Indian pharmaceutical company Dr. Reddy’s Laboratories has agreed to acquire Haleon’s portfolio of Nicotine Replacement Therapy (NRT) brands outside of the US for a total of £500m.

The acquisition will include Nicotinell, sold in more than 30 countries, along with its local brand names, Nicabate in Australia, Thrive in Canada, and Habitrol in New Zealand and Canada.

It will include all formats of NRTs such as lozenge, patch, and gum, along with Haleon’s portfolio of products in all applicable global markets outside of the US.

Under the terms of the agreement, Dr. Reddy’s will purchase shares of Northstar Switzerland, a company of Haleon Group.

The total consideration of £500m includes an upfront cash payment of £458m and performance-based contingent payments of up to £42m, payable in 2025 and 2026.

The transaction is anticipated to be closed in the early fourth quarter of this calendar year, subject to certain customary conditions, including regulatory approvals.

Upon closing, Dr. Reddy’s will acquire Haleon’s NRT business in all countries outside the US.

The operations will be transferred to Dr. Reddy’s in a phased approach to ensure effective integration of the business.

Dr. Reddy’s CEO Erez Israeli said: “We see the acquisition of this global portfolio of consumer healthcare products led by the global brand Nicotinell as a logical extension of our efforts in consumer healthcare OTC in recent years and of our purpose of ‘Good Health Can’t Wait’.

“The business to be acquired from Haleon has maintained steady sales and strong profitability over the years. The portfolio is attractive for its customer loyalty, its global nature, and the access it provides to key customers.

“We believe we can unlock more value, grow the portfolio further, and increase consumer access around the world to these global brands. Given these advantages, it is the ideal anchor around which to build a larger global OTC platform.”

Haleon said that the net cash proceeds from the transactions will be used in line with capital allocation priorities, including reducing leverage.

The divestment allows it to exit the NRT category outside of the US, reduce complexity across the business, and help focus on strategic growth areas, said the consumer products company.

Haleon CEO Brian McNamara said: “The divestment of Haleon’s NRT business outside of the US is a further example of Haleon being proactive in managing its portfolio and is consistent with our strategy as we implement change to become more agile and competitive.

“Whilst this business has great brands, these are not core for us, but I’m sure they will continue to flourish given the focus and capability of Dr Reddy’s.”