Pfizer considering a spinoff of one of its biggest divisions

One of Pfizer’s core divisions, animal health, is facing a challenge from a drug whose approval could be a shot in the arm for the company. “New London, Conn.-based Pfizer aims to spin off…

Pfizer considering a spinoff of one of its biggest divisions

One of Pfizer’s core divisions, animal health, is facing a challenge from a drug whose approval could be a shot in the arm for the company. “New London, Conn.-based Pfizer aims to spin off the animal health unit as a standalone company to consumers,” Bloomberg reported. Pfizer, which owns Pfizer Labs, is the top dog in animal health, with market share over 35 percent. New London-based Zoetis is a second-place contender. Bloomberg added that if Pfizer succeeds in its proposed spinoff, it would give Zoetis a $7.3 billion boost to its value.

On Friday, August 10, 2020, Pfizer is scheduled to file its application for a marketing authorization for a pill containing its investigational treatment for seizures, it has been reported. The Cogentreatment drug, which has U.S. Food and Drug Administration approval in 65 countries, treats patients with Epilepsy with partial onset seizures.

Pfizer is showing healthy growth on a global scale, its numbers went up 9.7 percent to $49.5 billion in the first half of this year. While it seemed obvious that the company could stand to expand its business, less obvious is the question as to how many of Pfizer’s divisions will be included in this expansion.

“Anytime that you have one of the largest pharmaceutical and major consumer products companies doing something that is quasi-disruptive in the industry, it’s going to influence things,” Kristen Stewart, an analyst with UBS bank, told MarketWatch. “There could be more M&A activity. Companies in the near term may pick up something, but if Pfizer goes with animal health as its innovation unit, you can expect other companies will look to do similar things as well.”

Pfizer also announced that it will exit its loss-making consumer drug division. In May, the company announced that it would be selling its older drug unit, a move that, had it occurred without COVID, could have caused the company’s overall revenue to fall below $40 billion for the first time since 2010. Instead, the company’s revenue increased over the last year, up 2.7 percent to $38.67 billion. While the consumer division will likely not have a big impact on Pfizer’s business if approved, investors must wonder if Pfizer will continue to try to sell the division. Pfizer has said that it would only keep its proprietary medications.

“Their consumer health strategy remains viable, but this could lead to more M&A activity. There are other pharmaceutical and consumer product companies that could buy it,” Mizuho analyst Dr. Chris Schott told MarketWatch.

Pfizer’s plans to keep its proprietary products for prescription-drug sale — which could help to boost revenues by building up more supply for its branded drugs — would also be enough to keep the pharmaceutical company on its current track. But dropping a division that brings in less than $2 billion in revenue is a big move for a company that does business in areas from vaccines to cancer drugs to cardiovascular treatments. This question is not yet fully answered, though many analysts seem optimistic about Pfizer’s prospects.

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