Showing posts with label animal. Show all posts
Showing posts with label animal. Show all posts
Tuesday, June 12, 2012
Friday, June 8, 2012
Pfizer plans animal health IPO
(Reuters) - Pfizer Inc plans to separate its animal health unit into a stand-alone company, a move Wall Street expected as the largest U.S. drugmaker focuses more intently on its core pharmaceuticals business.
Pfizer said on Thursday that preparations were under way for a public offering of a minority stake in the new animal health company, which would be called Zoetis.
The business, which generated revenue of about $4.2 billion last year, sells medicines, vaccines and other products for livestock and pets. It has more than 9,000 employees and markets products in more than 120 countries.
Pfizer said it would provide details of the proposed IPO in the coming months, when it reports second-quarter earnings.
New York-based Pfizer, which agreed in April to sell its baby formula business to Nestle SA for $11.85 billion, had also been shopping its animal health unit since last year. But Chief Executive Officer Ian Read has said in recent months that any separation of the animal health business would probably be in the form of an IPO, to avoid hefty taxes.
ISI Group analyst Mark Schoenebaum valued the animal health unit at about $15 billion, and estimates Pfizer could generate $3 billion in cash proceeds by spinning off 20 percent of the business through an IPO.
"Pfizer did not provide any information on what they will do with the majority stake that they will continue to own," he said in a research note.
Schoenebaum speculated Pfizer would eventually divest its possible 80 percent remaining stake by offering those shares of Zoetis to Pfizer shareholders at a slightly discounted price. By doing so, he said the drugmaker would reduce by about 8 percent the number of outstanding shares of Pfizer.
In the meantime, however, Pfizer will treat the animal health business as a continuing operation.
The Pfizer unit competes with thriving animal health operations of Merck & Co, Eli Lilly and Co and Sanofi SA, all of which are able to use knowledge from their human medicines to develop products for pets and farm animals.
Animal health operations are also attractive, compared with prescription drugs, because there are fewer concerns about patent expirations and regulatory interventions that can decimate sales of their products. Moreover, middle-class populations are growing in emerging markets such as China, with adequate disposable incomes to acquire pets.
Pfizer's animal health sales jumped 16 percent in the first quarter to $982 million, boosted by the company's recent acquisition of King Pharmaceuticals and its Alpharma animal health brands. By contrast, Pfizer's sales of prescription drugs slumped 2 percent in the quarter to $14.2 billion, hurt by the loss of U.S. patent protection on its Lipitor cholesterol fighter and ensuing competition from cheaper generics.
In the case of Merck, its animal-health sales - also from livestock and pets - rose 7 percent in the first quarter to almost $760 million, eclipsing the 2 percent growth for its prescription drugs.
The contrast was even more stark at Lilly. Sales from its Elanco animal health business soared 33 percent to $491 million in the quarter, while overall company sales fell 4 percent due largely to generic competition for its Zyprexa schizophrenia drug.
Despite Pfizer's strategy of focusing on its prescription drugs, which have high profit margins, the company has decided to hold onto its consumer products business, including Centrum vitamins and the Advil painkiller.
Shares of Pfizer were up 0.4 percent at $22.02 in early afternoon trading.
(Reporting By Ransdell Pierson and Lewis Krauskopf; Editing by Lisa Von Ahn and Tim Dobbyn)
Monday, March 12, 2012
Pfizer CEO: spin-off more likely for animal health
LONDON (Reuters) - Pfizer Inc is more likely to spin off its animal health unit than sell it outright, reflecting the expected investor appeal of such a large standalone business, its chief executive said on Monday.
No final decision has been taken but Ian Read told Reuters there were clear attractions for shareholders in a tax-free spinoff of the operation, which is the biggest in the industry.
"I would probably handicap animal health as more likely to be a spin than a sale," the CEO of the world's biggest drugmaker said in an interview in London.
Read, who took over as Pfizer chief in December 2010 at a challenging time, is shrinking the group by divesting non-core businesses, including veterinary medicine and infant nutrition.
Pfizer is losing billions of dollars of revenue from cholesterol blockbuster Lipitor, which is now off patent in many markets, although Read said he hopes to carve out a new future for the medicine as an over-the-counter (OTC) product.
The nutrition business is widely expected to be sold outright for around $10 billion. Bidders were asked to submit offers last week, with Nestle SA and a partnership of Danone SA and Mead Johnson Nutrition Co seen as frontrunners.
The process for animal health, however, is less well advanced and the case for a sale less obvious. Pfizer faces a hefty tax bill if it sells outright and any buyer would also faces substantial antitrust hurdles.
"It's the largest animal health business and it would stand alone as an individual company. There's huge interest among investors to own a company like that," Read said.
"With nutritional there are lots of companies that are already in the nutritional business and have it as a major development area."
Speculation about a possible sale of animal health, which analysts believe could be worth $15-20 billion, was fuelled last week by reports that Novartis AG had made an approach that was rebuffed by Pfizer, while Bayer AG
The plans to dispose of both units, which Pfizer has said would be completed between July 2012 and July 2013, follows a far-reaching review and a decision to focus on core pharmaceutical operations.
The outcome of that review was to focus on five core areas of drug research, while maintaining a strong presence in generic and OTC medicines.
Read said Pfizer hoped to introduce a non-prescription form of Lipitor, but this would not happen in the short term. Pfizer is currently discussing the issue with the Food and Drug Administration, which is seeking public comment on the idea of making more medicines available OTC.
"We would like to sell it over the counter. We're in discussions and development with the FDA on that," Read said.
In the past, Pfizer has been a mergers and acquisitions machine, snapping up smaller rivals and partners to build out its portfolio.
It will continue to look for bolt-on acquisitions, including deals that could be "multiples" of 2010's $3.6 billion purchase of King Pharmaceuticals, Read said. But he did not see a need for another large-scale deal like the $67 billion purchase of Wyeth in 2009.
Asked about the possibility of buying out Bristol-Myers Squibb Co
(Editing by Chris Wickham)
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