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Jul, 12 2018

Pfizer separates consumer health unit in business rejig

Starting 2019, Pfizer’s new units would be Innovative Medicines, Established Medicines and Consumer Healthcare.

Pfizer Inc announced plans on Wednesday to reorganize into three units, separating its consumer healthcare business that the U.S. drugmaker has been trying to sell since last year.

The company said it is still looking for options for the lower-margin, non-core consumer healthcare business that makes products ranging from painkiller Advil to lip balms and is worth about $15 billion.

“Given the lack of urgency, management is being rational about its divestiture,” BMO Capital Markets analyst Alex Arfaei said, adding the new structure will help Pfizer maintain its options for the business.

The news comes a day after Pfizer deferred drug price increases for no more than six months, following criticism from U.S. President Donald Trump.

Starting 2019, Pfizer’s new units would be Innovative Medicines, Established Medicines and Consumer Healthcare.

The company is currently split into two units - Innovative Medicines, which includes the consumer business, and Essential Health which houses legacy drugs such as Viagra.

“This design gives us a sharper focus on diverse patients in diverse markets,” Albert Bourla, chief operating officer, said.

The innovative medicines business will include biosimilars and a new hospital business unit, and together with the consumer healthcare business, will account for about three-quarters of the company’s revenue. Pfizer’s 2017 annual revenue was $52.55 billion.

The established medicines unit would now include a majority of the company’s brands such as soon-to-be off-patent neurological disease treatment Lyrica as well as some generic drugs.

The restructuring will allow the company to evaluate its businesses better and could result in selling or spinning off its off-patent drugs, Wall Street analysts said.

While the company expects the business to generate sustainable moderate revenue growth after Lyrica goes generic, Credit Suisse analyst Vamil Divan said the reorganization would allow the established medicines unit to have more autonomy.

 “We believe the potential for Pfizer to ultimately sell or spin the business likely remains on the table over time,” Divan said.

Pfizer shares were trading marginally down at $37.27 in early trading.

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