Pfizer Reorganization Could Set the Stage for Full-Blown Spinoff

 | Jul 11, 2018 | 12:10 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


The proposed reorganization of the 169-year-old Pfizer Inc.'s  (PFE) business separating a new major unit covering more innovative drugs including off-patent brands and anti-infection drugs and injectable medicines in 2019 could presage selling off parts of the company, analysts said.

Steve Chesney, of London-based Atlantic Equities who analyzes the pharmaceutical industry said the new structure signals confidence in the ability to innovate while position possible sales of its consumer brand which handles over the counter medications and established brands business that includes off-patent oral medications like Lipitor, Norvasc and Viagra.

"I think it would be attractive for shareholders to want to own that," Chesney said. "Probably a consumer health business is going to trade at a higher multiple. It's sustainable because the drugs are no longer exclusive products as far as the active pharmaceutical ingredients."

In a prepared statement Dean Mastrojohn, a Pfizer spokesman emphasized the reorganization was not related to any immediate plans for a future split of any businesses but to position the company to grow revenue.

Pfizer failed in May to sell Pfizer Consumer Health, the business which handles its over the counter medicines. On Wednesday the company reiterated previous statements that "strategic alternatives" are being reviewed with the company making a decision in 2018.

In a July 11 analyst's note, BMO Capital Markets rated Pfizer to outperform the market, setting a target price of $42, 16 percent over its Wednesday opening price.

BMO Equity Analyst Alex Arfaei said the new structure would maintain or enhance what was seen Pfizer's having optionality to sell or spin off units.

In the company's announcement, executives said the new established brand and consumer brand divisions would, "operate relatively autonomously with dedicated manufacturing and regulatory capabilities."

-- By Martin Cassidy



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.