Pfizer Inc. will unload its consumer-health unit which could bring billions of dollars into the company and help the pharmaceutical giant streamline its operations. Yet the “big deal” that investors believe to be company-changing remains elusive.
The drug giant based in the U.S., which abandoned its plan to split into two in 2016, had attempted, but failed, to pull off mergers worth hundreds of millions of dollars that would have given it the opportunity to move overseas and secure a tax break of significant proportion.
Now, with Congress debating tax reform, Pfizer might consider another big deal to give its development pipeline a much needed boost.
The consumer unit at Pfizer, with 2017 sales of more than $3.4 billion, markets brand that are well-known including pain reliever Advil, Centrum a dietary supplement and ChapStick, one of the leading lip balms.
In a prepared statement on Tuesday, Pfizer said that it would spin off or sell all or a part of its consumer business.
Pfizer will post its quarterly earnings later in October, and its plan to sell off the division would likely still be a major topic.
Several possible buyers could value this unit of Pfizer at between $13 billion and $17 billion, said one analyst on Wall Street.
Shares of Pfizer were up 0.7% on Tuesday on Wall Street but the stock has been an underperformer compared to its peers for the last five years.
Selling the unit or spinning it off is not something strange for Pfizer, said an analyst. The pharmaceutical giant has trailed other big drug companies due to not developing its blockbusters at the same rate as others and has lost patent protection of its top sellers. Mergers would one a way to increase sales, added the analyst.
Earlier in 2017, Pfizer CEO Ian Read cited a lack of tax reform clarity as a big factor in restraining any deal activity.
This is not the first occasion the biggest drug maker in the U.S. has toyed with the idea of splitting off part of the business. In 2013, the company spun off its business for animal health through an offering of stock, after selling its business of infant nutrition to Nestle at the price of $11.9 billion.
In 2016, Pfizer announced it would not go through with its plan to break its core drug unit into a pair of separate companies with one focusing on innovative new medicines and one on its established products as well as foreign markets.