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Dihon’s OTC product portfolio includes Kang Wang for the treatment of dandruff and other scalp disorders and Pi Kang Wang, an antifungal cream, as well as TCM product Dan E Fu Kang for the treatment of various women’s health indications.

Both the firms have not disclosed financial details of the transaction, which is subject to fulfillment of certain conditions, including merger control clearance.

The acquisition, which is scheduled to be completed in the second half of 2014, is expected to help the company move into a leading position amongst multinationals in the OTC industry in China.

It also brings a portfolio of well-known consumer brands, which will allow the company to offer its consumers with an even broader range of self-care options.

Bayer HealthCare CEO Olivier Brandicourt said adding the strong OTC brands from Dihon to the company’s portfolio will advance its business in China.

"Equally important is the foothold we will gain in TCM, which makes up about half of the OTC segment in China and is a well-accepted and sought after line of natural science-based alternative therapies for consumers looking for trusted solutions for their healthcare needs," Brandicourt said.

"We think we can leverage our recent acquisition of Steigerwald in combination with Dihon’s herbal TCM expertise and pipeline to benefit both these areas, which have a different but related heritage."

Dihon Pharmaceutical chairman and CEO Zhenyu Guo said self-care is a critically important component of healthcare in China and internationally, and OTCs are an important tool to help people live happier, healthier and longer.

"As such, we’re pleased to have been able to build a business with brands that bring relief to consumers across China and other parts of the world," Guo said.

"We believe that Bayer, with its marketing, sales, distribution and research expertise, is well positioned to take our success to the next level.

"This acquisition will further strengthen the Yunnan pharmaceutical industry and offers the potential to further expand TCM to other parts of the world."

Dihon that employs about 2,400 people in R&D, manufacturing, sales and marketing has generated sales of EUR123m in 2013.

Apart from operations in China, Dihon brands are sold in other countries such as Nigeria, Vietnam, Myanmar and Cambodia.

Image: Bayer HealthCare’s research site at Berlin, Germany. Photo: courtesy of Bayer AG.