Mucinex Packs Its Bags for England

NJBIZ, Dec 17, 2007

The $2.3 billion payout for Adams Respiratory Therapeutics Inc of Chester may seem high at first glance, but there are good reasons for the hefty price tag, says one analyst

Adams, the maker of expectorant Mucinex, is set to be acquired by England's Reckitt Benckiser, a health care, food and cleaning products company.

One reason for the premium price is Adams has marketing exclusivity for extended-release guaifenesin, the active ingredient in all of the Mucinex products for adults and children, in the United States through 2020, notes Karen Yiu, an analyst with investment research firm Morningstar Inc. of Chicago. The three Mucinex products for adults made up 77 percent of Adams' $332 million in sales for the fiscal year ended June 30,2007, according to Janet Bart, a spokeswoman for Adams.

While guaifenesin has been used in expectorant products for decades, Adams was the first drug maker to prove the ingredient's efficacy in clinical trials, says Yiu. As a result, the U.S. Food and Drug Administration in May 2007 ordered other companies to stop making products with extended-release guaifenesin. Adams "immediately gained significant market share," says Yiu.

The Mucinex brand has also been entrenched in the minds of consumers through a "pretty robust marketing strategy," Yiu says. Mr. Mucus, an ugly green creature, is a well-known product mascot, she notes.

Mucinex will most likely remain a top-selling over-the-counter medicine for the foreseeable future, but Reckitt Benckiser has taken on some risk, says Yiu. Generic companies whose guaifenesin products were bumped from the shelves by the FDA have been trying to sue Adams, says Yiu.

Adams says it's "unclear" whether there will be layoffs. The company has about 80 employees in Chester, 300 workers in Fort Worth, Texas, and 125 salespeople spread across the country.