GlaxoSmithKline was yesterday at the centre of speculation linking it to an £8 billion bid for Pfizer's consumer healthcare arm.
Such a move would transform Glaxo into the world's biggest maker of non - prescription drugs, as well as the second largest prescription drugs supplier.
But the UK company faces stiff competition as Reckitt Benckiser - successful in the recent £1 billion auction of the Strepsils-to-Nurofen arm of Boots - and Johnson & Johnson are also likely to be interested.
Glaxo may also have to sell some products if it is successful, as it is likely to face regulatory concerns over smoking cessation products. The company's consumer division generates sales of around £3 billion.
Pfizer announced this year that it was conducting a strategic review that could lead to a sale of its consumer healthcare operations.
According to one report, Glaxo is prepared to offer more than analysts' estimates of £7.5 billion, but will not pay more than £ 8.58 billion because it would be difficult to achieve the necessary synergies to justify the deal.
It is thought that Pfizer could make a decision on the future of the operation in the third quarter of the year.
Glaxo declined to comment on the report.
The acquisition is expected to bolster the company's negotiating position with retailers while it will also gain from Pfizer's strength in the United States.
Glaxo is thought to have been among the disappointed parties when Boots sold its Healthcare International arm to Reckitt.
Shares closed down 13p at 1483p.