Bayer's New Chief Plans to Bolster Animal Unit With Deals

April 12, 2016 10:08 AM

Bayer AG’s Werner Baumann, who will take over as chief executive in the next month, signaled his plans to beef up the company’s smallest unit -- animal health -- with acquisitions and partnerships.

“We would really, really like to strengthen our animal health business,” Baumann told reporters at a briefing in Leverkusen, Germany, where the company is based. “The animal health business is a business that, for many years, we have been trying to start, to start strategically, which means inorganically, that is still our goal.”

Revenue at the unit, which was 1.49 billion euros ($1.71 billion) last year, will probably grow only “slightly” this year, Bayer said in February. Alongside medicines to repel flea and ticks and de-worm pets, the company has introduced Zelnate, a product that harnesses farm animals’ own immune system to fight an infectious disease without using antibiotics. It’s a strategy drugmakers are also testing against cancer in humans.

"We think the animal health area is highly attractive even if it is a relatively small industry,” Baumann said. “There are possibilities to further strengthen the business and that is our goal.”

Clear Owner

Bayer would consider partnerships and particularly joint ventures as long as it’s clear who owns the asset and sees no urgency to doing a deal. “There is no immediate need to act, we can explore our strategic options calmly,” he said.

Other pharmaceutical companies with animal-health operations include Merck & Co. and Eli Lily & Co. Closer to home, Germany’s Boehringer Ingelheim GmbH announced plans in December to swap its over-the-counter drugs business for the animal-health division of France’s Sanofi. Zoetis Inc., spun off by drugmaker Pfizer Inc. in a 2013 initial public offering, ranks as the world’s largest producer of animal health products. Baumann estimates that Bayer’s unit ranks as No. 4 or 5 in the industry.

"We are not badly positioned,” he said. Should Bayer fail to bulk up the unit, it may consider a sale or a public offering, as it did last year for its plastics unit Covestro, Baumann said.

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