Pfizer seeks to unload animal health division

Pfizer seeks to unload animal health division Send us feedback about this article

July 8, 2011
By: Jennifer Fiala
For The VIN News Service



The world's largest drugmaker plans to shed its animal health division.

Officials with Pfizer announced yesterday that the company is seeking "strategic alternatives" for Pfizer Animal Health as well as its nutrition division, which manufactures infant formulas and other baby foods.

“Both Animal Health and Nutrition are strong businesses with attractive customer bases and solid fundamentals, but distinct enough from our core businesses that their value may be best maximized outside the company,” says Ian Read, Pfizer's president and chief executive officer, in a press release. “In exploring these alternatives, we can determine what options will best drive their future growth opportunities and expansion, and enable shareholders to potentially realize higher value for these businesses.”

Just two years ago, Pfizer spent $68 billion to acquire Wyeth and its subsidiary, Fort Dodge Animal Health. After some assets were divested to comply with U.S. antitrust laws, Pfizer Animal Health incorporated Fort Dodge. Cavan Redmond, a former Wyeth executive, is now group president of Pfizer Animal Health.

The move to unload Pfizer Animal Health responds to pressure from shareholders to divest some business in an effort to free up cash for investors. Earlier this year, the company announced it would cut its research and development budget by as much as one-fourth in 2012.

According to its website, Pfizer Animal Health has some 5,000 employees, including 700 scientists and veterinarians, working in more than 60 countries. Forty percent of the division's global business is derived from products for companion animals, while 60 percent is derived from products for livestock. The company's portfolio includes products to prevent and treat disease, including vaccines, parasiticides and anti-infectives.

In 2010, Pfizer Animal Health brought in revenues of approximately $3.6 billion. It is one of five operating segments within Pfizer. The others are Primary Care; Specialty Care and Oncology; Established Products; and Emerging Markets and Consumer Healthcare.

It's not clear whether Pfizer Animal Health plans to issue a public statement during the American Veterinary Medical Association annual convention held July 16-19 in St. Louis. The division has always maintained a presence at the national meeting.

 

Just think what has happened to all the companies Pfizer has acquired over the years. Where are those reps now....Oh yeah, severance and then buh, bye! How many of those companies did they divest a portion of the products to other companies? Think about the history and start preparing your resumes. Oh, and when they start offering you resume workshops, but also tell you your job is safe.....the writing is on the wall. They will NOT admit you're cut until the round of phone calls happen one morning after a conference call. They want you to keep working hard, trying to squeeze every bit of profit out until the sell is finalized. How much you sell won't matter much as to whether you are retained or severed. It WILL happen. Get your finances in order. Don't make the large purchases. Prepare for the inevitable. Did I mention fine tune your resume? Oh yeah, I did...do it. Sounds like they're being generous and will drag this out for 12 to 24 months, you have time. Start networking now!

 

There's two things that will happen without a doubt:

1. No more separate bags, all territories will carry one rep...so that's about 100 reps gone

2. Distribution will carry the full line of products...the Pfizer mentality of keeping distribution out will be rid of

 

This is exactly what will happen if bought by Private Equity. They do not care about anything but the bottom line which is to make back their money and a lot more on top.

 

Why are we still hiring?

 

Pfizer Won’t Break Up Animal Unit as Lilly Shows Interest in Some Products

By Tom Randall and Bob Langreth - Jul 21, 2011 4:13 PM ET

Pfizer Won’t Break Up Animal Unit for Potential Lilly Bid Michele Tantussi/Bloomberg
A Pfizer Inc. employee passes the company's logo at its German headquarters in Berlin, Germany.

A Pfizer Inc. employee passes the company's logo at its German headquarters in Berlin, Germany. Photographer: Michele Tantussi/Bloomberg
Pfizer Inc. (PFE), the world’s biggest drugmaker, said it has no plans to break up the company’s animal health unit after Eli Lilly & Co. (LLY) expressed interest in buying some of its products.

Lilly, which had $1.39 billion in sales from animal-health products last year, is monitoring Pfizer’s plans to divest its unit and will pursue assets deemed of interest, Chief Financial Officer Derica Rice said today in a conference call. Pfizer wants a sale or spinoff of the unit and doesn’t foresee breaking it up, said Joan Campion, a company spokeswoman.

Pfizer Chief Executive Officer Ian Read said on July 7 he is divesting the company’s animal health and nutrition units to buy back shares and focus on developing new drugs. The units may fetch $22 billion, according to Seamus Fernandez, an analyst at Leerink Swann & Co. Pfizer’s animal health unit had sales last year of $3.48 billion.

“While we are evaluating a variety of options including a sale, spinoff or other transaction, we believe we will favor one overall option rather than dividing assets and business operations,” Campion said today in an e-mail.

Pfizer’s review of its options for the unit will take 12 to 24 months, Campion said. The company doesn’t plan further announcements about the unit until 2012, she said.

Pfizer shares rose 20 cents, or 1 percent, to $20.10 at 4 p.m. in New York Stock Exchange composite trading. Lilly rose $1.15, or 3 percent, to $39.32, for the biggest single-day gain since Jan. 19, 2010.

Evolving Situation
“We will watch how that situation evolves, and if there are some assets that become available that we are interested in, yes, we will pursue them,” Lilly’s Rice said in a conference call with analysts. “It is very early to speculate” what type of transaction Pfizer is seeking, he said.

Lilly isn’t likely to buy the unit outright, Fernandez said in an e-mail. In order to maintain its quarterly dividend of 49 cents a share, which Rice has said Lilly will do, the company would have to issue more stock and risk diluting earnings or use so much cash that it would hurt the company’s credit ratings, Fernandez said. The deal is also unlikely to be approved by antitrust regulators, he said.

“I simply don’t think they are interested, and a $12 billion-plus deal would be a pretty big deal,” Fernandez wrote. If another buyer emerges and faces regulatory hurdles, Lilly might be able to purchase some assets from the acquiring company, he said.

Lilly is interested in expanding its Elanco animal heath unit’s offerings in vaccines and pet products, as well as boosting its presence in Europe, Jeff Simmons, president of the division, said in a June 29 telephone interview. Elanco’s biggest product line is feed additives for cattle and poultry.

“We are going to be opportunistic in animal health,” Simmons said. “We are looking for additional assets. We are not interested in acquiring for the sake of acquiring; it has got to have a strategic element.”

To contact the reporters on this story: Tom Randall in New York at trandall6@bloomberg.net; Robert Langreth in New York at rlangreth@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

 

Elanco seems to be only animal health company with a plan.

 

With a plan? They barely have any products. Their plan is they need more products. They want to compete with the big boys but have no vaccine line or NSAID.