Pfizer may consider separating its branded and generic pharmaceutical businesses by 2015, according to business analysts briefed by its CEO Ian Read.
The announcement caused Pfizer’s share prices to rise to their highest value in more than four years.
Coming after Pfizer’s announcement that it will divest its animal health and nutrition businesses, the news is seen as indicative of an industry trend towards reversal of M&A.
At a meeting with Goldman Sachs analysts, Read (pictured) indicated that he was willing to consider further divestment of non-core assets. According to analyst Jami Rubin, “a potential full-scale breakup” of Pfizer is on the cards.
However, Rubin said, such a move would depend on Pfizer’s gaining regulatory approval for new branded drugs: “If the pipeline is successful and drives meaningful top-line growth, management will want to separate the businesses so investors can better value the pharma business.”
This would mirror the recent split of Abbott into separate branded drugs and medical products businesses.
In her report to investors, Rubin noted that other leading pharma companies may follow suit, since in many cases “the sum of the parts is greater than the whole”.
Les Funtleyder, a fund manager for Miller Tabak, which owns Pfizer stock, commented that moves towards the breakup of the Pfizer corporation represent the company’s answer to the question of what can follow the blockbuster era.
After years where M&A were the prevailing trend, he said, the industry may be shifting towards a more ‘lean’ model. In the case of Pfizer, having survived the Lipitor ‘patent cliff’ appears to be the trigger for a major restructure, with the long-term aim of reviving the company’s core focus on R&D.
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