* Drugmakers end joint venture begun in 1989
* Quality lapses sparked Pepcid, Mylanta recalls
* J&J acquires full interest in Mylanta, Pepcid factory (Adds details on deal, background on recalls)
By Ransdell Pierson
Sept 28 (Reuters) - Merck & Co <MRK.N> has sold for $175 million its half interest in a longtime joint venture with Johnson & Johnson, giving J&J full rights in North America to over-the-counter heartburn drugs Pepcid and Mylanta that J&J recalled in the past two years due to quality control lapses.
The transaction also gives J&J <JNJ.N> exclusive rights to other consumer brands sold by the two companies in the United States and Canada through their 22-year-old joint venture, while Merck retains rights to Pepcid outside North America, Merck said in a release.
The deal also gives J&J full ownership of the joint venture's manufacturing plant in Lancaster, Pennsylvania, where Mylanta and Pepcid -- formerly a top-selling Merck prescription drug -- are made.
U.S. regulators in July 2010 cited a dozen quality-control problems at the factory that paved the way for widely publicized recalls of Pepcid.
The U.S. Food and Drug Administration highlighted problems with test procedures and record-keeping at the factory. The agency, for example, said consumers had complained that different products were packaged together, including berry-flavored Pepcid tablets mixed in with mint-flavored Pepcid.
Merck on Wednesday said it was selling its interest in the joint venture to focus on the consumer products division it acquired through its 2009 merger with Schering-Plough Corp. The unit's brands include the antihistamine Claritin and Dr. Scholl's foot care products.
J&J in the past two years has had to recall hundreds of millions of bottles and packages of other over-the-counter consumer brands that it made in its own plants and sold through its McNeil consumer healthcare division.
The many recalls damaged J&J's reputation and have hurt its earnings. The diversified healthcare company is making costly upgrades to McNeil plants under federal supervision to restock stores with its recalled brands, including Tylenol and Motrin painkillers, Rolaids antacids and its Benadryl and Zyrtec allergy drugs. (Reporting by Ransdell Pierson; Editing by Tim Dobbyn)
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