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Pfizer Considering Sale/Spin-Off of Consumer Healthcare Unit

Zacks

Pfizer, Inc. PFE said it is exploring strategic alternatives for its Consumer Healthcare segment including a partial or a full separation through a spin-off, sale or other transaction. A decision regarding the same is expected to be made next year and it may ultimately opt to retain the business.

Pfizer’s shares have underperformed the industry this year so far. The stock has returned 12.1% during this period, comparing unfavorably with an increase of 18% for the industry.

The Consumer Healthcare segment includes several over-the-counter (OTC) healthcare medicines, vitamins, and personal care products, which can be sold without prescriptions. Important products among these are Advil pain relief tablets and Centrum multivitamins, which are two of the top-selling consumer healthcare brands globally. The segment recorded sales of almost 1.7 billion in the first half of 2017, representing growth of 2% year over year.


Chief executive officer (CEO) Ian Reed said that the consumer unit is not core to its prescription drug business and its potential value will be “more fully realized outside the company”. Regarding its core pharmaceuticals business, in August, Pfizer said that it expects approximately 25 to 30 drug approvals over the next five years, including around 15 products that have blockbuster potential. These include line-extensions for Xtandi, Ibrance & Xeljanz/XR. Half of these potential blockbusters are expected to receive approval by 2020.The funds from the potential spin-off of the non-pharmaceutical Consumer Healthcare business may make it easier for the company to achieve this goal.

It is being apprehended that consumer health biggies like Nestle, Reckitt Benckiser, Procter & Gamble PG, GlaxoSmithKline GSK or Johnson & Johnson JNJ may be interested in buying the unit that Pfizer may put on sale.

Pfizer carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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