Thu, Oct 12, 2017 - Page 10 News List

Pfizer to offload consumer-health division to boost operations and please investors

Bloomberg

Pfizer Inc’s move to offload its consumer-health division could bring in billions of dollars and help the drugmaker streamline operations. However, the company-changing deal that investors have been hoping for might be still to come.

The US drug giant, which abandoned a plan to split in two last year, has tried — and failed — to orchestrate mergers of hundred billion dollars or more that would have allowed it to move its address overseas to secure a lower tax rate.

Now, with tax reform being debated in the US Congress, Pfizer could consider another large deal to bolster its development pipeline.

“They have not been shy about discussing the possibility of transformative M&A [mergers and acquisitions] along with smaller deals too,” Edward Jones & Co analyst Ashtyn Evans said. “If they think it can create value for their shareholders, I think they’ll go for it. We’ve seen them look at big deals in the past, and we think they’ll continue to consider big deals.”

Pfizer’s consumer unit, with sales of US$3.4 billion last year, markets well-known brands including the over-the-counter pain pill Advil, ChapStick lip balm and the dietary supplement Centrum.

It could sell or spin off all or part of the business, the drugmaker said in a statement on Tuesday.

Pfizer is to report its earnings later this month, and the plan to sell the division will almost certainly still be a topic.

There are several potential buyers who could value the unit at around US$13 billion to US$17 billion, Berenberg analyst Rosie Edwards said, adding in her note that companies like Reckitt Benckiser Group PLC, Nestle SA, GlaxoSmithKline PLC, Johnson & Johnson and Sanofi could be interested.

Pfizer has trailed other drug companies because it has not developed blockbusters as quickly as its top sellers have lost their patents, she said.

Earlier this year, Pfizer chief executive officer Ian Read said the lack of clarity on tax reform as a key factor in restraining deal activity.

“We will continue to evaluate deals,” he said. “We never say ‘never,’ but I believe the current environment needs to stabilize in order to be an advantageous market for big deals.”

Pfizer’s consumer-health division has 10 brands, each with more than US$100 million in last year sales, and its revenue rose 5 percent last year. The firm has been rebuilding in over-the-counter drugs since selling off a consumer health business in 2006.

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