Pfizer Considers a Sale or Spinoff of Its Consumer Healthcare Business -Update

By Jonathan D. Rockoff Features Dow Jones Newswires

Pfizer Inc. said Tuesday it is exploring a sale or spin-off of its consumer-health business, the pharmaceutical company's latest move to double down on prescription-drug sales and a potential prelude to more deal-making.

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Pfizer said it would look at a "full or partial separation" of the business and make a decision on how to proceed next year.

The drug company left open the possibility of holding on to the unit, but Pfizer has been cutting ties with nonpharmaceutical businesses, as rivals have pushed to consolidate in the $233 billion global consumer-health market.

"Although there is a strong connection between Consumer Healthcare and elements of our core biopharmaceutical businesses, it is also distinct enough from our core business that there is potential for its value to be more fully realized outside the company," Chief Executive Ian Read said in a statement.

Proceeds from a sale, which analysts said could top $10 billion, would give Pfizer more firepower to deal for prescription-drug makers. Last year, it bought cancer-drug company Medivation for $14 billion.

Pfizer's consumer-health business sells well-known brands like Advil pain medicine, Centrum vitamins and ChapStick lip balm and generated about $3.4 billion in revenue last year.

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The cash flow and steadily growing sales bolstered Pfizer's earnings during the past few years, while the company was coping with generic competition for some of its top-selling products like the cholesterol drug Lipitor and pain medicine Lyrica.

Yet the company's performance has picked up in recent quarters, as Pfizer has worked its way through the bulk of its big patent expiries and sales have risen for new drugs like Ibrance breast-cancer pills and the blood-thinner Eliquis.

Shares in Pfizer, which are up 11% so far this year, were flat Tuesday, trading at $36.11.

The consumer-health business, which Pfizer acquired as part of its $68 billion takeover of Wyeth in 2009, had become an outlier at a company that had been tightening its focus on prescription drugs by parting ways with animal-health and other noncore units.

The New York-based company sat on the sidelines as rivals like Bayer AG, GlaxoSmithKline PLC and Sanofi SA did deals to bulk up their consumer-health businesses. Pfizer now ranks fifth in the world by market share, according to Euromonitor International market-research firm. Glaxo ranks first.

Pfizer had built and sold off a consumer-health business before landing Wyeth's. Johnson & Johnson, the No. 2 company in the consumer-health market, had bought Pfizer's legacy consumer-health business in 2006 for $16.6 billion.

All of the consumer-health market leaders could have interest in adding Pfizer's business. So could Swiss food company Nestlé SA, which has indicated interest in doing deals in markets growing faster than packaged goods like consumer health.

Germany's Merck KGaA said in September it is considering selling its consumer-health business, which had EUR860 million in 2016 net sales.

Allison Prang contributed to this article

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

(END) Dow Jones Newswires

October 10, 2017 12:27 ET (16:27 GMT)