- Pfizer Inc. is finally taking the plunge and splitting off part of its behemoth business — or that's what it hopes to do. The pharma giant announced Tuesday morning it would seek strategic alternatives for its consumer healthcare business.
- Among the options under consideration are spinning off the business or an outright sale. If no attractive options materialize, Pfizer said it could ultimately decide to hold on to it.
- Pfizer Consumer Healthcare is one of the largest consumer products businesses in the world with sales of $3.4 billion last year across nearly 90 countries.
Pfizer has been floating the idea of splitting up its expansive business for several years, stoking investor excitement each time. The company even went so far as to internally reorganize its pharma unit and split up products into a legacy business and a growing products division. Yet those preparations haven't amounted to anything yet.
While Tuesday's disclosure isn't a done deal, it is a step toward "right-sizing" the company to allocate resources to core areas.
"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," said Pfizer Chairman and CEO Ian Read in a statement.
The company has hired Centerview Partners LLC, Guggenheim Securities LLC and Morgan Stanley & Co. LLC as advisors on the strategic review process. Pfizer said a decision is not likely until 2018 and that it will make no further statements until the process comes to its conclusion.
The consumer healthcare business includes brands like the vitamin brand Centrum, over-the-counter headache medication Advil, lip moisturizer Chap-Stick, and gastrointestinal medication Nexium 24 Hour.
As a way of putting the business in context of the greater Pfizer organization, last year the Consumer Health unit brought in $3.4 billion. By comparison, Pfizer's leading pain drug Lyrica (pregabalin) and the vaccine Prevnar 13 brought in $5 billion and $5.7 billion, respectively. Meanwhile, pharmaceutical brands like Viagra (sildenafil citrate), Lipitor (atorvastatin) and Ibrance (palbociclib) all brought in around $1 billion each.
Overall, the consumer health products are a small piece of the Pfizer puzzle with likely lower margins than the more lucrative pharma side of the ledger.