(Bloomberg) -- Teva Pharmaceutical Industries Ltd. is weighing options for its active ingredients business, including a possible sale, people with knowledge of the matter said, as takeovers of health-care assets continue to defy the global dealmaking slump. 

The Israeli company is working with advisers as it seeks to gauge interest in the Teva API unit from potential buyers, according to the people. A deal could value the business at about $2 billion, they said. 

Teva’s active pharmaceutical ingredients business comprises more than 400 APIs used in drugs to treat everything from migraines to diabetes. The business employs over 5,000 staff, according to the company’s website.

Deliberations are in the early stages and Teva could still decide to retain the asset, the people said, asking not to be identified discussing confidential information. 

“As part of our ongoing business conduct, we continue to regularly review our businesses,” a spokesperson for Teva said in an emailed statement. Teva views the API business as strong and able to contribute to the company’s growth strategy, the spokesperson said.

Teva’s new chief executive officer, Richard Francis, announced a plan in May to cut back manufacturing of certain generic treatments because of low profitability and instead focus on more innovative products. Bloomberg News reported in May that Teva is exploring options for its treatment for inflammatory bowel disease.

One of the world’s largest makers of generic drugs, Teva has been trying to move on from a multibillion-dollar legal bill for US lawsuits linked to highly-addictive opioid painkillers. It’s also been contending with high levels of debt and a sale of the API business may help the company with its efforts to deleverage. Teva’s debt stood at about $21 billion at the end of March.

“A possible sale of Teva Pharmaceutical Industries’ active pharmaceutical ingredients business would likely have to be executed at a multiple well above its very low 6.2x enterprise value to Ebitda to be both accretive to the company’s equity and to enable deleveraging of its debt load,” Mike Holland, a senior credit analyst at Bloomberg Intelligence, wrote in a note on Wednesday.

Teva’s stock is down 15% in Tel Aviv trading this year, giving it a market value of 31.2 billion Israeli shekels ($8.4 billion). 

A sale of the API business would add to roughly $170 billion of deals targeting health-care companies this year, data compiled by Bloomberg show. That’s up more than a fifth on this point in 2022 and a marked contrast to the dropoff in mergers and acquisitions activity affecting most other major sectors. 

Health-care dealmaking is being driven by large pharmaceutical companies looking to revamp their portfolios with new treatments for rare diseases. The largest transaction announced so far in 2023 has been Pfizer Inc.’s planned $43 billion takeover of cancer-drug maker Seagen Inc.

--With assistance from Alisa Odenheimer and Gwen Ackerman.

(Adds detail on debt, analyst comment from seventh paragraph; updates share move in ninth paragraph.)

©2023 Bloomberg L.P.