After  a spate of recent mega mergers in the pharmaceutical sector, global drug giants are now eying smaller rivals to enhance their product variants and expand their operations.

Johnson & Johnson, Novartis and GlaxoSmithKline have evinced interest in skincare specialist Stiefel Laboratories, a large, family-owned pharmaceutical company based in Coral Gables, Florida.

The 160-year-old privately held pharmaceutical maker is the largest independent dermatology company in the world, according to its website. It is owned and operated by the Stiefel family since its inception in in 1847 – in Europe, when founder, John David Stiefel joined forces with dermatologists Ferdinand von Hebra and Paul Unna, to develop some of the world's first medicated soaps.

Stiefel specialises in dermatological products, such as anti-itch creams and acne treatments, said to be to expecting $3 billion to $4 billion, the Wall Street Journal reported yesterday.

With a variety of both prescription and over-the-counter products, Stiefel could appeal to a number of large drugmakers looking to diversify their businesses.

J&J and Novartis have long been among the world's most broad-based healthcare groups, while Glaxo's new CEO Andrew Witty has made clear he wants to expand in areas other than traditional prescription drugs. Valuations of many drugmakers have fallen over the past year in the global economic downturn, making smaller companies more attractive targets for bigger ones.

Private-equity group Blackstone Group LP, which invested $500 million in the company in 2007, owns a substantial minority stake. Stiefel has annual revenue of about $1 billion, the paper said, citing a person familiar with the company.

However, a Stiefel spokeswoman denied the reports saying that the company's board has not decided to sell the company and has not received any offers.

"Like any business, if we received an offer it would be carefully considered," the spokeswoman said in an email to the Journal.

The news comes against the backdrop of three heavyweight drug deals this year. Roche Holding AG has agreed to buy the 44 per cent of Genentech Inc it doesn't already own for $46.8 billion billion (See: Roche clinches Genentech deal for $47 billion) ; Pfizer Inc has agreed to pay $68 billion for Wyeth Pfizer-Wyeth create $68-billion blockbuster deal ; and Merck & Co Inc plans to buy Schering-Plough Corp for $41.1  Merck to acquire Schering- Plough for $41 billion

The family members who run the company have resisted many take-over bids over the years, but recently the drug-development pipelines of the global pharma giants have been running dry and they have been aggressive in purchasing other companies to expand revenues.

Under the leadership of chief executive Charles Stiefel, the company has expanded aggressively. Last June, it purchased New Jersey-based Barrier Therapeutics, a developer of dermatology products, in a deal valued at $148 million.

The acquisition of Barrier broadened Stiefel's extensive product offering with three premium prescription products, making a wider range of treatment options available to physicians and patients under the Stiefel umbrella. It also deepens an already strong Stiefel pipeline of products by adding several promising novel product candidates.

In addition to bringing new assets to Stiefel, the acquisition also provides the opportunity for the company to leverage its global footprint for the newly-acquired portfolio.

With a variety of both prescription and over-the-counter products, Stiefel could appeal to a number of large drugmakers looking to diversify their businesses.

J&J and Novartis have long been among the world's most broad-based healthcare groups, while Glaxo's new CEO Andrew Witty has made clear he wants to expand in areas other than traditional prescription drugs. Valuations of many drugmakers have fallen over the past year in the global economic downturn, making smaller companies more attractive targets for bigger ones.

Stiefel claims to be the largest independent dermatology company in the world, with annual revenue of about $1 billion.

Founded in 1847 in Germany as a manufacturer of medicated soaps, some members of the family moved to South Florida in 1977. Blackstone Group, a private-equity firm, owns a substantial stake in the company.

Some of its newest and best-known brands of Stiefel include Duac Topical Gel (an acne cream), Evoclin, Luxiq, MimyX, and Olux Foam. Last week it announced the US launch of Impruv, a line of dry skin products, effective for patients suffering with mild to severe dry skin.

Its global network includes more than 30 subsidiaries, research and development facilities on four continents, and products marketed in more than 100 countries.

The company, which employs more than 3,000 around the world, is reported to have factories in Canada, Ireland, Brazil, Mexico, Singapore and Pakistan, as well as the United States.