The pharma spinoffs have just begun, bankers figure

Want to see more divestment action in Big Pharma? Just wait. That's what investment bankers are predicting, now that Pfizer ($PFE) and AbbVie ($ABBV) have led the way.

After all, investors and shareholders responded strongly to Pfizer's animal-health spinoff and nutrition-unit sale--so much so that analysts are calling on CEO Ian Read for more. And AbbVie, the pharma unit spun off by Abbott Laboratories ($ABT) on New Year's Day, has seen its shares climb from a debut at $35 to $45 as of yesterday's close.

So, if these companies have become "shareholder friendly" enough to sell off and spin off, then other drugmakers almost have to consider similar moves. What pharma CEO wants to be seen as unfriendly to shareholders? Plus, industry leaders these days are more willing to jettison lower-performing assets to pay more attention to those most likely to grow. Consider, for example, GlaxoSmithKline's ($GSK) sale of a basket of consumer brands last year; CEO Andrew Witty said at the time that handing off those products would allow GSK's consumer health group to focus in on growing brands.

As Ercument Tokat, a partner at Centerview Partners, said at the Reuters Health Summit yesterday, "The mindset has changed with a new generation of CEOs ... investors love the fact that they are thinking creatively, thinking shareholder-friendly. ... In the past, there was a lot of revenue protection. Now the focus is more about keeping the profitable revenue, keeping the growing revenue."

As we reported last month, Witty is now looking at a possible spinoff. The company is setting up a new unit focused on established drugs, the better to hive it off later, if it so desires. Sanofi ($SNY), another Big Pharma with diverse operations, is also considering its options for its portfolio of older drugs, Reuters says.

Who's next? Other diversified drugmakers, such as Novartis ($NVS), perhaps? That remains to be seen. But Bain Capital's Chris Gordon also anticipates more divestment action. "We're in the very early innings of it ... I think you'll see a lot more to come," he said (as quoted by Reuters).

- read the Reuters news