Wyeth enters race for Pfizer's OTC business

Wyeth enters race for Pfizer's OTC business

Wyeth is expected to make an offer for Pfizer's over-the-counter business ahead of the next deadline for bids on June 6, according to people familiar with the situation.

It will compete with rivals Johnson & Johnson and Colgate-Palmolive – both thought to be primarily interested in the personal care unit.

By joining the auction for Pfizer's OTC business, Wyeth is pursuing a prize it has previously targeted: in 1999, as American Home Products, it made a $71bn bid for Warner-Lambert, which owned many of the consumer brands for sale today.

"We are always open to evaluating opportunities to augment our existing businesses but we cannot comment on rumours regarding potential acquisitions or business transactions," said Douglas Petkus for Wyeth.

Reckitt Benckiser, the UK-based household and personal care group, is also looking at the business. Last year, Reckitt won the hotly-contested auction for Boots Healthcare International, which makes OTC drugs including Nurofen painkillers and Strepsils lozenges.

Bayer, the German pharmaceuticals and chemicals company that invented Aspirin, is also expected to submit a final offer. It recently paid $20bn for rival German drugs company Schering.

GlaxoSmithKline, which was an underbidder for BHI, will also table a bid, while Swiss rival Novartis is thought to have dropped out of the auction.

In spite of the intense competition for the OTC division, Pfizer might still decide to spin off the unit to shareholders. A key obstacle to a sale would be the large tax bill, which some bankers estimate at about $3.5bn.

"The initial level of interest has been high and we anticipate a decision in the third quarter on which of the two strategic options we will pursue," said Paul Fitzhenry, for Pfizer.

A sale to Wyeth could raise questions about its strategy. Consumer healthcare products – worth $109bn globally, according to Sanford Bernstein – are more stable businesses than prescription drugs, but offer less growth.

Observers might question why Wyeth is not following the lead of some peers and buyingbiotech groups. One banker not involved in the auction said Pfizer's OTC arm would be a "big bite" for Wyeth. Wyeth could team up with Colgate or J&J to split the unit, he said.