Would Pfizer breakup leave a healthier core?

There's good reason why analysts have been excited by the prospect of a Pfizer break-up. They figure that the company would be worth $180 billion in pieces, about 11 percent more than it's worth now, Forbes reports. But is the prospect of ginning up value via sell-offs just another distraction from Pfizer's internal problems?

The divestment idea certainly is generating plenty of talk. And even though the "strategic review" of Pfizer assets will continue for the better part of this year, CEO Ian Read seems to be leaning toward some sell-offs. "My sense is he's already made up his mind," Goldman Sachs analyst Jami Rubin, who's been calling for a Pfizer break-up for years, told Forbes.

"[Pfizer is] not a significantly diversified company to begin with," Read told the Wall Street Journal in a recent interview. "So my focus is to ensure that the core is productive, the core is working." He cited animal health, nutritionals and consumer health as "outside" of that core business. 

Forbes quotes some potential prices for Pfizer units: animal health, $16 billion; nutritionals, $8 billion; consumer health, $6 billion. The company's established products business--which sells off-patent drugs--could fetch $40 billion; though it's not on Read's non-core list above, it's been bandied about as a possible for-sale asset. That would leave the "core" business with an estimated value of $110 billion, Forbes says.

The question: Would selling off these parts actually leave a better Pfizer core? Or would it just be a stock-price boost? "I think it's financial engineering. I think it makes the stock more valuable," Miller Tabak fund manager Les Funtleyder told the magazine. "From a strategic point of view, would it solve the problem? No."

- see the WSJ story
- get the Forbes analysis

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