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Pfizer Will Consider Split of Drug Units, CEO Read Says

A man walks past Pfizer Inc. headquarters in New York. Photographer: Peter Foley/Bloomberg
A man walks past Pfizer Inc. headquarters in New York. Photographer: Peter Foley/Bloomberg

Pfizer Inc., the world’s largest drugmaker, may consider dividing its branded medicines and generic products units into separate businesses, Chief Executive Officer Ian Read said.

Any split would be a long-term proposition first requiring changes to parts of Pfizer’s existing operations, Read said yesterday on a conference call with analysts. “We will look at it,” he said when asked about the possibility of a bigger breakup of the New York-based company.

Read’s comments echoed those of Geno Germano, president of the company’s specialty care and oncology business, who told Bloomberg News Jan. 15 that Pfizer may reorganize its drug operations into two units. Those comments led analysts to suggest that kind of business shuffle may be a step toward splitting Pfizer into separate companies.

“We will move toward separate management, and at that point we’ll evaluate whether shareholders would prefer to have the opportunity to invest in two separate companies or not,” Read said. “There’s not really a point in speculating on this.”

Pfizer is seeking as much as $2.2 billion from its animal health unit, called Zoetis Inc., in an initial public offering. Read’s strategy of divesting non-drug units, share buybacks and new medicines has helped boost Pfizer shares 29 percent in the past 12 months through yesterday.

Current Structure

Pfizer fell less than 1 percent to $27.51 at the close in New York.

Read said Pfizer’s operations in developed markets like the U.S. and Europe already are structured into separate units for new, brand-name drugs and generics. The company may move toward a similar business structure in emerging markets, which in most places base operations around the country or region instead of by types of drugs.

“It is still possible that Pfizer will go the full distance and eventually split up the drugs side of the business,” Tim Anderson, an analyst with Sanford C. Bernstein & Co., said today. “Pfizer has begun to raise this possibility consistently in its meetings with investors, and the question is whether it could really happen or not.”

Pfizer’s new drugs business will have about $36 billion in sales in 2013, and its generic medicines line $17 billion, Jami Rubin, an analyst at Goldman Sachs Group Inc. who has led speculation about a breakup, said earlier this month.

Pfizer plans to sell at least 86.1 million Zoetis shares for $22 to $25 each, the midpoint of which would value the company at $11.8 billion. The IPO is scheduled to price tomorrow, according to data compiled by Bloomberg.

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