Exclusive-Pfizer explores sale of hospital drugs unit, sources say
11:31 am Tuesday, November 12th, 2024
By Anirban Sen
NEW YORK (Reuters) – Pfizer is exploring the sale of its hospital drugs unit, as the drugmaker, which has been under pressure from activist investor Starboard Value, looks to divest non-core assets, according to three people familiar with the matter.
The unit, now called Pfizer Hospital, was formed after Pfizer bought Hospira for about $17 billion in 2015. The pharma giant has hired Goldman Sachs to gauge initial interest from potential buyers, which include private equity firms and other pharmaceutical companies, the sources said, requesting anonymity as the discussions are confidential.
After its takeover of Hospira, Pfizer combined the biosimilars business with its own unit that manufactured lower-cost near copies of expensive biotech drugs. In 2017, Pfizer sold the hospital infusion system business that it had acquired through the takeover.
The Pfizer Hospital unit is now a subsidiary focused primarily on antibiotics and other drugs delivered as sterile infusions or injectibles in hospitals and clinics.
The business, which could be worth a few billion dollars, currently generates nearly $500 million of earnings before interest, taxes, depreciation and amortization, the sources said, cautioning that a deal is not guaranteed and Pfizer could choose to keep the division.
Pfizer and Goldman declined to comment.
New York-based Pfizer, which held long-term debt of $61.5 billion at the end of 2023, has been shedding non-core businesses and ownership stakes in companies to reduce its debt pile. In October, Pfizer sold a stake worth about $3.26 billion in British consumer healthcare group Haleon.
The moves come at a time when Pfizer, led by Chief Executive Albert Bourla, is facing pressure from Starboard, which has criticized management for overspending on big acquisitions and failing to produce profitable new drugs from those deals or from its internal research and development.
Last year, it acquired cancer drugmaker Seagen for $43 billion in what was one of the company’s biggest ever deals.
Pfizer’s shares are down about 7% this year, underperforming the S&P 500, which has risen nearly 26% during the same period.
On its most recent post-earnings conference call, Pfizer CFO Dave Denton said the company has paid down about $4.4 billion of debt this year and would continue to evaluate non-core assets that could be offloaded.
(Reporting by Anirban Sen in New York; additional reporting by Michael Erman; Editing by Caroline Humer and Nick Zieminski)
