Pfizer’s efforts to find a buyer for its consumer health business have come to nothing, so it’s reorganising to make it easier to pursue other options for the unit in future.
From next year, consumer health will shift from its current position within Pfizer’s innovative health division to a new standalone unit that could be sold of spun off more easily – or even retained with a leaner, more focused structure. The move comes after both GlaxoSmithKline and Reckitt Benckiser confirmed they were not interested in making a formal offer for the business, and Pfizer has committed to making a decision on its future by the end of the year.
There are other changes afoot as well. Innovative health is rebadged as innovative medicines and will absorb biosimilar drugs and sterile injectables – currently part of Pfizer’s essential health division spanning mature and generic products and contract manufacturing.
The sterile injectables unit will be organised into a new business unit focusing on the hospital market, said the drugmaker. Meanwhile, essential health – to be called essential medicines after the changes – will operate with “substantial autonomy” after the changes, raising the possibility that Pfizer may also be looking to jettison that business, in whole or part.
That’s a path trodden by other companies such as AstraZeneca, which has relentlessly sold off mature and non-core products over the last couple of years to fund its R&D drive. Pfizer has also kicked that idea around before, but backed away after deciding it was unlikely to make enough money on the divestment. It’s already sold off animal health and nutrition divisions however since Read took over the group in 2011.
Pfizer CEO described the move as a “natural evolution” for the group as it looks to life beyond 2020 – after which it will have dealt with most of its ‘patent cliff’ – the loss of market exclusivity for older, big-selling drugs. The last of these – epilepsy therapy Lyrica (pregabalin) – will be exposed to generic competition in the US from December of this year, he said.
“As we transition to a period post-2020 where we expect a higher and more sustained revenue growth profile we see this new structure better positioning each business to achieve its growth potential,” said Read.
Some investors would love to see Pfizer strip away its lower-margin businesses and focus on innovative medicines, although some companies – notably GSK – see value in their lower but stable returns.
What direction Pfizer takes remains to be seen, but Read highlighted the “ongoing strength of our in-market products and our late-stage pipeline” as reasons for the reorganisation. Once the new changes come into effect the innovative medicines unit will account for around three-quarters of group revenues.
Pricing backdown
The new guaranteed Pfizer continued to dominate the pharma news flow this week, coming just after the company reversed July 1 price rises for some of its products after being called out on the matter by President Donald Trump.
Pfizer issued a statement in response saying it held “an extensive discussion” with the President and would defer the price increases “until the earlier of when the president’s blueprint goes into effect or the end of the year – whichever is sooner”.