P&G, Inverness form joint venture

Procter & Gamble Co. yesterday said it is paying $325 million to create a joint venture with Waltham firm Inverness Medical Innovations Inc. to sell home pregnancy and fertility diagnostic kits.

The agreement is the first new partnership with a local company that P&G has disclosed since taking over Boston shaving giant Gillette last year. The agreement calls for Inverness to develop and manufacture its over-the-counter test kits, including Clearblue, Accu-Clear, and Fact Plus, and for the Cincinnati consumer-products conglomerate to market, sell, and distribute existing and future products.

The companies, which negotiated the deal over the past year, will equally own the venture. The transaction is expected to close early next year.

"Consumers are much more interested in their health than in the past and want to take charge of their own healthcare at a much earlier date," P&G spokesman David Bernens said. "We see this as a growth area."

The pregnancy and fertility diagnostic market is estimated at about $630 million globally, according to Inverness, and it is growing at about 5 percent annually. Inverness, however, has invested profits from its consumer business over the past five years into research and development of cardiology and diabetes products for its professional diagnostics division, according to Jon Russell , vice president of finance. The joint venture excludes medical products for diagnosing diabetes or heart conditions.

Since 2002, the Waltham company's professional business jumped to $291 million from $33 million, while the consumer sector only grew to $174 million from $110 million over the same period, Russell said.

Inverness said the P&G partnership will help accelerate its business.

"P&G takes great brands and maximizes the value of the brand," Russell said. "They have tremendous acumen and purchasing clout to get our products into the place we want to be -- drug stores and to some extent grocery stores -- and the ability to distribute them cheaply."

For P&G, the deal helps the company expand its health care line, which includes Metamucil laxative and Pepto-Bismol indigestion relief. Jason Gere , a research analyst with A.G. Edwards & Sons, said P&G has set a goal of generating 50 percent of its innovation from outside partnerships, and this joint venture helps meet that expectation.

P&G chief executive A.G. Lafley has previously said the company is involved in several development and consulting projects with local nanotechnology companies and universities, but declined to identify them because of confidential agreements.

"The self-care market has a lot of opportunity and this deal helps P&G round out its focus on the healthcare business. It's also less capital intensive than trying to go at it alone," Gere said.

Inverness shares rose yesterday 2.1 percent, or 77 cents, to $38.18.

Jenn Abelson can be reached at abelson@globe.com.

(Correction: Because of incomplete information supplied by Inverness Medical Innovations Inc., a story in Thursday's Business section about Procter & Gamble Co. creating a joint partnership with Inverness incorrectly referred to how the Waltham firm had been investing profits from its commercial business. Inverness has been investing primarily in cardiology diagnostic devices.)