* CEO expects shakeout in fragmented consumer health market
* Company has firepower to do sizeable deals
* RB likely to see disposals as well as acquisitions (Adds more comments, background)
By Martinne Geller and Ben Hirschler
LONDON, Sept 11 (Reuters) - Reckitt Benckiser Group will be a major player in a coming shakeout of the globalconsumer health industry and has the firepower to do sizeabledeals, its chief executive said.
Speaking at the Reuters Consumer and Retail Summit onWednesday, CEO Rakesh Kapoor predicted that the industry, whichcovers vitamins to over-the-counter medicines to condoms, willsee a wave of deals.
"Consumer health is one of the most fragmented markets inthe world, and that is a real issue-stroke-opportunity," Kapoorsaid. "This fragmentation will result in consolidation - theonly question is who, when and how."
Kapoor, who has been in the top job for just over two years,added that: "My personal opinion is that RB will be in the campof aggregators or consolidators."
"We have the capability to do interesting size M&A," hesaid, even though British-based RB is still paying down debtfrom last year's $1.4 billion purchase of U.S. vitamin andsupplements maker Schiff Nutrition.
Large pharmaceutical companies dominate the consumer healthmarket. But they are pruning their portfolios to unlockshareholder value.
Pfizer has led they way in such divestments butothers are following suit, with Bristol-Myers Squibb selling RB the rights to market some of its non-prescriptionremedies in Latin America earlier this year.
GlaxoSmithKline this week agreed to sell itsLucozade and Ribena soft drinks to Suntory Beverage & Food , while some other drugmakers with consumer healthcarebrands, including Novartis, are reviewing theirportfolios.
RB still gets most of its sales and profits from cleanersand disinfectants like Lysol, Finish and Cillit Bang, but astring of health deals over the last decade means consumerhealthcare now accounts for about a quarter of revenue.
Over-the-counter health products tap into consumer anddemographic trends such as aging populations, ballooninghealthcare costs, and more interest in wellness.
They also enjoy brand loyalty, fat margins and stronggrowth, and because of that they don't come cheap.
"We are talking about assets which are probably the mostprized assets in the consumer space," Kapoor said. "There willbe premiums."
That is not deterrent to RB, which last year beat outGermany's Bayer with a higher bid for Schiff.
Kapoor said RB's M&A track record and consumer goods historygives it an advantage in finding synergies that could help itjustify higher premiums.
$200 BILLION INDUSTRY
Johnson & Johnson is the biggest player in theglobal consumer health industry - worth nearly $200 billion atthe retail level - with about 4 percent of the market, followedby Bayer and GSK. Other firms are relatively small,such as Merck & Co, with around 1 percent of the market.
In the past decade, RB was largely a buyer of businesses,with some of the biggest deals being Boots HealthcareInternational in 2006, Adams Pharmaceutical in 2008, and Durexcondom maker SSL in 2010. But in the future, there should bedivestitures as well, Kapoor said.
"Our next 10 years, in my opinion, will be a combination ofthe two," he said.
RB has two non-core businesses - one that sells mustard andsauces, and one that sells Suboxone, a prescription drug totreat addiction to heroin and other opioids.
Suboxone, a film that dissolves under the tongue, is facingcompetition from cheaper generic tablets. RB shares took a hitin July when U.S. healthcare provider CVS Caremark dropped coverage of the film in favour of the pills.
Investors fear profits could tumble if other providersfollow CVS, fuelling speculation that RB might be better offselling the business, which analysts have estimated could fetchsome 2 billion pounds ($3.1 billion).
Kapoor said he would continue to review options but it wasnot clear at present that another firm would be a better owner.
Since Kapoor, 55, took over the top job at RB, its stock hasrisen 35 percent, outperforming gains of 27 percent for theBritain's FTSE 100 share index and 33 percent for theStoxx European personal and household goods index.
The shares tumbled on the day in April 2011 when theIndian-born RB insider was named to replace CEO Bart Becht, oneof the FTSE's longest-serving and highest-paid executives.
Becht led the company since the 1999 merger of Britain'sReckitt & Coleman with Benckiser from the Netherlands. The stockended that year at about 660 pence and in the month before Bechtannounced his departure it was around 32 pounds on the back ofearnings growth that consistently beat expectations.
(For other news from the Reuters Global Consumer and RetailSummit, click on http://www.reuters.com/summit/Retail13)
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For more summit stories click (Editing by Jane Merriman)
Glaxosmithkline (GSK)
