Pfizer to split generic, branded drugs units

Mon Jul 29, 2013 12:07pm EDT
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By Ransdell Pierson

(Reuters) - Pfizer Inc, in what could be the prelude to spinning off of its generics drug business, said it plans to separate its commercial operations into two units mainly for patent-protected branded treatments and a third for generics.

Pfizer, the largest U.S. drugmaker, said on Monday the changes will go into effect in January in countries that do not require a consultation with labor unions.

Earlier this year, Pfizer said it would begin examining the finances of its patent-protected unit, which it calls its "innovative" business, and its generic operation, its "value" business, to decide whether to spin off the generics operation. It said the review would take three years.

Pfizer generics, which have far lower profit margins than patent-protected drugs, had global sales last year of $10.2 billion. The business represents 17 percent of total sales and overwhelmingly comes from overseas.

One "innovative" business will include drugs expected to have patent protection beyond 2015, and include treatment areas for inflammation, immunology, cardiovascular and metabolic, neuroscience and pain, rare diseases and women's and men's health. Geno Germano, currently heads Specialty Care and Oncology, will serve as president of the Innovative Products Group.

The other "innovative" business will include vaccines, cancer and consumer healthcare. Amy Schulman will be president of the Vaccines, Oncology and Consumer Healthcare unit.

"The vaccines, oncology and consumer operations that will be bundled together seem unlikely bed fellows," Citibank analyst Andrew Baum said in a research note. He speculated the components, all dependable sources of revenue, were grouped together to provide a "balanced" revenue base.

Many analysts have urged Pfizer to spin off its generics business, just like it did with the nutritional products and animal health units in recent years so it can focus on its core, more lucrative branded pharmaceuticals business.   Continued...

The entrance of Pfizer World headquaters in New York City, August 31, 2003. ECONM REUTERS/Jeff Christensen