March 23, 2011

Pfizer evaluates possible divestitures

Pfizer Inc will be completing a review this year of whether it should divest any of its businesses to achieve value maximisation, according to Mikael Dolsten, Pfizer's president of worldwide research and development.

"We are going through a comprehensive review that we aim to complete during this year," said Dolsten.

Speaking at a Barclays Capital investor conference, Dolsten acknowledged that Pfizer Chief Executive Ian Read has said that Pfizer has an innovative core with adjacent businesses that are doing really well.

"However, we need also to understand what is the maximum value for those businesses, which of them actually have a higher value by being inside Pfizer and can benefit from the capabilities and our financial strengths, our reach in the market, and which would do better as businesses and create more value for shareholders to be outside the company," Dolsten said.

Dolsten's comments come after Sanford Bernstein analyst Tim Anderson said that Pfizer may spin off or sell its non-pharmaceutical divisions, including nutritionals and animal health, as well as the company's established products unit that focuses on off-patent medicines.

Anderson said in a research report the move could shrink the world's largest drugmaker's revenue base to between US$35 billion and US$40 billion from $67 billion.

Analysts and investors have been debating whether Read, who was named CEO in December, should break up the company to revive its languishing stock price. Critics say a series of mega-mergers created a bloated organisation.