UPDATE 1-Fresh bids due for generic drug firm Mepha -source

* Field set to narrow to 2-3 bidders in $700 mln sale

* Generic and large pharma companies vie for purchase

(Adds detail, background)

By Quentin Webb

LONDON, Nov 16 (Reuters) - Some half a dozen pharmaceutical companies are set to submit revised bids for Mepha, the Swiss generic drugmaker owned by the family of dead billionaire Adolf Merckle, a person familiar with the matter said.

Two or three companies will then probably be picked for a final round of bidding, the person said, in a sale the family hopes could fetch more than 700 million Swiss francs ($695 million). No fixed timetable has been set for the last round.

The bidders include both large pharmaceutical companies and specialist generic-drug manufacturers, although some companies previously touted as possible buyers, such as France's Sanofi-Aventis SA (SASY.PA) and Hungary's Richter Gedeon GDRB.BU, have not bid, the person added.

U.S. generic drug firms such as Watson Pharmaceuticals Inc (WPI.N) have also stayed clear because of the complexity of operating in Switzerland, where drugs need separate regulatory approval from that required in the European Union.

A spokeswoman for the Merckle family declined to comment.

Mepha, which has annual sales of some 379 million Swiss francs, was first put up for sale in August.

It has an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of about 16 to 17 percent, but that may come under some pressure next year as price cuts take effect in Switzerland.

The sale is running alongside an auction for larger sister company Ratiopharm, which is the world's fourth-biggest generic drugmaker.

Last week people familiar with the procedure said at least 10 bidders, including both drug companies and private equity firms, had made indicative offers for Ratiopharm, most between 2 and 2.5 billion euros ($3 to $3.74 billion). [ID:nLB286675]

Merckle committed suicide in January. Ratiopharm is being sold as part of an agreement with lenders to cut the heavy debts in his business empire, which also includes HeidelbergCement (HEIG.DE) and drug wholesaler Phoenix. However, Mepha is not covered by the same agreement.

($1=.6677 Euro)

($1=1.008 Swiss Franc)

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(Additional reporting by Frank Siebelt; editing by Simon Jessop)