Is a Pfizer break-up back on?
Is the longest-running corporate breakup story still active? That is one conclusion from Pfizer’s announcement that it is reorganising into three business units, five years after the biggest of big pharma groups said it would begin reporting independent profit and loss for each one and nearly two years after chief executive Ian Read said it had no plans to split. Today’s announcement once again sorts Pfizer into three units – innovative, including biosimilars and hospital drugs; established medicines for off-patent and generic small molecules; and consumer healthcare for over-the-counter products. This is not dissimilar to its 2013 decision to divide into three units and begin reporting independent profit-and-loss numbers for each unit, a move that was widely seen as a precursor to a breakup in that it would allow deal bankers and potential buyers to independently value each unit. Mr Read scotched any spinoff talk in September 2016, but perhaps the combination of the new US tax law and prohibitively high valuations among biopharma targets have made spinoffs attractive again. Moreover, there undoubtedly are still some investors who see value being unlocked in a breakup or spinoff of some units, and Mr Read must be keen to present a positive story to them. After all, many investors must be disappointed after he did an about-face on drug pricing yesterday and promised President Donald Trump that Pfizer would delay mid-year increases.
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