Pfizer Considers Selling Hospital Drugs Unit

By Anirban Sen

NEW YORK (Reuters) – Pfizer (NYSE:PFE) is exploring the sale of its hospital drugs unit as the drugmaker faces pressure from activist investor Starboard Value to divest non-core assets, according to three anonymous sources familiar with the matter.

The unit, now called Pfizer Hospital, was formed after the company acquired Hospira for approximately $17 billion in 2015. Pfizer has engaged Goldman Sachs to assess initial buyer interest, which includes private equity firms and other pharmaceutical companies.

After the Hospira acquisition, Pfizer merged the biosimilars business with its unit that produced lower-cost alternatives to expensive biotech drugs, later selling the hospital infusion system business acquired in the takeover in 2017.

The Pfizer Hospital unit is focused primarily on antibiotics and other drugs delivered as sterile infusions or injectables in hospitals and clinics. This division could be valued at a few billion dollars and currently generates nearly $500 million in earnings before interest, taxes, depreciation, and amortization. However, it's important to note that a deal is not guaranteed, and Pfizer may decide to retain the division.

Both Pfizer and Goldman Sachs declined to comment on the matter.

With long-term debt totaling $61.5 billion at the end of 2023, New York-based Pfizer has been shedding non-core businesses and equity stakes to decrease its debt burden. In October, Pfizer divested a stake worth approximately $3.26 billion in British consumer healthcare firm Haleon.

These moves come as Pfizer, under CEO Albert Bourla, faces scrutiny from Starboard for alleged overspending on large acquisitions and a failure to generate profitable new drugs from these investments or through internal research and development initiatives. Last year, Pfizer made headlines by acquiring cancer drugmaker Seagen for $43 billion.

With Pfizer's shares down about 7% this year, they have notably underperformed compared to the S&P 500, which has risen nearly 26% in the same timeframe.

During the most recent post-earnings conference call, Pfizer CFO Dave Denton announced that the company has paid down around $4.4 billion of debt this year and would continue to evaluate non-core assets for potential divestiture.