Pfizer mulls sale of US$15 billion consumer health unit

Pharmaceutical giant Pfizer said on Tuesday (10 October 2017), it is mulling the sale of its consumer health unit. This move is part of its continuing efforts to "allocate resources and capital to maximise value for its shareholders," Pfizer chairman and chief executive officer Ian Read, said.

A range of options will be considered, including a full or partial separation of the consumer healthcare business from Pfizer through a spin-off, sale or other transaction, and Pfizer may ultimately determine to retain the business.

Industry experts are expecting the deal to worth some US$15 billion, with Swiss food giant Nestle identified as a potential buyer, according to Reuters. Reckitt Benckiser, Procter & Gamble, GlaxoSmithKline, Johnson & Johnson and Abbott are some of the other established consumer health companies that could be interested in Pfizer's assets.

The report cited Nestle is exploring the boundaries between food and healthcare, with its new CEO Mark Schneider telling investors last month it would keep identifying new opportunities, and that 10% of group sales could be derived for "portfolio adjustment".

It also added that a Pfizer exit from the consumer health business would be one of its biggest corporate moves since it abandoned a US$160 billion deal to buy Allergan in 2016. Pfizer also tried and failed to acquire AstraZeneca in 2014.

In a statement, Pfizer said its consumer healthcare division is one of the largest over-the-counter (OTC) health care products businesses in the world. In 2016, it generated a revenue of approximately US$3.4 billion, operating in more than 90 countries globally. Consumer healthcare markets two of the ten top selling consumer healthcare brands globally - Centrum and Advil. In addition, the business has 10 brands that each exceeded US$100 million in 2016 sales, and several local brands that are top-ranked in their respective markets.

"Although there is a strong connection between consumer healthcare and elements of our core biopharmaceutical businesses, it is also distinct enough from our core business that there is potential for its value to be more fully realised outside the company. By exploring strategic options, we can evaluate how best to fuel the future success and expansion of consumer healthcare, while simultaneously unlocking potential value for our shareholders,” Read added.

Furthermore, Albert Bourla, group president, Pfizer Innovative Health, added that consumers nowadays are taking more ownership of their health and wellness through OTC products, preventative treatments and alternative health paths.

Whether or not to sell the unit, Read was reportedly saying in early August that it will see how US tax changes are going to take place before making that final decision. The tax reform includes a change of how overseas profits would be taxed and a reduction of corporate rate from 35% to 20%. A final decision from is Pfizer expected in 2018.

"Pfizer expects that any decision regarding strategic alternatives for Pfizer consumer healthcare would be made during 2018. The company does not plan to make any further statements about the strategic review process until a decision has been reached or upon the completion of the strategic review," the company's spokesperson said.

The news comes as rival Germany's Merck KGaA is also looking to divest its non-prescription products estimated to worth about US$4.5 billion.