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Pfizer Inc. (PFE) Drug Units' Shuffle Triggers Breakup Concerns



1/15/2013 7:30:43 AM

Pfizer Inc. (PFE)’s four business units may be combined into two, a top company official said, triggering speculation by analysts that the world’s biggest drugmaker is preparing to split in half. Pfizer’s business units cover oncology, primary care, specialty drugs, and so-called established products, which are medicines that have lost patent protection and are sold against generics. That’s “probably going to evolve to two, where there’s the innovative business and the value business,” Geno Germano, president of the specialty care and oncology businesses, said in an interview. Chief Executive Officer Ian Read took over New York-based Pfizer in 2010, as the company was digesting the 2009 acquisition of Wyeth and preparing for the loss of its top- selling product Lipitor. Under Read, Pfizer has cut research and operations and is divesting non-drug businesses, such as animal health and infant nutrition. Those actions have created questions about whether a bigger breakup is on the horizon. The reorganization outlined by Germano may be another step toward a split by Pfizer two to three years down the line, said Mark Schoenebaum, an ISI Group Inc. analyst. Such a move would be similar to the action by Abbott Laboratories (ABT), which spun off its brand-drug business Jan. 1 as the new company AbbVie Inc. (ABBV). Making the generics unit more independent of the business that finds and develops new medicines would be a sign that Pfizer is headed for such a major breakup, Schoenebaum said. “Any signal that Pfizer is physically disentangling that business from the rest of those businesses, those would all be viewed as positive steps toward a spinout,” Schoenebaum said in a telephone interview. “It’s in their back pocket, should it make sense in a few years.”

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