Pfizer considers selling off consumer health unit

Pfizer Inc. is considering offloading its consumer-health division in a sale that could be worth as much as $17 billion after abandoning a plan to split the drug giant in two last year.

The consumer unit, with sales of $3.4 billion last year, markets well-known brands including the overthe-counter pain pill Advil, ChapStick lip balm and the dietary supplement Centrum. In a statement Tuesday, Pfizer said it could sell or spin off all or part of the business.

The move is the drugmaker’s latest attempt to streamline operations as its shares have lagged behind its peers since 2012. It follows failed attempts to orchestrate hundred-billion-dollar-plus mergers that would have allowed New York-based Pfizer to move its address overseas to secure a lower tax rate.

“There’s been some frustration about the stock performance over the past few years and we’re waiting for some changes to help drive some shareholder value,” said David Heupel, a health-care analyst at Thrivent Financial for Lutherans, an investment firm that holds Pfizer shares.

Selling or spinning off the consumer unit is not “out of the ordinary for them,” said Ashtyn Evans, an analyst for Edward Jones who rates the stock a buy. The company has trailed other drug companies because it hasn’t developed blockbusters as quickly as its top sellers have lost their patents, she said.

This isn’t the first time the U.S.’s biggest drugmaker has flirted with breaking off parts of itself. In 2013, Pfizer spun out its animal health business into Zoetis Inc. through a stock offering, months after selling its infant nutrition business to Nestle for $11.9 billion.

“The growth in their pharma business has been a little disappointing for them,” Evans said. “They invest a lot in R&D, but it’s harder to move the needle with a bigger company and just their overall growth rate hasn’t been as strong as some of their peers.”

Last year, Pfizer announced it wouldn’t go ahead with a plan to break up its core drug units into two separate companies, one focused on newer, innovative medicines and the other on established products and foreign markets.

There are several potential buyers who could value the consumer unit at around $13 billion to $17 billion, said Rosie Edwards, an analyst with Berenberg. Companies like Reckitt Benckiser Group Plc, Nestle SA, GlaxoSmithKline Plc, Johnson & Johnson and Sanofi could be interested, Edwards said.

The consumer unit is “distinct enough from our core business that there is potential for its value to be more fully realized outside the company,” Pfizer CEO Ian Read said in the statement.

Analysts say the asset could generate a lot of interest in the market. “There is a scarcity for these types of franchises. They’re very consistent businesses for the most part, they typically do get a fairly rich valuation,” Heupel said.

The world’s drug giants often go through periods of expansion and contraction, buying up companies to add to their pipeline of experimental drugs or bolster revenue, then splitting off pieces to focus their businesses or pay down debt.

Associated Press The Pfizer logo appears on a screen above its trading post on the floor of the New York Stock Exchange. Pfizer said Tuesday it may sell its consumer health care business as part of a strategic review.