Pfizer is reportedly considering the possibility of divesting up to 40% of the current business to focus solely on research drugs. A new company would be born, much smaller and perhaps easier to manage. Similar to AstraZeneca Bristol-Myers Squibb and Eli Lilly, for example. This was revealed by Tim Anderson, an analyst at the Sanford C. Bernstein & Co. bank who a few days ago had a long conversation with Ian Read, the new CEO of the American company.
It should be emphasized that no decision has yet been made and the company has not commented on this indiscretion. It should be noted that the share gained 1.8% today, a sign that the stock exchange may appreciate this strategic choice.
Read said the company is conducting a thorough review of its business precisely to evaluate the areas to focus on and those to divest. Among the latter, for example, there would be Capsugel, the company that produces capsules for medicines, a small and profitable business ($732 million in turnover in 2010), however completely detached from the corporate mission.
The current pharmaceutical giant, the result of numerous acquisitions (Warner-Lambert, Pharmacia, Wyeth), has a huge turnover, equal to about 67 billion dollars, but also an organizational complexity that is not easy to manage. Read would be considering the possibility of divesting everything that is not pure research drug and for human use, namely: the veterinary division, the one dedicated to nutrition, the consumer health division, the company that produces capsules and perhaps also the division dedicated to which also includes numerous generic drugs.
It would remain a company with a turnover of 35-40 billion dollars, a respectable size that would still place it among the very first companies in the sector. In this hypothesis, the surviving divisions would be primary care (general practitioner drugs), the division dedicated to specialist drugs, oncology and emerging markets.
Analyst Anderson cites some examples of strategies of this kind which, on the basis of the performance of the shares, have proved to be successful choices: Medco exit from Merck; Zimmer and Mead Johnson both from Bristol-Myers Squibb; Guidant from Eli Lilly and Hospira from an Abbott rib.
For now, we emphasize, it is a market rumor, absolutely not confirmed by the company. It should therefore be taken as a mere hypothesis, albeit suggestive.
