DRUGS group GlaxoSmithKline was last night at the centre of speculation linking it to an £8bn bid for Pfizer's Listerine-to-Sudafed 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 £1bn auction of the Strepsils-to-Nurofen arm of Boots - and Johnson & Johnson are also likely to be interested.

Glaxo, which employs 1,100 people in Barnard Castle, County Durham, 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 about £3bn and includes Lucozade and Panadol painkillers in its portfolio.

Pfizer announced this year it was conducting a review that could lead to a sale of its consumer healthcare opera-tions.

According to the Financial Times, Glaxo is prepared to offer more than analysts' estimates of $14bn (£7.5bn), but will not pay more than $16bn (£8.58bn) 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 last night.

However, Seymour Pierce analyst Sav Neophytou believed there was ''significant strategic rationale'' for a bid by Glaxo, particularly as it would be able to extract cost savings in the region of $150m (£80.4m).

He said: ''At a recent meeting with Pfizer's chief executive, we were informed that there were numerous keen bidders.

"Glaxo is in a good position to pick up assets that may add value to the business going forward, but we do not expect them to overpay under the current management team.''

The acquisition is expected to bolster the company's negotiating position with retailers, while it will also gain from Pfizer's strength in the US.