Teva Pharmaceutical Industries and consumer goods giant Procter & Gamble are setting up a joint venture which will combine their over-the-counter treatments outside North America.

The two companies say the partnership will enable them to generate greater value from their existing OTC businesses. The JV, which will be based in Geneva, Switzerland, combines P&G's strong "brand-building, consumer-led innovation and go-to-market capabilities with Teva's broad geographic reach, its experience in R&D, regulatory and manufacturing and its extensive portfolio of products", they added.

No financial details have been given though Teva and P&G say the markets included in the JV generated sales of more than $1 billion in 2010. They expect this figure to rise to $4 billion, but noted on a conference call that this does not include any switches of prescription drugs to OTC. The Israeli firm, the world's largest generics group, has over 1,500 pharmaceuticals in its portfolio.

Teva, which will have a 49% stake in the JV to P&G's 51%, adds that the link-up will further strengthen its position with major pharmacy customers around the world, while for P&G, the partnership will accelerate global expansion of its big-selling OTC brands such as Vicks, Metamucil and Pepto-Bismol.

Reshaping global OTC market

Shlomo Yanai, Teva's chief executive, said the JV will create value by "immediately expanding the number of channels and geographies in which each company's OTC products will be sold. Together, we will develop a new platform with the potential to reshape the entire global OTC market."

The latter is valued at around $200 billion and is expected to rise as governments look to cut back on the treatments that are reimbursed. Ageing populations and the emerging markets wil also drive the figures up.

The transaction is expected to close in the autumn, subject to regulatory approvals. Investors reacted positively to the news and Teva's shares were up 3.4% to 178.60 shekels, their highest level since the beginning of January