Financial Times

Pfizer weighs sale of consumer unit

by David Crow in New York

October 12, 2017 | 5:39 pm
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Pfizer has said it is looking at a spin-off or sale of its consumer healthcare business in a move that could fetch up to $14bn for the US pharmaceuticals group and set off a flurry of dealmaking.


Pfizer said yesterday it was considering a range of options for the business, which makes Centrum vitamins and ChapStick lip balm, including “a full or partial separation . . . through a spin-off, sale or other transaction”. It added that it might ultimately decide to keep the division.


Ian Read, Pfizer chief executive, said the drugmaker was a leader in over-the-counter healthcare products but that the unit was “distinct enough” from its main medicines business for it to do better outside the company.


In December 2015, Rakesh Kapoor, chief executive of Reckitt Benckiser, said he would be “very interested” in Pfizer’s consumer health division if it were to come up for sale. However, Reckitt has since paid $16.7bn for Mead Johnson, the baby formula maker, raising doubts over whether it can afford a second large deal.


Nestlé, the Swiss foods group, has said that it is in the market for such assets, while analysts also cite drugmakers GlaxoSmithKline, Bayer, Sanofi and Johnson & Johnson as potential buyers.


Pfizer’s review of a division making dietary supplements and cold remedies underscores a perennial debate on whether pharmaceutical groups should own consumer divisions. Some companies believe such businesses provide stability in an industry plagued by patent expiries and unpredictable drug development schedules, while others argue that the units suck up capital and attention that should be spent on discovering lucrative medicines.


Pfizer left the industry in 2006 when it sold its consumer division to J&J for $16.6bn. But it took on a new portfolio when it acquired Wyeth in 2010.


For Mr Read, who became chief executive in 2010, divesting the consumer business would mark the biggest shake- up since the company spun out its animal health unit in 2013, creating Zoetis, which now has a market value of $31bn.


He has since tried to reshape the drugmaker through acquisitions of AstraZeneca and Allergan, although both tie-ups were thwarted by politicians worried over jobs and lost tax revenues.


Bankers say that if Pfizer were to begin dealmaking with gusto it would thaw the market for mergers and acquisitions in pharmaceuticals, a sector subdued recently by uncertainty over tax reform and drug pricing legislation.


by David Crow in New York

October 12, 2017 | 5:39 pm
  |     |     |   Start Conversation

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