Pfizer ($PFE) wasn't kidding about expanding in consumer healthcare. The company has picked up global over-the-counter rights to AstraZeneca's ($AZN) heartburn blockbuster Nexium, for $250 million up front, plus milestones and royalties. So, when the OTC version hits the U.S. market, likely in 2014, Pfizer's name will be on the package.
AstraZeneca will still sell prescription Nexium, and supply Pfizer with the OTC version. The U.K. company has already filed for OTC approval from the European Medicines Agency, but an FDA app won't be on tap till next year. Pfizer aims to get OTC Nexium on store shelves by 2014, with launches in other markets to follow.
The Nexium arrangement could be just the first. Pfizer and AstraZeneca "are exploring the potential for a strategic partnership that would include similar agreements for other AstraZeneca prescription brands," the companies said in a statement. To that end, the company granted Pfizer refusal rights to an OTC version of Rhinocort Aqua, a steroid nasal spray for allergies.
An OTC partnership like this could give pause to Pfizer analysts hoping that CEO Ian Read will extend his slim-down plan by selling off consumer healthcare. The company already sold its Capsugel business, and it's agreed to unload its baby formula business to Nestle. And today, its animal health division filed IPO documents, in a first step toward a spinoff.
Read didn't exactly promise that Pfizer will hang onto the consumer healthcare business, but he did emphasize its "strong connection to our core biopharmaceutical business and to emerging markets and pharmacy customers worldwide" And Read doesn't throw around the word "core" willy-nilly. Sounds like an endorsement to us.
Both companies revised their earnings forecast because of the deal. AstraZeneca hiked its 2012 earnings target by $0.16, with the new range at $6 to $6.30. Pfizer expects a two-cent hit to its EPS, with its new target range for adjusted earnings at $2.12 to $2.22 per share.
- read the joint release