By Hinting At Breakup, Pfizer Controls Wall Street Conversation

1/15/2013

How much does a Pfizer executive have to say in order to get Wall Street analysts talking about the odds that the company will split itself in two? About a dozen. See this Bloomberg story:

Pfizer’s business units cover oncology, primary care, specialty drugs, and so-called established products, which are medicines that have lost patent protection and are sold against generics. That’s “probably going to evolve to two, where there’s the innovative business and the value business,” Geno Germano, president of the specialty care and oncology businesses, said in an interview.

via Pfizer Drug Units’ Shuffle Triggers Breakup Concerns – Bloomberg.

As I detailed in 2011, there is a big push for Pfizer, which is already divesting its baby formula and veterinary divisions, to split its drug division in two. One division would sell medicines that have lost their patents but still generate significant sales worldwide. The other would focus on new, innovative drugs like the five that Pfizer managed to get through the Food and Drug Administration this year.

The reason analysts get excited by this idea is that it makes some sense, and fits with the current thinking about drug companies. But it also gives Pfizer an unusual amount of control over the discussions among Wall Street analysts. All it has to do is hint maybe, probably that there could be a breakup and all eyes turn away from its pipeline and base business to financial engineering.

http://www.forbes.com/sites/matthewherper/2013/01/15/by-hinting-at-breakup-pfizer-controls-wall-street-conversation/