Pharmaceutical giant Pfizer could be split up by the end of the year

International Business Times | Dan Cancian 

Ian Read said a decision on whether Pfizer should sell off its lower-margin unit of older products facing generic competition would be taken "no later than the end of 2016", adding the group needed to reduce its tax burden.

The US-based firm and its Irish-headquartered counterpart were set to conclude a £113m ($160m, €140m) merger only to walk away from the proposal after the US Treasury Department unveiled a crackdown on so-called "tax inversion deals", which see a company relocate its legal domicile to a lower-tax country usually while retaining its material operations in its country of origin.

The proposed merger, which would have been the largest-ever deal in the healthcare sector, would have seen New York-based Pfizer being registered in Ireland, where the tax rate is considerably lower than the US.

However, on 4 April, the US government announced tighter rules to control tax inversion deals, which scuppered the Pfizer deal with Allergan, although officials claimed the new measures were not designed to target the proposed merger.

Read said Pfizer remained open to a new merger as it sought to "pursue attractive business development and other shareholder-friendly capital allocation opportunities".

"Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies," he added.

"We remain focused on continuing to enhance the value of our innovative and established businesses."

Meanwhile, Allergan's chief executive, Brent Saunders, suggested the crackdown on tax inversion deals, which have long been an issue for the US Treasury, was specifically aimed at scuppering the proposed deal between Allergan and Pfizer.

"It really looked like they [US Treasury] did a very fine job at constructing a temporary rule to stop this deal and obviously it was successful," he said.

"While we were surprised that Treasury issued rules, we were prepared for that contingency. Allergan and Pfizer thought it was a remote possibility and are ready to spring into action on our independent strategies."