According to industry analysts, the global consumer healthcare market is predicted to reach $106 billion by 2017. In this growing industry, the five primary product categories are: cold, allergy, sinus and flu; analgesics; gastrointestinal treatments; dermatology; and nutritionals. Similar to many other industries, the consumer healthcare market has witnessed significant consolidation in the form of acquisitions or joint ventures in recent years as companies aim to broaden their product portfolios, enter new markets, improve efficiency and reduce costs. Others, however, elect to divest their consumer healthcare businesses to focus on their core competencies.

In 2011, Teva Pharmaceutical Industries, the Israeli generics giant, partnered with Procter & Gamble (P&G) to form a unique joint venture “PGT Healthcare,” which combines each company’s over-the-counter (OTC) brands and leading capabilities. Leveraging P&G’s retail presence and brand-building expertise, and Teva’s manufacturing and distribution experience, the two companies expect their combined sales to quadruple from $1.3 billion to $4 billion outside North America within the decade, mainly through expanded product & category portfolios and global distribution networks.

More recently, in late 2014, Bayer acquired Merck’s OTC division for $14.2 billion. This was Bayer’s second most expensive acquisition ever, a move the company expects will significantly enhance its OTC business across multiple categories and geographies. With combined annual sales of over $7 billion, the company is positioning itself as the number two market leader in the global OTC market.

Merck, however, only entered the OTC market through its $41.1 billion acquisition of Schering-Plough in 2009 – and its OTC business had limited presence outside North America. Divesting its OTC operations should allow Merck to focus on its core prescription drug business and promising pipeline. Despite the benefits of a narrowed focus, companies like Merck might be more vulnerable to setbacks, including delays, failure to secure FDA approval or limited sales, in their remaining businesses. This is a risk that companies should evaluate and manage accordingly.

Last April, GlaxoSmithKline (GSK) and Novartis announced the joint venture of their OTC businesses. With well-recognized OTC brands, highly complementary portfolios and broad global presence, especially in emerging markets, the partnership seems promising. Upon completion, the joint venture is expected to be the global OTC market leader, with $10 billion in combined annual sales; GSK will have a 63.5% stake and managerial control.

Novartis, unlike Merck, will remain in the OTC market while keeping their focus on core businesses. The two pharmaceutical giants (Novartis & GSK) see the joint venture mutually beneficial in terms of accelerated growth, synergy and economies of scale – all critical success factors in the highly competitive OTC market.

As a result of these consolidations, projections suggest that Johnson & Johnson, the previous OTC industry leader, will be surpassed by both the GSK-Novartis joint venture and Bayer in 2015. The consolidation trend is highly likely to continue, and competition in the OTC market will amplify as companies seek aggressive top line growth and cost reductions post-consolidation.

However, the completion of a deal is not an end; rather it is just the beginning of a transformative journey. Companies must ensure a timely and smooth integration across business functions in terms of process, technology and most importantly, people and culture. Many highly touted mergers and acquisitions have failed to realize the projected benefits because the companies could not successfully combine diverse processes, systems and cultures.