Sector News

Pfizer abandons plan to split into two companies

September 26, 2016
Life sciences

U.S. drugmaker Pfizer Inc, which has been considering a split into two companies for more than two years, said on Monday it will not do so because the move would not create any shareholder value.

Pfizer will keep its low-growth generics and patent-protected branded medicines separate, giving it the option to split down the road if “factors materially change at some point in the future.”

Pfizer said on Monday the decision would not have an impact on its 2016 financial forecast.

The decision not to create two publicly traded companies follows the collapse of its planned $160 billion acquisition of Allergan Inc after a change in tax law took away the tax benefits of the deal.

Investors were expecting the company to step back from the split, Sanford Bernstein analyst Tim Anderson said in a research note.

“Where to from here? The company seems likely to leave open its option for a future split-up, but more immediately it may continue hunting for M&A targets,” Anderson wrote.

Pfizer’s shares were down 1.2 percent to $33.85 in premarket trading on Monday.

The pharma giant began openly planning for the possible split in early 2014, saying it would operate the businesses as separate divisions and track their progress for three years before reaching a decision. In August, it said a decision would be made by year-end.

Pfizer said the sum-of-the-parts analysis showed no benefit to shareholders, and that tax costs and business disruptions were factors it considered.

The company had considered the move largely because its patent-protected medicines routinely enjoy sales growth while sales in the generics portfolio usually declined.

Investors shifted their focus to whether Pfizer would split after the company terminated the deal for Irish drugmaker Allergan in April.

In August Pfizer announced it was buying cancer drugmaker Medivation Inc for $14 billion to get access to blockbuster prostate cancer drug Xtandi for its growing oncology roster.

The Medivation deal illustrates a shift in Pfizer’s mergers and acquisitions strategy from lowering taxes, which was the rationale behind the failed Allergan tax inversion deal, to strengthening its lineup of branded drugs, especially lucrative cancer treatments.

A year ago, Pfizer paid $15 billion for Hospira, which sells generic hospital products and is developing biosimilars to compete with big-selling injectable biotech drugs. That deal was seen by Wall Street as a way of bolstering its generic drugs operation ahead of potentially divesting the business.

By Natalie Grover and Caroline Humer

Source: Reuters

comments closed

Related News

September 25, 2022

Rise of the machines: Novo Nordisk pledges $200M to create first quantum computer for life sciences

Life sciences

Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.

September 25, 2022

Mount Sinai AI uncovers new brain analysis method to predict dementia, Alzheimer’s disease

Life sciences

Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.

September 25, 2022

New AstraZeneca-backed report finds big money behind diverse owners and entrepreneurs in Europe

Life sciences

There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.