Sell it
If Pfizer’s looking for immediate returns, it could follow in the footsteps of last year’s divestment of the company’s former infant nutrition business. A smart sale of that segment to nutrition giant Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCBB:NSRGY) grossed nearly $12 billion for the company.
That deal was a perfect match: Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCBB:NSRGY) earned a big boost in its emerging markets push, as Pfizer’s business drew around 85% of its business from developing economies. Meanwhile, Pfizer got rid of an unwanted business — and made a pretty penny for shareholders while at it. Is there such a perfect suitor for the company’s generics business?
One leading generics company that would fit right in is Mylan Inc. (NASDAQ:MYL). It’s questionable whether Mylan Inc. (NASDAQ:MYL) could afford Pfizer’s generics unit, a business that alone brought in sales equal to half of Mylan Inc. (NASDAQ:MYL)’s 2012 revenue. Still, Mylan has been growing well in recent years, and the company has had a number of relationships with Pfizer in the past, including a strategic collaboration last year to market generic drugs in Japan.
Mylan also launched its generic version of Pfizer’s Lipitor last year. Pfizer still sells Lipitor under its established products division, and a sale would add obvious synergies to Mylan’s cholesterol-fighting sales.
Fueling up for growth
Right now, it looks more likely that Pfizer Inc. (NYSE:PFE) will take action to divest this business, rather than keep around a slow-growth, if steady, segment. In the wake of its infant nutrition business sale and spin-off of Zoetis, Pfizer’s going all-in on a branded-pharmaceutical, high-growth future. Whatever this company decides on, it’s no time to make a hasty buy or sell decision on this company. Pfizer may be in the midst of reshaping its future, but this stock’s still among the best in big pharma — with or without its generics business.
That’s because Pfizer has been one of the best blue-chip stocks on the markets this year. Between a strong pipeline of drugs in development and a number of high-sales products already on the market, this is one company looking at a bright future. Pfizer is a shining example of the power of how big picture-and long-term investing is the best way to maximize your chance at true financial freedom.
The article 3 Potential Solutions for Pfizer’s Generic Drug Business originally appeared on Fool.com and is written by Dan Carroll.
Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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