Pfizer continues trend of shedding non-core assets
- ICU Medical's stocks closed up 14.86% on Thursday after it picked up the Hospira Infusion Systems business from Pfizer, which is continuing to shed its non-core assets.
- In a deal that's expected to close in the first quarter 2017, Pfizer gets $600 million in cash and around $400 million in shares, giving it a 16.6% stake in ICU Medical and a right to put feet under the table in the boardroom.
- The acquisition creates a company that can deliver a full IV offering, from solutions to pumps and infusion sets.
After the $15 billion Hospira acquisition, it's clearing out the wardrobes to find new homes for all the things that it has already got, don't quite fit, or that no longer suit. One of these decisions was to sell off the Hospira Infusion Systems business, which doesn't align with its two newly announced business units, Innovative Health and Essential Health. This will have the added bonus that it will return $600 million in cash to Pfizer's coffers. Pfizer's newly acquired stake in ICU Medical also gives it the right to nominate a director to the board. The linkup between Hospira and ICU Medical seems to be a natural fit, Vivek Jain, ICU Medical's CEO, explains in a statement.
"The combination of these two businesses is the natural evolution of a productive relationship that began more than 20 years ago when Hospira began integrating ICU Medical's needle-free technology into their infusion offering globally. By acquiring the Hospira Infusion Systems business, currently our largest single customer, we create a pure-play infusion business with the focus and scale to compete globally, eliminate our single customer concentration issue, and have a significant value creation opportunity as a much larger company," he said.
Earlier this year, Pfizer also handed rights to CT-P6 and CT-P10, biosimilars of its cancer drugs Herceptin (trastuzumab) and Rituxan (rituximab), back to developer Celltrion. This wasn't a step away from biosimilars, however, but a ridding the pipeline of duplicates because it has biosimilar candidates for these drugs in the Hospira pipeline.
It's not just drugs, it's people and places too. Pfizer will close four Hospira distribution sites with over a hundred layoffs and shift the work to other facilities during the second quarter of 2017, and a Colorado manufacturing facility by 2019.
So what has it kept from the deal? The Hospira acquisition has made Pfizer one of the leaders in the sterile injectables category, in both branded and generic products, and this is predicted to be worth $70 billion by 2020. Despite returning two biosimilars to Celltrion, the deal also extended Pfizer's marketed and pipeline biosimilar assets, giving it better access to a market that could grow up to $20 billion in 2020. And it also looks like Hospira's medication management systems will remain on board.
- Pfizer Statement
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