TRENTON, N.J. (AP) —
Drugmaker Pfizer Inc. said Thursday it's taking the first steps to spin
off its animal health business into a separate company, a
long-anticipated move that's part of an ongoing makeover to divest
nonpharmaceutical businesses and boost returns to frustrated
shareholders.
Pfizer said it is preparing to submit a regulatory
filing for a possible initial public offering of a minority stake in the
new company, to be called Zoetis. New York-based Pfizer said it will
provide more details when it reports its second-quarter results, likely
during the first week of August.
Pfizer said the spinoff should be complete by July 2013, a deadline it had previously set.
"Our
focus continues to be taking the actions that will generate the
greatest after-tax value for our shareholders," Chairman and CEO Ian
Read said in a statement.
In mid-morning trading, Pfizer shares rose 17 cents to $22.08.
Just
six weeks ago, Pfizer said it agreed to sell its infant nutrition
business for $11.85 billion to Swiss food and drink giant Nestle SA.
That business primarily sells formula in Asia and other areas outside
the United States.
In the third quarter of 2011, Pfizer sold its
Capsugel capsule-making business to private equity firm Kohlberg Kravis
Robert & Co. for $2.38 billion in cash.
The moves are part of a
major corporate makeover begun by Read when he became CEO in December
2010, after predecessor Jeffrey Kindler was forced out by Pfizer's board
after 4 1/2 years.
Investors had long been unhappy over Pfizer's
lagging stock price, repeated flops in its research labs and lack of
enough new drugs coming on the market. It needed new drugs to offset the
long-anticipated plunge of sales when Pfizer's cash cow cholesterol
fighter Lipitor, the top-selling drug in history, got U.S. generic
competition last Nov. 30.
Under Read, Pfizer has continued to cut
costs by eliminating jobs and closing factories — much of that related
to the integration of fellow drugmaker Wyeth, which Pfizer bought in
October 2009 for $68 billion. Read has also chosen to end research in
unpromising areas, trimming research spending by about 10 percent, and
to make other changes aimed at getting more bang for the roughly $8
billion a year Pfizer spends on research.
Pfizer shares had sold
for a peak of $48 12 years ago after a huge run-up in the late 1990s,
and were still worth about $25 when Kindler took over in spring 2006.
But the stock had slipped further to about $17 a share when he was
nudged out, and many buy-and-hold investors also were angry when Pfizer
halved its prized dividend to 16 cents per share in spring 2009 to help
pay for the Wyeth deal. The dividend has since been increased and now
sits at 22 cents a share.
Pfizer also has a few new drugs approved in the last year, particularly pricey cancer treatments.
The animal health business has more than 9,000 employees and had 2011 revenue of about $4.2 billion.
The new name, Zoetis, derives from the word zoetic, which means "pertaining to life."
In
the U.S., the business sells Convenia, and antibiotic for dogs and
cats; Revolution, for protecting dogs and cats from fleas, heartworms
and other parasites, and a cancer drug for dogs called Palladia.
Around
the world, it also sells a variety of medicines, vaccines and
diagnostic tests for pets and livestock. It operates in more than 120
countries. Pfizer says it has leading market positions in North and
Latin America, Europe, Africa, the Middle East and the Asia-Pacific
region.
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Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma
Copyright 2012 The Associated Press.