Pfizer to create standalone animal health business
pharmafile | June 8, 2012 | News story | Sales and Marketing | Ian Read, Pfizer, Zoetis, nestle, standalone
Pfizer has said it is setting up a new standalone company out of its animal health division.
This means it is not selling off the unit completely, but is instead offering an initial public offering (IPO) in the US for a minority ownership stake in a new public company, which it has called Zoetis.
The firm will hold on to a majority stake for now, but believes that divesting the unit from Pfizer to create a standalone business is the best option for its investors.
Pfizer expects to provide details regarding the proposed transaction during its second quarter earnings announcement later this year.
“Pfizer animal health is a dynamic business with strong fundamentals, an expanding and loyal direct customer base and a proven management team,” said Ian Read, chairman and chief executive of Pfizer.
“We are on track to create a standalone animal health company by [our] target of July 2013. Our focus continues to be on taking the actions that will generate the greatest after-tax value for our shareholders, with share repurchases remaining the case to beat in allocating cash proceeds from the separation.”
The new company, Zoetis, will build on the leadership of Pfizer’s animal health unit in the discovery, development, manufacture and marketing of a diverse portfolio of animal vaccines and medicines, the firm said.
It said the business has an extensive R&D network and holds strong market positions across major geographic regions, including North America and Europe – revenues in 2011 were around $4.2 billion.
The firm is looking to have a tighter focus on prescription medicines, and sold off its nutrition unit to Nestlé earlier this year.
These business units are still profitable, and create revenue of around $3 to $4 billion a year for the firm. But compared to the $13 billion a year that Lipitor made at its peak before going off patent last year, this simply isn’t enough for Pfizer to help it sustain high revenue growth, and the impact felt by Lipitor’s loss.
By selling off these units in whole or in part, it can make a one-off sale and re-invest that back into its drugs business, which can potentially yield better returns.
It is also being used to buyback shares from investors, a developing theme amongst big pharma firms.
The name Zoetis has its root in ‘zo’, which is familiar in commonly known words such as zoo and zoology and derives from ‘zoetic’, meaning ‘pertaining to life’.
Ben Adams
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