Bayer buys Teva animal health unit

Bayer has agreed to buy the US animal health business of generic drugmaker Teva Pharmaceutical Industries in a deal - valued at up to $145m - that is expected to close early next year.

The deal includes a $60m upfront fee and $85m in milestone payments linked to "the successful and timely achievement of manufacturing and sales targets", said the two companies in a statement today.

Bayer said the deal would boost its food animal franchise by expanding the range of anti-infective products it offers and giving it a presence for the first time in reproductive hormones, as well as adding to its dermatological, pet wellness and nutraceutical product lines.

The transaction includes Teva's US animal health manufacturing site in St Joseph, Missouri, which employs around 300 workers.

"Teva's animal health business is a great strategic fit," said Bayer HealthCare chief executive Joerg Reinhardt, who noted that Bayer will be present in all major animal health therapeutic areas once it completes the takeover.

Teva has been threatening to divest its animal health operations for a number of years, first suggesting it was a possibility after a strategic review of the business in 2007 concluded it was too small to be a core unit.

Bayer has been linked to a possible purchase from the outset, but it is thought that a deal was delayed after manufacturing compliance issues at the St Joseph facility led to a shutdown in production there in 2009.

FDA inspections of the plant between 2007 and 2009 had revealed serious deficiencies in quality and the agency put a block on manufacturing and distribution from the facility until these had been addressed to its satisfaction.

Teva has been renovating and upgrading the affected production areas to bring the plant back up to code, and said it restarted production there earlier this year.