Pfizer Inc., the world’s largest drugmaker, plans to sell a minority stake in its animal health division in an initial stock sale by July 2013.
The unit and its more than 9,000 employees worldwide will become a stand-alone company called Zoetis, New York-based Pfizer said today in a statement. The divested business may be valued from $15 billion to $20 billion, Catherine Arnold, an analyst with Credit Suisse in New York, said in an April note.
The divestiture of the animal health operations, which sold $4.18 billion in products for pets and livestock last year, is part of a three-pronged strategy by Chief Executive Officer Ian Read to refocus the company on developing new pharmaceuticals. He said in April that the unit would probably be shed in a combined initial public offering and share swap.
“Pfizer Animal Health is a dynamic business with strong fundamentals, an expanding and loyal direct customer base and a proven management team,” Read said today in the statement. “Our focus continues to be on taking the actions that will generate the greatest after-tax value for our shareholders.”
Pfizer rose less than 1 percent to $21.94 at the close in New York and has gained 5.8 percent in the past 12 months. The company previously said that July 2013 was its target to complete the changeover.
Pfizer announced on April 23 that it would sell its infant nutrition business to Vevey, Switzerland-based Nestle SA for $11.9 billion. Read has also said he is eliminating $1 billion from costs this year.
Money from the unit divestitures is likely to be used for more share buybacks, Read has said, calling them “the case to beat” compared to acquisitions and dividend payments. Pfizer has repurchased 2.43 billion shares worth $66.1 billion since 1998, according to a report by John Boris, an analyst with Citigroup in New York.
Pfizer needs new products as it enters an era without Lipitor, the cholesterol pill that lost patent protection in 2011 after generating $9.58 billion in revenue that year. The company doesn’t have a medicine in its pipeline that will replace all of Lipitor’s sales by itself. Instead, Pfizer is trying to fill the hole with several products, including two under review by U.S. regulators for possible approval this year.
Eliquis, a blood thinner developed with Bristol-Myers Squibb Co., is scheduled to get a ruling from regulators by the end of this month. Tofacitinib, Pfizer’s anti-arthritis pill, is scheduled for a decision this summer.
The new name for the company was suggested by the words zoo and zoology, according to the company statement.
It “best captures the company’s focus on partnership with veterinarians, livestock producers and companion animal owners,” said Juan Ramón Alaix, president of the division.