Pharmaceutical Business review

Pfizer scraps plan to split into two companies

The US drugmaker said its analysis determined that splitting Pfizer Innovative Health and Pfizer Essential Health would not improve cash flow or better position the businesses competitively.

The move would also disrupt operations, increase costs and fail to offer any tax efficiencies, the company said.

Pfizer has been considering a split for several years in order to enhance shareholder returns. Even though the company’s patent-protected medicines experienced better revenue growth, its generics portfolio usually reported drop in sales.

The company said when it first evaluated the option of a split, market valuations at the time indicated that the two businesses would be worth more separately than together. However, that value gap has now closed.

Pfizer chairman and CEO Ian Read said: “We believe that by operating two separate and autonomous units within Pfizer we are already accessing many of the potential benefits of a split – sharper focus, increased accountability, and a greater sense of urgency – while also retaining the operational strength, efficiency and financial flexibility of operating as a single company as compared with operating as two, separate publicly traded companies.”

The company said the decision to not split itself would not impact its 2016 forecast, and it preserved the option to split in the future.

Pfizer's $160bn agreement to acquire Irish drugmaker Allergan collapsed in April this year after the US Treasury Department imposed strict new curbs on corporate inversions.

Last month, Pfizer agreed to acquire US biopharmaceutical firm Medivation in a transaction valued at about $14bn.


Image: Pfizer World Headquarters New York City. Photo: courtesy of Norbert Nagel, Mörfelden-Walldorf, Germany.