Rivals eye leftovers from Pfizer-Wyeth deal

NEW YORK/LONDON (Reuters) - Rival drugmakers are looking to pick up some promising assets left behind when Pfizer ties the knot with Wyeth WYE.N, although that may turn out to be slim pickings.

Pfizer Inc's (PFE.N) $68 billion acquisition of its smaller rival is not expected to hit serious antitrust snags, but there will almost surely be some forced divestments, particularly in animal health and possibly cancer.

Schering-Plough Corp SGP.N said it would likely evaluate any products that become available as a result of the merger as it looks to expand its business.

Eli Lilly & Co (LLY.N) CEO John Lechleiter has made clear he will be looking closely at products sold off by Pfizer to build up Lilly's Elanco animal health unit.

"Any time there is any large combination like this we are looking at opportunities there might be in divested assets," Lechleiter told analysts in a conference call last month. "So you can bet with our interest in growing our animal health business we have our eye on that."

Animal health has become an increasingly important source of revenue for drugmakers. Pfizer reported revenue of $2.83 billion from its animal health business in 2008, while Wyeth posted $1.08 billion in animal health sales last year.

Morgan Stanley analysts believe Sanofi-Aventis (SASY.PA) will have strong interest in the business to supplement the Merial operation it jointly owns with Merck & Co (MRK.N).

Bayer AG BAYG.DE and Novartis (NOVN.VX) also have been mentioned as possible buyers of animal health assets.

"There will be plenty of people looking at any assets that would undergo FTC (Federal Trade Commission) scrutiny," Leerink Swann analyst Seamus Fernandez said.

But analysts said the overlaps between Pfizer and Wyeth are few, which could result in very little that the world's largest drugmaker will be forced to sell by U.S. trade regulators.

"I would be hard pressed to think of much of anything. I don't see any real overlap from an antitrust perspective," said Barbara Ryan, an analyst for Deutsche Bank.

"Maybe some obscure products or something in the pipeline, but I don't think there's going to be anything meaningful," Ryan said.

Fernandez also saw little need for significant divestitures.

"The only thing that has any material overlap with Wyeth is animal health and we already assume that maybe 5 percent of that overall business might have to go," Fernandez said. "But the synergies across these companies are pretty positive, you (Pfizer) get to keep most of the company."

Another asset that could be on the block is Wyeth's kidney cancer drug Torisel.

"We believe Pfizer will be forced to divest Torisel given its ownership of the gold standard first-line agent in renal cell carcinoma, Sutent," the Morgan Stanley analysts said in a research note.

Other industry watchers disagree on Torisel.

Deutsche Bank's Ryan called it "highly unlikely" that Pfizer would be forced to unload Torisel, saying it and Sutent worth through different mechanisms.

Leerink's Fernandez was even stronger in his belief that Pfizer will be able to add Torisel to its oncology portfolio.

"The Wyeth kidney cancer drug definitely will not have to be sold off," Fernandez said in no uncertain terms.

He noted competition in the kidney cancer space from Nexavar, sold by Bayer and Onyx Pharmaceuticals Inc (ONXX.O).

"I see Torisel definitely staying in the mix," Fernandez said.

Although currently only approved for kidney cancer, Torisel has potential in other indications, including gynecological, melanoma and brain cancers.

Fernandez said there is something of an overlap in osteoporosis that could lead Pfizer to sell lasofoxifene, an experimental drug that has seen several regulatory setbacks.

"That probably is not going to fetch a particularly good price because the product isn't going to be that big," he said.

(Reporting by Bill Berkrot and Ben Hirschler; editing by Richard Chang)