US drugmaker adjusts strategy of pursuing deals to replenish drug pipeline
Pfizer said it would begin offloading its 32 per cent stake in consumer health business Haleon as it focuses on reducing debt linked to its $43bn acquisition of Seagen and boosting returns to shareholders.
Dave Denton, Pfizer’s chief financial officer, told the Financial Times the company would begin selling down the holding within months in a “slow and methodical” manner so it does not undermine Haleon’s market valuation.
“We love the Haleon business but it’s not strategic,” said Denton.
GSK and Pfizer combined their consumer healthcare businesses in a joint venture in 2019 that sat within GSK before it was spun off via a listing on the London Stock Exchange. The listing created the world’s biggest pureplay consumer health company with a valuation of £30.5bn.
The transaction left GSK and Pfizer holding 13.5 per cent and 32 per cent of the shares, respectively.
Shares in Haleon, the maker of Sensodyne toothpaste and Advil painkillers, have jumped almost 14 per cent since the listing, valuing Pfizer’s stake in the consumer health business at just over £10bn.
However, Haleon’s market capitalisation remains significantly below the £50bn takeover offer made by Unilever for the business in January 2022, which was rejected by GSK and Pfizer.
Haleon declined to comment on Pfizer’s plans.
Pfizer revealed its intention to dispose its Haleon stake as soon as it announced a sharp fall in first-quarter revenue due to falling sales of its Covid-19 vaccine.
Pfizer said it would shift its focus from pursuing mergers and acquisitions that would replenish its drug pipeline to boosting shareholder returns.
The US drugmaker said revenues fell 29 per cent to $18.2bn in the three months to the end of March, compared with the same period last year, as Covid vaccine sales fell to $3.06bn, down from $13.2bn over the same time period.
Pfizer’s stock has fallen by almost a quarter this year amid investor concerns about a steep drop in sales of Covid products owing to the easing of the pandemic. The decline was so sharp it knocked more than 2 percentage points off the S&P 500 in the first four months of the year, according to Bloomberg data, making it the biggest single drag on the benchmark index.
Denton said the company was adjusting its business development strategy after its $43bn acquisition in March of oncology-focused biotech Seagen to focus more on shareholder returns.
“While we will continue to invest in our business, we do expect more balance between that priority and returning value to our shareholders via increased dividends and value-enhancing share repurchases,” said Denton.
Pfizer did not repurchase any shares in the first three months of 2023, but has prior authorisation for $3.3bn in repurchases.
Since the start of 2022 Pfizer has spent $70bn of its Covid windfall on mergers and acquisitions as it prepares to lose exclusivity from several drugs this decade.
Pfizer said its acquisition of Seagen — the largest pharmaceutical deal agreed since 2019 — would contribute more than $10bn in 2030 risk-adjusted revenues, with potential significant growth beyond 2030. The deal should close late this year or early next year, Pfizer said.
Evan Seigerman, analyst at BMO Capital markets, said Pfizer management was executing its strategy with transformative business development, pipeline progress and near-term launches.
He said the earnings beat — Pfizer reporting adjusted earnings of $1.23 per share driven by strong sales of its antiviral medication Paxlovid — reflected the market’s “overly negative expectations and sentiment” about the company’s transition from the pandemic emergency.
Pfizer is in the middle of a whirlwind 18-month period during which it plans to launch 19 products to help it grow despite an expected steep decline in sales of Covid products.
The drugmaker on Tuesday reiterated its 2023 revenue and earnings guidance — a move that analysts said would help to soothe “overly negative expectations” about its prospects as the pandemic eases.
Umer Raffat, analyst at Evercore ISI, said the performance of Pfizer’s non-Covid franchise and the launch of new products would be critical to it meeting its 2023 guidance. Pfizer has forecast 7 per cent to 9 per cent revenue growth this year for its non-Covid business, which expanded by just 5 per cent in the first quarter.
Fonte: Financial Times