Germany-based global healthcare leader Bayer HealthCare, a sub-group of Bayer AG, has signed an agreement with drug company Teva Pharmaceutical Industries to acquire Teva’s US animal health operations for a maximum of $145 million.
The transaction, involving 300 employees and a manufacturing site in Missouri, should be official in 2013 provided regulatory clearance and other conditions are met.
The deal is hoped to help expand Bayer’s livestock animal and emerging companion animal product lines in the US as Bayer merges its existing assets with those purchased from Teva.
Bayer’s new offerings in animal care products and services will include pet wellness, nutritional supplement and dermatological products as well as anti-infection and other treatments for livestock.
Teva will benefit both financially and operations-wise as the Bayer deal is part of Teva’s strategic plan to concentrate its efforts on being a leader in providing branded and generic pharmaceuticals to patients across the globe.
Bayer Takes Steps Toward Conquering Animal Health Industry
Bayer HealthCare reported sales of over €17.2 billion in 2011, and its animal health unit is fifth globally.
As animal health is one of only four of Bayer’s departments – the other three being consumer care, pharmaceuticals and medical care – the company stands to benefit from expansion efforts in this area.
Further, animal health is an increasingly attractive business opportunity in the struggling pharmaceutical industry as it is relatively stable and has growth potential given the rise of pet ownership.
Bayer previously hoped to purchase larger assets to boost its animal health unit, but was unsuccessful. For instance, Pfizer, one of its target acquisitions, chose to take its successful veterinary unit (with $4.2 billion in revenue) public rather than selling it.
Bayer is now taking smaller steps to reach its goal, with the Teva agreement the most recent of its small-to-mid-sized acquisitions.
Key Statistics – Pet Health Industry In The US (source: Freedonia)
- In 2016, consumer spending on pet health goods and services is expected to hit almost $32 billion.
- Demand for pet health products at the manufacturer level is projected to rise to over $5.5 billion by 2016, for an annual increase of slightly more than 4.5%.
- In 2011, although cats made up the largest pet group, some 70% of total spending on pet health care went toward products for dogs.