and when they come to the market we will engage."

Reckitt was once thought to be a potential suitor for medium-sized U.S. personal care firms such as Chattem, since acquired by Sanofi-Aventis (³ Also see "Reckitt Benckiser Tops Acquisition Speculation In Personal Care" - Pink Sheet, 30 November, 2009.). But the U.K. giant more likely seeks players in other international markets.

Becht highlighted Reckitt's rollouts of Strepsils, Gaviscon antacid and Nurofen pain reliever in eight new markets in 2009. Recent launches occurred in Greece, Spain, Indonesia, Malaysia, Egypt, Nigeria and India, he said.

Reckitt derived 45 percent of its 2009 net revenue from Europe, 28 percent from North America and Australia and 19 percent from developing markets. The largest jump in sales growth was in developing markets, up 16 percent to $2.33 billion for the year.

Companywide, Reckitt reported net revenue of $3.22 billion during the fourth quarter, a 10 percent increase, and $12.11 billion for the full year, up 8 percent.

Adjusted net income jumped 14 percent to $699.8 million in the quarter, and rose 13 percent to $2.21 billion in 2009.

Excluding its pharmaceutical division, Reckitt's full-year 2010 targets are 5 percent net revenue growth and 10 percent operating profit growth.

- Dan Schiff ( ⁴ d.schiff@elsevier.com )

Reckitt's Lysol Innovation Leads Launches As Acquisition Talk Subsides

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