Johnson & Johnson’s Mylanta and Mylicon brands return to the market in a “fixed-term” licensing with infirst Healthcare Ltd. sooner than J&J’s consumer products business could manage under manufacturing limits imposed by FDA.

Unlike other OTC brand deals J&J made since quality-control problems at its McNeil Consumer Healthcare business led to widespread recalls, including the Mylanta and Mylicon lines, starting in 2009 led to a 2011 consent decree with FDA, the firm is not divesting the digestive health products.

London-based infirst will manufacture and market the products in the U.S. under a fixed-term license from McNeil Consumer Pharmaceuticals announced March 4. The brands will return to J&J/McNeil at the end of the term. [See Deal]

The deal comes not only after J&J/McNeil has divested a handful of OTC brands, but also a year after CEO Alex Gorsky said returning recalled products to market was the firm’s top priority and that all remediation responsibilities under the decree would be satisfied by the end of 2014 Also see "J&J Prioritizes OTC Return With McNeil Remediation End In Sight" - Pink Sheet, 4 March, 2013..

However, the decree remains in place – manufacturing at McNeil’s Fort Washington, Pa., plant has not restarted and production continues at its Lancaster, Pa., and Las Piedras, Puerto Rico, facilities under limitations – and J&J’s consumer health business turnaround remains slowed by the absence of revenue from sales of some recalled OTC brands.

With infirst responsible for manufacturing Mylanta (aluminium hydroxide 200mg, magnesium 200mg, simethicone 20mg) and Mylicon (simethicone 20mg) effective immediately with the agreement, those brands certainly will be on store shelves sooner than McNeil could have managed Also see "J&J Bit Off More Than McNeil Could Chew In 2006 Pfizer OTC Acquisition" - Pink Sheet, 31 October, 2014..

J&J/McNeil did not comment on updated expectations for satisfying the consent decree, but said it has returned more than 80 recalled stock-keeping units to market and is “committed to continuing to return additional products to consumers throughout 2015.”

The infirst “agreement ensures return of two strategic digestive health brands to consumers who rely on these products,” a spokeswoman said in an email.

Positioning For Turnaround

J&J/McNeil began divesting OTC brands after its business-stifling recalls began, but before the consent decree with FDA was imposed, with the January 2011 sale of the St. Joseph Aspirin brand to Ilex Consumer Products Group Also see "St. Joseph Aspirin Is First J&J/McNeil Divestiture From 2010 OTC Recalls" - Pink Sheet, 10 January, 2011..

The next month McNeil sold the e.p.t. home pregnancy test and Uristat urinary pain treatment brands to Insight Pharmaceutical; in September that year Insight acquired the North American portfolio of McNeil’s Monistat yeast infection treatment, since acquired by Prestige Brands Holdings Inc. Also see "Insight Acquires Monistat In Third Deal With McNeil For Women’s OTC Drugs" - Pink Sheet, 5 September, 2011..

In January 2013, the OTC divestments continued with the sale of the iconic Rolaids heartburn relief line to Sanofi’s U.S. business, Chattem Inc. Also see "Chattem To Revive Rolaids Line Bought From J&J" - Pink Sheet, 14 January, 2013..

J&J also has invested to help drive its consumer business turnaround. The firm in 2011 acquired from J.B. Chemicals & Pharmaceuticals a portfolio of products marketed in Russia and other Eastern European markets.

And J&J’s fixed-term deal with infirst could be a play to capitalize on consumer product sales momentum its fiscal 2014 fourth quarter generated after its planned turnaround of the business had moved in fits and starts since the consent decree was imposed Also see "J&J Includes Listerine In 20 Consumer Product Launches Planned In 2015" - Pink Sheet, 21 January, 2015..

The firm reported global consumer health product sales increased 0.9% to $3.6 billion in the quarter, led by 2.5% growth in the U.S. However, full-year sales fell 1.4%.

Additional fuel for consumer sales growth is expected from some 20 product launches in 2015, including extensions for the Listerine Healthy White mouthwash and Neutrogena Hydro Boost skin care lines.

J&J also will look at acquisitions for its consumer and other businesses with the $14.3 billion in net cash – approximately $33.1 billion of cash and marketable securities and $18.8 billion of debt – it had on hand at the end 2014.

Infirst Expands U.S. Business

Infirst said it will market the brands through its U.S. subsidiary in Westport, Conn., working with its sales partner Advantage Consumer Healthcare.

"We expect the products to be back on the market during the second half of 2015 and the first half of 2016," said infirst President and CEO James Barickman in an email.

Barickman said the agreement "lasts several years" but declined to be more specific.

Infirst launched in 2010 with plans to market established OTC cough suppressant and analgesic ingredients with formulation twists, such as the Dr. Cocoa line of children’s OTC cough and cold products introduced in the U.S. in 2014 ([A#05131223003]).

Advantage Consumer Healthcare launched in 2011 as a sales, marketing and supply chain provider with “laser focus” on OTC brands and clients, according to the Pittsburgh firm’s website.

J&J’s Mylanta, Mylicon Lines Return Via ‘Fixed-Term’ License With Infirst

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