FRANKFURT Germany's Bayer (BAYGn.DE) is considering whether to bid for the animal health unit of Pfizer (PFE.N) should the world's largest drugmaker divest a business valued at as much as $16 billion.
"If it is up for sale, we will have a look at it," Bayer Chief Executive Marijn Dekkers told German business weekly WirtschaftsWoche.
Animal health is a lucrative market since people in developed economies spend a lot on their pets. Moreover, in comparison to human drugs, the business is not as strictly regulated.
Pfizer's animal health business develops products for livestock and pets, and operates in more than 60 countries. It posted revenue of about $3.6 billion last year, making it one of the world's largest in the field. Analysts put the value of the business at $10 billion to $16 billion.
Bayer had net financial debt excluding pension liabilities of 7.40 billion euros at the end of the June, which is some 300 million euros more than it earned last year before interest, taxes, depreciation, amortization and special items.
Dekkers said the group was also looking for possible targets in agrobusiness and genetically modified food technology.
"We thinking more in terms of smaller acquisitions," he told the magazine in an interview that will be published on Monday.
The Bayer CEO called a possible mega-merger between his pharma division and a rival as a theoretical option that was more attractive than an outright acquisition.
"Current prices for big transactions makes it very difficult to recoup your investment, so a merger among equals is much more elegant," he said.
"I won't speculate on names. I know all CEOs of the major pharma companies and enjoy speaking to all of them about industry topics."
Bayer is bracing for impacts on its bottom line from the loss of patents on its popular Yaz and Yasmin families of birth control pills, which Dekkers anticipates will lead to a single digit percentage decline in global sales of the pills starting this year.
By 2013, he is aiming for robust organic growth in Bayer's drugs business, when stroke treatment Xarelto along with two or three other medications should hit the market.
Dekkers said he expects cancer drug Alpharadin to generate peak sales in the "several hundreds of millions of euros."
(Reporting by Christiaan Hetzner and Andreas Kroener; Editing by Mike Nesbit)