Pfizer, which put Big Pharma divestments in vogue back in 2012, is at it again.
The company said on Tuesday it's weighing up its consumer health business, with a “range of options” on the table, including a spinoff, a sale, and no transaction at all.
“Although there is a strong connection between consumer healthcare and elements of our core biopharmaceutical businesses, it is also distinct enough from our core business that there is potential for its value to be more fully realized outside the company,” CEO Ian Read said in the company's Tuesday morning statement.
Centerview Partners, Guggenheim Securities and Morgan Stanley & Co. are all advising the pharma giant as it navigates a strategic review, and Pfizer expects to come to a decision on the unit—which generated about $3.4 billion in 2016 sales—sometime next year.
For years, analysts have been expecting Pfizer to ship off the business, whose lineup includes big-name products, such as the dietary supplement Centrum, pain reliever Advil and personal care brands ChapStick and Anbesol. Exane BNP Paribas analysts wrote in late 2015 that a hive-off was “inevitable,” and just last week, Credit Suisse’s Vamil Divan, M.D., wrote to clients that “it is becoming clearer to us that Pfizer does not see that as part of their long-term innovative core.”
And Pfizer, of course, hasn’t been one to shy away from divestment. After selling off its baby food unit to Nestlé in 2012 and spinning off its animal health unit, which became Zoetis, in 2013, the company went as far as to ponder a large-scale split, though it ultimately decided to stay intact.
The bigger question is which consumer health player might want the company’s OTC assets. While consumer health was all the rage a few years back—several companies, including Bayer, GlaxoSmithKline and Sanofi aggressively bulked up in the space—things have been quieter lately. Bayer, which snapped up Merck’s OTC unit in 2014 for $14.2 billion, has stopped pushing the idea that it plans to become No. 1 in the field, and it used its latest M&A action to scale considerably in agrochemicals.
And while investors have clamored for GlaxoSmithKline to set its industry-leading Novartis joint venture off on its own, a move that could be preceded by a beef-up in the field, former CEO Andrew Witty said multiple times before turning over the reins that selling or spinning off the unit wouldn’t happen anytime soon.
Meanwhile, Pfizer isn’t the only company potentially interested in finding an OTC buyer. Last month, Merck KGaA said it was going over options for its own consumer health unit, including a full or partial sale and strategic partnerships.
“We expect increasing internal constraints to fund the business to reach the required scale,” Belén Garijo, M.D., the company’s healthcare CEO, said in a statement at the time, adding that “any possible proceeds from a potential transaction would be used to deliver on the company’s overall financial targets.”