Pfizer is
selling off some of its non-core businesses, including Animal Health &
Nutrition. But Goldman Sachs analyst Jami Rubin writes that CEO Ian Read
“expressed an openness to going further with separations” in a recent meeting.
In fact, Goldman can envision a scenario wherein the pharmaceutical giant
splits its generic drug unit from its brand-name or Pharma division.
Goldman Sachs analyst Jami Rubin has
set investors abuzz by suggesting that the drugmaker won't stop with divesting
its animal health and nutrition units. A final, big split could come two or
three years after that.
In a recent meeting with Goldman, CEO Ian Read said he was open "to
going further with separations beyond animal health and nutrition if the
conditions make sense," Rubin wrote in a note to investors. Hiving off
those two units, then, would just set the stage for more. "We see these
moves as first steps in a potential full-scale breakup," Rubin writes.
Already, Read has said that he sees Pfizer encompassing "two primary
businesses with distinct cost structures and operating approaches," namely
the R&D-based, branded-drug business and the "value business" of
selling off-patent products. And, as Bloomberg notes, Read has pledged
to break out the numbers on branded and generic drugs, so that investors can
better understand each business.
Rubin suggests that, in the end, Pfizer's branded-drug business could go
one way, and its generics unit would take its own separate path. That split
would give Pfizer's pharma operations a chance to shine. Without the drag of
lower-margin generics, branded drugs could deliver faster, more impressive
growth for investors. And the separate generics business would be a stable,
value-oriented company in its own right.
Theoretically, as Rubin notes, some pipeline successes would have to
precede this sort of split, to ensure that the branded business has enough
oomph going forward. Setting the stage would require some preliminary work internally, Rubin
figures, as Pfizer rejigs its operations to separate the two businesses, each
with its own management structure and its own set of goals. But a breakup could
happen by 2015, she says.
What does Pfizer say? Spokesman Ray Kerins tells Bloomberg that
"ultimately, our decisions will be driven by value creation for the
businesses and delivering the greatest after-tax value for our shareholders
over time." By Rubin's calculations, a breakup would do just that.
Read previously said he
intends to create more detailed financial reports for the generic and
brand-name products, to help investors better understand the two units.
Of Pfizer’s $67.4 billion
in 2011 revenue, $18.5 billion fell under “established
products” or “emerging markets.” The animal health and infant nutrition units
that Pfizer is currently divesting had $6.32 billion in sales last year.
The Goldman report said
Abbott’s share jump “will likely pressure other CEOs to consider similar
strategies if the sum of the parts is greater than the whole,” Rubin said in
the note. “Our recent meeting with PFE’s CEO Ian Read
suggests he is open to all options to unlock shareholder value, including considering going further in
divesting non-core assets.”
Πηγές: FierceFarma / Bloomberg /
Barron’s