LEVERKUSEN, Germany: Bayer will look into divesting its animal health unit if it continues to struggle to find takeover targets to bulk up the division, the German drugmaker’s incoming chief executive said.
“Animal Health is a business that we have been trying for many years to strengthen strategically, that is to say inorganically. That is still our goal,” strategy chief Werner Baumann, who is to take over as CEO on May 1, said at a media briefing late on Monday.
“Should we not succeed at that in the end, we will have to ask the strategic question – as is the case with all our businesses – are these businesses well placed with us as best owner or can these businesses perhaps progress better in a different environment, with different access to resources.”
He declined to say for how much longer Bayer would continue to scout for takeover targets for the veterinary drugs unit, which saw revenue increase 13 percent to 1.5 billion euros (US$1.7 billion) last year, or 4.5 percent when adjusted for currency swings.
In animal health, Bayer is set to become a second-tier player behind four clear market leaders following a series of major consolidation moves in the sector, capped by exclusive talks unveiled in December between Sanofi and Boehringer Ingelheim to combine some businesses.
Even though animal health offers lower margins than pharmaceuticals, many drugmakers are drawn to the sector because pet ownership increases faster than the overall economy in emerging markets, and as the same goes for meat consumption and livestock farming.
Apart form Bayer, pharma majors such as Eli Lilly and Merck & Co run animal health operations, reusing some remedies originally developed for humans.
(Editing by Maria Sheahan)