Analyst: Pfizer spinoff no need for worry in Groton

A news report Tuesday that Pfizer Inc. could be split into two companies in the next few years shouldn't necessarily concern scientists at the company's laboratories in Groton, according to a health care firm analyst.

Les Funtleyder, president of the investment advisory division of New York-based Poliwogg Inc., said a report by Bloomberg news service that sparked speculation Pfizer might soon cut itself in two is largely conjecture. New York-based Pfizer still has to finalize its already announced animal-health spinoff and other issues before tackling a possible move to split its new-medicines operations from its generics portfolio, a process that would take well over a year, he said.

But Funtleyder said any spinoff that eventually occurs would likely be a good thing for Pfizer's R&D scientists. Pfizer employs about 3,500 people in the region.

"It probably wouldn't mean a change as far as employment," Funtleyder said. "It could mean more focus on R&D."

Bloomberg reported Tuesday that Geno Germano, Pfizer's president of specialty care and oncology, said in an interview that the company's four business divisions would probably be whittled down to two at some point, representing so-called "innovative business" (R&D for new products) and "value business" (generics).

"We really see the business segmenting into these two segments with pretty different capabilities, and we would want to organize in a way that we realize the most value for shareholders," Germano told Bloomberg.

Germano didn't specifically say Pfizer was preparing to spin off one of its core businesses, but analysts already had been speculating that a split might be in the cards, and Germano's comments fueled further speculation.

Pfizer's stock price finished the day at $26.62, down less than half a percent, a change that Funtleyder said was likely more related to normal stock-market fluctuations than any concern about a spinoff.

"Investors are looking forward to earnings," he said. "Pfizer has had a very good run for the last month or two."

The price is close to a five-year high.

Pfizer, under chairman Ian Read, had decided to divest its nutritions and animal-health divisions to try to focus more on core drug products and cope with the loss of marketing exclusivity for cholesterol fighter Lipitor, which at its height brought in more than $10 billion a year in sales. Pfizer also has made drastic cuts to its R&D structure, including 1,100 layoffs in the past two years at local Pfizer sites, highlighted by the closure of its former world R&D headquarters in New London.

Funtleyder noted that the breakup of Pfizer would be similar to Abbott Laboratories' Jan. 1 spinoff of its branded drug line now known under the name AbbVie Inc. He said it is unknown how Pfizer might structure any spinoff, but it's possible that shareholders could be offered shares in each company, similar to what happened when AT&T divested itself of smaller phone companies.

A spinoff would create two distinctly different types of companies, the generics side more oriented toward slow and steady growth while the branded drugs business would include higher risks with the chance of higher returns, Funtleyder said. It would be up to stockholders whether to hold or sell either of the two companies, he added.

l.howard@theday.com

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