Pfizer ditches its break up plans after two years

Billy Bambrough
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Golfer Tiger Woods uses Pfizer's ChapStick
Golfer Tiger Woods uses Pfizer's ChapStick (Source: Getty)

US drugmaker Pfizer has resisted calls for it to be split in two.

The pharma giant, which has been considering a split into two companies for more than two years, said a break up would not create any shareholder value. However, Pfizer’s low-growth generics and patent-protected branded medicines will remain separately run divisions, leaving the option to split on the table.

“With this decision, our two distinct businesses will remain separately managed units within Pfizer, which we believe is currently the best structure to continue to deliver on our commitments to patients, physicians, payers and governments, and to drive value for our shareholders,” said Ian Read, Pfizer chairman and chief executive.

“We believe that by operating two separate and autonomous units within Pfizer we are already accessing many of the potential benefits of a split.”

The decision comes after the US government changed tax laws to take away the tax benefits of Pfizer’s planned $160bn (£123bn) acquisition of Ireland-based rival Allergan.

Pfizer has been planning for the possible split since 2014 and has tracked the progress of the two separately-run internal divisions since then.

Initial interest in a split was sparked by sales growth in the company’s patent-protected medicines, while sales in the generics portfolio generally decline.

The decision could alleviate some pressure from the newly appointed GlaxoSmithKline (GSK) CEO, where some investors have been pushing for the company to hive off its consumer health division from its drug research.

Outgoing GSK boss Sir Andrew Witty has been keen to keep the company together and it’s thought new chief executive officer Emma Walmsley will also work to hold GSK together.