Pfizer is considering divesting some of its businesses to maximize their value, according to remarks made by Mikael Dolsten, Pfizer’s president of worldwide research and development, at a Barclays Capital investor conference last Thursday. “We are going through a comprehensive review that we aim to complete during this year,” said Dolsten.
Pfizer CEO Ian Read has remarked that the company’s core and adjacent businesses are successful, said Dolsten at the conference. “But 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,” said Dolsten.
Dolsten’s remarks confirmed a Mar. 14, 2010, research report by Tim Anderson, an analyst with investment firm Sanford Bernstein. Pfizer might spin off or sell its nonpharmaceutical divisions, including nutritionals and animal health, as well as its established-products unit that focuses on off-patent medicines, according to the report. Divestments could reduce Pfizer’s revenue base to $35–40 billion from $67 billion, said the report, as reported in Bloomberg Businessweek.
Divesting certain businesses could boost Pfizer’s stock price, and investors and analysts are debating whether Read should pursue this strategy. A series of mergers, including the high-profile acquisition of Wyeth, have made Pfizer a bloated organization, according to critics. On Mar. 1, 2011 King Pharmaceuticals became a wholly owned Pfizer subsidiary, thus signaling the completion of the latter company’s latest acquisition.
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