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Pfizer split still on cards - for tax reasons

Firm continues to look for ways to reduce tax burden
Pfizer

In the wake of its failed attempt to buy Allergan, Pfizer is once again talking about splitting its business, saying it could make a decision by the end of the year.

Pfizer walked away from a $160bn merger with Ireland-based Allergan last month after the US Treasury unveiled measures to prevent so-called 'tax inversions' - which involve side-stepping high US corporation taxes by moving portions of a company to lower rate jurisdictions.

Now, it is suggesting that splitting the business - something that has been on the table for several years - could also help it reduce its tax burden which is currently standing at around 25%.

Pfizer is "continuing to look for ways other than inversions to improve our tax rate", said chief executive Ian Read on a conference call with analysts yesterday.

"The Treasury action and the government's willingness to act in this area will make us think deeply about what are the alternatives to let part of this company, if possible, have a different tax jurisdiction," he added.

Read's comments came as Pfizer reported a buoyant set of first-quarter results, with declining sales of old products more than offset by strong performances from newer products including breast cancer therapy Ibrance (palbociclib), arthritis therapy Xeljanz (tofacitinib) and Prevnar pneumonia vaccine family.

After just over a year on sale, Ibrance achieved $429m in first-quarter sales, almost entirely from the US as it is still rolling-out in international markets, while Xeljanz sales more than doubled on the same period of 2015 to reach $197m, despite Pfizer's difficulties getting the drug approved for arthritis in Europe and for psoriasis in the US.

Prevnar grew 16% to top $1.5bn in the quarter, helped by a new indication for use in adults, which added $439m as well as a $40m supply contract from the US government.

All told, first-quarter sales surged 20% year-on-year to $13bn, well ahead of analyst estimates of $12bn and boosted by Pfizer's recent Hospira acquisition. For the full year, the pharma company is predicting sales of $51bn-$53bn, a $2bn increase on prior expectations.

Article by
Phil Taylor

4th May 2016

From: Sales

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