Swiss firms in running to buy DuPont’s drug arm

Novartis and Roche could bid for Dupont's pharmaceutical operations swissinfo.ch

European pharmaceutical firms, including Switzerland's Novartis, are reportedly seeking to purchase the pharma business of the United States group, DuPont.

Britain’s Financial Times newspaper said on Monday that a deal would be a rare opportunity for a European firm to acquire a strong position in the US at a reasonable price of less than $10 billion (SFr17 billion).

According to the paper three companies – Bayer of Germany, Switzerland’s Novartis and Anglo-American group GlaxoSmithKline – have so far expressed an interest in the unit, which DuPont plans to sell by the summer.

Analysts say the Swiss group, Roche, might also emerge as a bidder. Roche is struggling to improve its market position following the failure of several new drugs to live up to expectations.

The Financial Times reported that Daniel Vasella, chairman and chief executive of Novartis, had played down the attractiveness of DuPont’s drugs’ unit, saying it was expected to have a difficult 2001.

The unit lost $13 million in the last quarter and the company warned that losses were likely to increase.

In a recent interview with swissinfo, Novartis chief financial officer Raymund Breu said that a major acquisition could be “dangerous” if it deflected attention from new products which Novartis is counting on to accelerate sales growth.

His comments were echoed by Zurich Kantonalbank pharmaceutical analyst, Meinrad Gyr: “Growth in Novartis’s products is accelerating and the company has to concentrate on the launch of these new big products.”

Gyr added that Roche would benefit far more from such an acquisition. “We know Roche does not have enough products in the late development phase so the company is looking for new drugs which are ready to be launched.”

But he noted that Roche might have a hard time raising funds for the purchase. Its financial assets stand at just SFr3.2 billion, while Novartis has SFr14.5 billion.

The Financial Times said DuPont has not ruled out a separate market floatation for the drugs unit.

swissinfo with agencies