Bayer sees opportunity for M&A in health sector

Germany's Bayer sees the current credit crisis as an opportunity to buy assets at favourable prices that can fuel future growth in its key healthcare division. Healthcare head Arthur Higgins said he wouldn't rush to strike deals before the dust had settled on "the new world order" but he was confident the group's healthy cash and credit position meant it would emerge a winner.
"We see this as an opportunity and we would hope to be able to take advantage of that opportunity in the next three to 24 months," he said in a telephone interview from Brussels.
"We are committed to looking at ways to expand our healthcare business inorganically. We believe that we are better positioned than many of our competitors." The main targets for acquisitions would be non-pharmaceutical businesses designed to expand Bayer's existing operations in over-the-counter (OTC) medicines, medical devices, diabetes care and animal health products.
But Bayer could also snap up companies developing prescription drugs, if the fit was right.
Bayer has been more successful than many of its larger rivals in getting new drugs to market.
Its biggest new product hope, the anticoagulant Xarelto, was launched in Britain and Germany on and is tipped by the company to be a potential 2 billion-euros-a-year ($2.8 billion) seller.
It also has a number of products in development that could become big sellers, including a product known as VEGF-trap for sight loss, Campath for multiple sclerosis and a Phase II drug for pulmonary arterial hypertension, for which clinical trial results will be announced this weekend. "We expect our pharma business to grow at least in line with the pharma market this year and next and accelerate thereafter, so we will grow above the market," Higgins said.
Similar above-market growth rates are seen for OTC medicines and the other non-pharma operations. The German chemicals-and-pharmaceuticals hybrid's enviable new product line-up and limited exposure to generic competition has made it a subject of bid speculation, with Pfizer frequently rumoured as a possible acquirer.
Many industry analysts, however, are dubious of the strategic fit between the two companies - particularly as buying Bayer would land Pfizer with a raft of non-core chemicals assets.