Pfizer spinning off animal health business
Friday, June 8, 2012
TRENTON, N.J. (AP) — Drugmaker Pfizer Inc. said Thursday it's taking the first steps to spin off its animal health business into a separate company, a long-anticipated move that's part of an ongoing makeover to divest nonpharmaceutical businesses and boost returns to frustrated shareholders.
Pfizer said it is preparing to submit a regulatory filing for a possible initial public offering of a minority stake in the new company, to be called Zoetis. New York-based Pfizer said it will provide more details when it reports its second-quarter results, likely during the first week of August.
Pfizer said the spinoff should be complete by July 2013, a deadline it had previously set.
"Our focus continues to be taking the actions that will generate the greatest after-tax value for our shareholders," Chairman and CEO Ian Read said in a statement.
Pfizer shares rose 3 cents to close at $22.08.
Just six weeks ago, Pfizer said it agreed to sell its infant nutrition business for $11.85 billion to Swiss food and drink giant Nestle SA. That business primarily sells formula in Asia and other areas outside the United States.
In the third quarter of 2011, Pfizer sold its Capsugel capsule-making business to private equity firm Kohlberg Kravis Robert & Co. for $2.38 billion in cash.
The moves are part of a major corporate makeover begun by Read when he became CEO in December 2010, after predecessor Jeffrey Kindler was forced out by Pfizer's board after 4 1/2 years.
Investors had long been unhappy over Pfizer's lagging stock price, repeated flops in its research labs and lack of enough new drugs coming on the market. It needed new drugs to offset the long-anticipated plunge of sales when Pfizer's cash cow cholesterol fighter Lipitor, the top-selling drug in history, got U.S. generic competition last Nov. 30.
Under Read, Pfizer has continued to cut costs by eliminating jobs and closing factories — much of that related to the integration of fellow drugmaker Wyeth, which Pfizer bought in October 2009 for $68 billion. Read has also chosen to end research in unpromising areas, trimming research spending by about 10 percent, and to make other changes aimed at getting more bang for the roughly $8 billion a year Pfizer spends on research.
Pfizer shares had sold for a peak of $48 12 years ago after a huge run-up in the late 1990s, and were still worth about $25 when Kindler took over in spring 2006. But the stock had slipped further to about $17 a share when he was nudged out, and many buy-and-hold investors also were angry when Pfizer halved its prized dividend to 16 cents per share in spring 2009 to help pay for the Wyeth deal. The dividend has since been increased and now sits at 22 cents a share.
Pfizer also has a few new drugs approved in the last year, particularly pricey cancer treatments.
The animal health business has more than 9,000 employees and had 2011 revenue of about $4.2 billion.
The new name, Zoetis, derives from the word zoetic, which means "pertaining to life."
In the U.S., the business sells Convenia, and antibiotic for dogs and cats; Revolution, for protecting dogs and cats from fleas, heartworms and other parasites, and a cancer drug for dogs called Palladia.
Around the world, it also sells a variety of medicines, vaccines and diagnostic tests for pets and livestock. It operates in more than 120 countries. Pfizer says it has leading market positions in North and Latin America, Europe, Africa, the Middle East and the Asia-Pacific region.
Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma
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