Johnson & Johnson sells the Purell Hand Sanitizer brand, marking a major consumer health product divestment as the firm seeks to rebound from a troubled year for its consumer business.

GOJO Industries acquired Purell Oct. 29 for an undisclosed sum. The Akron, Ohio, company launched the ethyl alcohol product for food service and health care use in 1988 before selling retail marketing rights to Pfizer in 2004 (Also see "Pfizer Consumer Health Looks To Clean Up With Purell Buy" - Pink Sheet, 11 October, 2004.).

Quick Facts

GOJO reacquires retail marketing rights to Purell, previously a Pfizer and J&J brand.
Purell sales dropped more than 34% since 2009's H1N1 flu virus juiced the sanitizer segment.
GOJO plans innovations for Purell and expects "significant" growth in the consumer market.

While GOJO continued manufacturing the product and retained the institutional distribution rights, J&J subsequently acquired Purell in its 2006 deal for the Pfizer Consumer Healthcare portfolio (Also see "Pfizer Eyes Consumer Unit Spin-Off Or Sale Price North of $10 Bil." - Pink Sheet, 13 February, 2006.).

Though J&J traditionally is strategic rather than opportunistic with its deals, the Purell sale does not appear to lend itself to a larger business strategy, said Damien Conover, an analyst with Morningstar.

Conover said he expected J&J would keep its consumer unit together and the divestment is "a little surprising."

H1N1 Subsides, Purell Slides

Purell has become an iconic brand, nearly synonymous with hand sanitizer in general, but J&J may have bumped up against the product's limitations as a consumer business sales driver.

Private-label sanitizers now dominate the market and Purell sales have plummeted compared to a year ago, when H1N1 flu virus fears inspired widespread sanitizer stockpiling (Also see "Hand Sanitizers Limited To Sterile Claims But Cleaning Up Amid Flu Worries" - Pink Sheet, 14 September, 2009.).

The acquisition enables GOJO to expand the Purell line to "include effective hand hygiene for every setting – at home, at work and on the go," the firm said.

Purell's main hand sanitizer stock-keeping units generated $24.5 million worth of sales in the 52 weeks ended Oct. 3, a 34.2% decrease from the year before, according to SymphonyIRI Group data from supermarkets, drugstores and mass merchandisers, excluding Walmart.

In contrast, over the same time, competitors have managed to maintain sales or grow. Private-label sanitizers essentially were flat at $67.3 million in sales, or 51% market share.

Additionally, a branded rival has made gains. Germ-X sanitizers by Vi-Jon Labs increased sales 39.6% to $10.8 million and now claim 8.2% of the category.

Purell's main products, meanwhile, lost more than 10 percentage points of share and comprise 18.6% of the sanitizer market, SymphonyIRI says. A smaller line extension, Purell Purifying Essentials, has less than 1% share and recorded just $1.2 million in sales during the same timeframe – a 51.8% drop.

GOJO's Opportunity

The Purell line has added aloe and vitamin E, and tried expanding into other delivery formats including wipes and sprays. But the innovations thus far are insufficient to ward off competitors offering lower prices and, in some cases, differentiated alcohol-free formulations.

GOJO now has a shot at its own innovations, hoping to push Purell over the hump.

A spokesman said the acquisition "enables GOJO to expand the Purell product line to include effective hand hygiene for every setting – at home, at work and on the go."

He declined to specify the innovations GOJO plans for Purell, but noted the company has introduced formulas with advanced germ-killing efficacy and a green-certified sanitizer in the professional market.

"We anticipate significant future growth in the consumer category," he added.

Trimming The Consumer Unit

J&J's consumer division may want to become leaner as a disappointing fiscal year nears its end, and selling Purell could represent a move in that direction.

The firm reported worldwide consumer sales down 24.5% to $1.28 billion in its latest quarter (Also see "J&J Consumer Unit Underperforms In Q3 As Recall Aftereffects Linger" - Pink Sheet, 25 October, 2010.).

Purell is part of J&J Consumer Products Co., not of McNeil Consumer Healthcare, which was responsible for the quality control issues that led to widespread recalls of Tylenol, Zyrtec, Benadryl and Motrin products.

By Dan Schiff

J&J Washes Hands Of Purell As GOJO Eyes Consumer Segment Growth

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