Pfizer Inc., the world’s biggest drugmaker, said it isn’t interested in breaking up its animal health unit after Indianapolis-based Eli Lilly and Co. expressed interest in buying some of its products.
Lilly, which had $1.39 billion in sales from animal-health products last year, is monitoring Pfizer’s plans to divest its unit and will pursue assets deemed of interest, Chief Financial Officer Derica Rice said in a conference call Thursday. Pfizer wants a sale or spinoff of the unit and doesn’t foresee breaking it up, said Joan Campion, a company spokeswoman.
Pfizer CEO Ian Read said on July 7 he is divesting the company’s animal health and nutrition units to buy back shares and focus on developing new drugs. The units may fetch $22 billion, according to Seamus Fernandez, an analyst at Leerink Swann & Co. Pfizer’s animal health unit had sales last year of $3.48 billion.
“While we are evaluating a variety of options including a sales, spinoff or other transaction, we believe we will favor one overall option rather than dividing assets and business operations,” Campion said in an e-mail Thursday.
Pfizer’s review of its options for the unit will take 12 to 24 months, Campion said. The company doesn’t plan further announcements about the unit until 2012, she said.
“We will watch how that situation evolves, and if there are some assets that become available that we are interested in, yes, we will pursue them,” Lilly’s Rice said in a conference call with analysts. “It is very early to speculate” what type of transaction Pfizer is seeking, he said.
Lilly is interested in expanding its Elanco animal heath unit’s offerings in vaccines and pet products, as well as boosting its presence in Europe, Jeff Simmons, president of the division, said in a June 29 telephone interview. Elanco’s biggest product line is feed additives for cattle and poultry.
“We are going to be opportunistic in animal health,” Simmons said. “We are looking for additional assets. We are not interested in acquiring for the sake of acquiring; it has got to have a strategic element.”
In March, Elanco agreed to acquire Jannsen Animal Health, a subsidiary of New Jersey-based Johnson & Johnson. Terms were not disclosed.