Nestle is the front-runner for Pfizer's nutrition business, Reuters' sources say. The Swiss company is vying with France's Danone for the Pfizer ($PFE) unit, which the drugmaker marked for sale or spinoff last year. "Assets as good as this do not come along very often," one source told the news service.
Among the Pfizer group's advantages is its strong position in the Chinese infant formula market, Citi analyst Robert Dickinson told Reuters. "The market is unusual in having super-charged Chinese growth rates as well as highly attractive margins," Dickinson said, estimating the value of that market at $6 billion right now; it's expected to growth to $16 billion by 2016.
Currently, Nestle is lagging in the Chinese market, but buying the Pfizer unit could put it in third place. The company and Danone emerged as the two top bidders after first-round offers were submitted before Christmas, Reuters' sources said. However, Mead Johnson is still in the hunt, and the auction process is far from over.
Sixty percent of the Pfizer unit's sales are in Asia, while Europe accounts for 30%, with most of that in the U.K., Reuters says. The rest of the business is concentrated in Latin America. Overall, the unit ranks 5th in the infant formula market.
The nutrition business is only one of the units Pfizer has decided to divest. Its animal health unit is also set for sale or spinoff as CEO Ian Read (photo) pares down to focus more tightly on drugs. The company is hanging on to its generic drugs business, as well as its consumer healthcare group, aiming to grow both units to augment its core branded pharma business.
- read the story from Reuters