May 14, 2008 / 8:26 AM / 9 years ago

UPDATE 1-Pfizer eyes Germany's MediGene -sources

3 Min Read

(Adds background on MediGene, Pfizer CFO comments on M&A)

By Patricia Nann and Frank Siebelt

FRANKFURT, May 14 (Reuters) - U.S. drugmaker Pfizer (PFE.N) is exploring acquisition possibilities in the German biotech sector and has held talks with the management of Munich-based MediGene MDGGn.DE, two industry sources said.

"Pfizer is looking at it," one of the sources told Reuters.

Pfizer and MediGene declined to comment.

MediGene shares rose 13 percent to 6.3 euros after the news on Wednesday, valuing the group -- which specialises in cancer treatment -- at around 210 million euros ($325 million).

For Pfizer, the world's biggest drugs company, MediGene would be an easily digested acquisition and the New York-based company has a past history of buying up smaller companies with promising products or technologies.

Pfizer Chief Financial Officer Frank D'Amelio said on Tuesday Pfizer's recent focus was on smaller transactions, and he did not feel obliged to buy mid-size drugmakers, in the $10 billion to $15 billion price range, as some analysts have urged.

Medigene is the only German biotech firm with two products on the market -- prostrate cancer drug Eligard and genital warts treatment Veregen. European approval for skin drug Oracea is expected in a few weeks.

It also has a promising new product pipeline, including the pancreatic cancer drug Endotag, which it views as a potential blockbuster.

The sources said Pfizer was interested not just in Endotag but was looking at the whole company. Endotag could generate annual sales of more than 1 billion euros, according to MediGene.

"Several leading drug companies have already expressed strong interest and started talks with us on being partners for Endotag," MediGene Chief Executive Peter Heinrich said in early April.

Overall Medigene sees sales potential for drugs in clinical development at over 3 billion euros. This comes on top of peak annual sales of more than 100 million euros for Eligard and over 150 million euros for Veregen.

Additional reporting by Patricia Gugau and Ben Hirschler; editing by Sue Thomas

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