Pharma Makers Enter Animal Health Care

Spotlighting drug company interest in the animal health market, two pharmaceutical makers are acquiring animal health businesses for a combined total of up to $430 million.

Bayer Healthcare has agreed to acquire the U.S.-based animal health business of Teva Pharmaceutical Industries for $60 million plus up to $85 million in milestone payments that depend on the health of the operation. The transaction includes a companion and food animal drug manufacturing facility in St. Joseph, Mo., and around 300 employees.

Meanwhile, Perrigo will acquire Sergeant’s Pet Care Products for about $285 million in cash. Perrigo, a manufacturer of generic and store-brand over-the-counter drugs, says the purchase of the Omaha-based firm is a first step in expanding its consumer health care business into pet care.

With the acquisitions, the companies are targeting the growing pet care market. Americans will spend $12.6 billion on over-the-counter medicines and other supplies for their pets this year, up from $11.8 billion in 2011, according to the American Pet Products Association.

In explaining the acquisition to investors, Perrigo executives said it will add about $140 million in annual sales in a product category adjacent to its traditional drug business. “Consumers are treating their pets like members of the family and are spending a higher proportion of discretionary income on pet care and well-being,” the firm said.

Not every drug company is pursuing animal health. Teva said it is selling the business to focus on its core businesses of generic and branded medicines. And Pfizer recently filed plans with the Securities & Exchange Commission for an initial public offering of up to 20% of its animal health subsidiary, Zoetis.