LONDON/CHICAGO (Reuters) - Procter & Gamble’s $4.2 billion deal for Merck’s vitamin and supplements business demonstrates that major consumer companies remain hungry for health-related products.

FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company Procter & Gamble (PG) is seen on a tube of toothpaste in Los Angeles, California, United States, April 25, 2016. REUTERS/Lucy Nicholson/File Photo

The fragmented nature of the sector and its appeal to younger consumers makes further M&A activity a likely prospect even after a spate of recent acquisitions.

The U.S.-based maker of Tide detergent and Gillette razors announced its plan on Thursday to buy Merck brands such as Seven Seas vitamins. It will become the fourth-biggest vitamin maker behind Amway, Pfizer and Nature’s Bounty, which KKR took over last year.

Only last month cleaning products company Clorox agreed to buy multivitamin business Nutranext for $700 million and Nestle closed its $2.3 billion purchase of vitamin maker Atrium Innovations.

The moves show how global consumer goods companies are looking to new, interesting areas to offset flagging growth in their core businesses.

“Vitamins have become the flavor of the day,” Rakesh Kapoor, CEO of Britain’s Reckitt Benckiser, said on Friday. Reckitt’s supplement brands include MegaRed for heart health and Airborne for immunity.

The vitamins and supplements sector has also seen the emergence of new brands marketing themselves digitally and selling directly online to young consumers, said investment banker William Hood of William Hood & Co.

“It’s what the millennials are buying and how they’re buying it,” Hood said. “Large companies are realising they need to figure it out ... It’s less about Vitamin A, B and C; it’s more about sleep or beauty.”

A spokeswoman for P&G declined to comment on its plans for the business. It acquired another small vitamin and supplements business in 2012 and owns other health brands including Vick’s, Metamucil and Pepto-Bismol.

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MORE DEALS?

Globally, the vitamin and supplements category has grown by 5-7 percent annually for the past five years, according to Euromonitor.

The category is highly fragmented, with market leader Amway Corp having only a 3.6 percent share, Euromonitor data shows. That implies that acquirers could could easily boost margins by building scale.

Reckitt on Friday reported first-quarter sales numbers showing that the unit including vitamins, minerals and supplements (VMS) outpaced the wider group.

P&G had also been in talks with Pfizer about buying its consumer health business, home to Centrum vitamins and Advil pain killers, CNBC reported this month.

That auction, which Pfizer hoped would draw bids up to $20 billion, hit a roadblock after GlaxoSmithKline and Reckitt dropped out of the running.

When asked about its interest in Pfizer on Thursday, P&G chief executive David Taylor declined to comment.

Referring to the P&G-Merck deal, Liberum analyst Robert Waldschmidt said: “The question is: is it a prelude to more? ... Is P&G still theoretically on the hunt for Pfizer?”

Bernstein analysts noted that the Pfizer business may still be an acquisition candidate (for P&G) because, on the surface, it doesn’t seem to raise antitrust concerns.

There is another much smaller vitamin manufacturer in play, Nutri-Force. Retailer Vitamin Shoppe announced in February that it was exploring strategic options for the business, which it bought for $85 million in 2014.

“Consumer health is a fragmented category and over a period of time, it is going to have more activity from an M&A point of view,” Reckitt’s Kapoor said on Friday.