The spinoff of Pfizer's animal health unit has gone off with such success that it may make some wonder why CEO Ian Read didn't keep it and dump the challenging pharmaceutical business.
Shares for the IPO of what is now Zoetis ($ZTS) went for $26 apiece, above Pfizer's offering range of $22 to $25, making it the biggest IPO since Facebook. They jumped in early trading to more than $31 a share. It raised more than $2.2 billion for Pfizer ($PFE) for just a 17% share, Bloomberg reports.
But spin it off Read did, as part of his plan to put more focus on Pfizer in an era when it no longer has Lipitor, the best-selling product ever, to mint huge earnings each quarter. The loss of Lipitor was illustrated this week when Pfizer reported fourth-quarter earnings, with worldwide revenue down 7% to $15.1 billion as sales of Lipitor crashed 71% to $584 million, Reuters reports.
Read shed Pfizer's infant-nutrition business last year, selling it to Nestle for $11.9 billion. This week, he said the company will explore moving toward pure plays in its branded prescription drugs and generics, but explained how complicated that will be and the long time it would entail if it were to happen.
"I believe we will move toward separate management, and, at that point, we'll evaluate whether shareholders would prefer to have the opportunity to invest in two distinct companies," Read said during the fourth-quarter earnings call. "There's no point in speculating on this."
Until then, he can keep selling off shares of the very popular Zoetis.