What Pfizer Could Look Like If it Breaks Up

What Pfizer Could Look Like If it Breaks Up June 22, 2016
By Alex Keown, BioSpace.com Breaking News Staff

NEW YORK – Although Pfizer continues to gobble up companies in the wake of its failed merger with Allergan , the company continues to discuss the possibility of breaking itself up into smaller entities.

The idea of splitting Pfizer has been discussed for a number of years, but it’s an argument that is likely to heat up again later this year. Pfizer announced in 2012 it would shed units that were non-essential to its stated goal of focusing on the development of new medications. Now the company is considering spinning its Global Established Products business, also called Pfizer Essential Health, into a separate business, Bidnessetc reported. But, that’s subject to change as the company looks at various ways to divide itself.

In its report, Bidnessetc laid out what Pfizer could potentially look like if the company were to break up. If the company were to split, Pfizer could be comprised of three units—Global Innovation Products (GIP) business, and Vaccines Oncology and Consumer (VOC) business.

Last year, Ian Read, chief executive officer of Pfizer, said a decision would likely be made at the end of 2016. He reiterated that earlier this year after the Allergan deal fell through.

“…on the breakup, we have not changed our views on wanting to have the optionality of the breakup. We continue to spend considerable amounts of money preparing and putting ourselves in a place to trigger that optionality if we take that decision,” Read said during a second quarter earnings call in August 2015.

At the time, Pfizer had already spent $300 million on the breakup, although Frank A. D’Amelio, Pfizer’s chief financial officer, said the cost would run into the “low billions of dollars.”

In June, Chris Schott, an analyst at J.P. Morgan told BioSpace that three years of audited financial statements (2014-2016) are required before any part of Pfizer could be spun off.

“…we also see 2017 as an attractive time for action as investors see Pfizer’s innovative pipeline clearly contributing to growth and the established business having transitioned to a more stable profile,” he said.

It may be a good time for Pfizer to pull the trigger, as the company has seen a decline in revenue and could seek to generate new revenues by focusing on the burgeoning oncology markets, Bidnessetc said. Additionally, Jeffries analyst Jeffrey Holford said a split would be beneficial as it would provide greater access to research and development capital and allow the company a “freer mandate to aggressively challenge IP related to biosimilars.”

Although Pfizer has been exploring a possible breakup, the company has still aggressively pursued other companies in M&A practices. Pfizer recently acquired Palo Alto, California-based Anacor Pharmaceuticals for $5.2 billion. As a result of the acquisition, Pfizer gained Anacor’s lead project, crisaborole, a non-steroidal topical PDE4 inhibitor to treat mid-to-moderate atopic dermatitis, more commonly known as eczema. In May, Pfizer struck a deal with Cambridge, Massachusetts-based WAVE Life Sciences to develop up to five programs from discovery to clinical candidate selection.

Another company being eyed for acquisition is California-based Acadia, following the approval of its drug, Nuplazid (pimavansrin), for the treatment of Parkinson’s psychosis. Pfizer has been one of the companies rumored to take an interest. Pfizer has its own Parkinson’s disease drug in Phase II development and Nuplazid could provide a solid support for that drug.

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