Jones Lang LaSalle
Biotechs, Aisle 5
Thursday, June 8, 2006
By DUNSTAN PRIAL
STAFF WRITER
With a projected $15 billion infusion of cash from the sale of its consumer unit, analysts expect Pfizer Inc. to go shopping for biotechnology companies.
"Fifteen billion buys you a lot of biotech," said Jason Napodano, an analyst with Zacks Independent Research in Chicago.
The bidding war for Pfizer's consumer group, which markets such popular products as Listerine, Sudafed and Rolaids, has heated up in recent days, with offers reportedly made by GlaxoSmithKline, Johnson & Johnson and a British company, Reckitt Benckiser.
London-based GlaxoSmithKline, whose consumer line includes Aquafresh toothpaste and Tums heartburn tablets, is the current high bidder, with an offer of at least $15 billion, according to Bloomberg News.
Pfizer's chief executive, Hank McKinnell, said in a television interview Wednesday that negotiations with each of the top bidders are expected to begin in earnest later this month and that a final decision probably will be made by the end of the third quarter.
McKinnell said spinning off the unit into a stand-alone company remains an option.
In February, when Pfizer announced its intention to sell the business, McKinnell said the transaction should generate at least $10 billion after taxes.
However it occurs, the sale will leave New York-based Pfizer, the largest drug company in the world, with a pile of cash to pursue acquisitions.
An emerging trend in the industry has seen the big pharmaceutical makers snapping up small biotechnology firms in an effort to gain a foothold in the burgeoning biotech field.
In April, Pfizer purchased Rinat Neuroscience Corp., a South San Francisco, Calif., company that develops treatments for diseases that affect the central nervous system. Terms were not disclosed.
Whitehouse Station-based Merck & Co. and Novartis, whose U.S. headquarters are in East Hanover, have also been busy acquiring and partnering with biotechs.
Analysts have said the strategy is especially important for Pfizer as it seeks to replace billions in lost revenues to generic competition as one after another of its blockbuster drugs loses patent exclusivity.
Seeking to address the shifting landscape, Pfizer is attempting to streamline its operations, both through a restructuring program announced last year and through the sale of its consumer products unit.
Napodano of Zacks Independent Research said profit margins are much higher for Pfizer's pharmaceuticals, which include the cholesterol fighter Lipitor, the world's biggest-selling drug, than for its consumer products such as mouthwash.
"Pfizer has been looking for ways to cut costs and raise profitability. A sale of its consumer goods unit would allow them to cut a significant amount of costs," he said.
As for New Brunswick-based Johnson & Johnson, picking up the consumer group and its nearly $4 billion in revenues would only enhance the company's stature among investors as a broadly diverse health care conglomerate, Napodano said.
He added that GlaxoSmithKline, the second-largest drug maker in the world, is likely seeking to enhance its presence in the United States by acquiring Pfizer's consumer business.
A Pfizer spokesman did not return a call seeking comment. GlaxoSmithKline spokesman Brian Jones declined comment, as did Jeff Leebaw, a spokesman for Johnson & Johnson.
E-mail: prial@northjersey.com
Copyright © 2006 North Jersey Media Group Inc.
Copyright Infringement Notice User Agreement & Privacy Policy
Biotechs, Aisle 5
Thursday, June 8, 2006
By DUNSTAN PRIAL
STAFF WRITER
With a projected $15 billion infusion of cash from the sale of its consumer unit, analysts expect Pfizer Inc. to go shopping for biotechnology companies.
"Fifteen billion buys you a lot of biotech," said Jason Napodano, an analyst with Zacks Independent Research in Chicago.
The bidding war for Pfizer's consumer group, which markets such popular products as Listerine, Sudafed and Rolaids, has heated up in recent days, with offers reportedly made by GlaxoSmithKline, Johnson & Johnson and a British company, Reckitt Benckiser.
London-based GlaxoSmithKline, whose consumer line includes Aquafresh toothpaste and Tums heartburn tablets, is the current high bidder, with an offer of at least $15 billion, according to Bloomberg News.
Pfizer's chief executive, Hank McKinnell, said in a television interview Wednesday that negotiations with each of the top bidders are expected to begin in earnest later this month and that a final decision probably will be made by the end of the third quarter.
McKinnell said spinning off the unit into a stand-alone company remains an option.
In February, when Pfizer announced its intention to sell the business, McKinnell said the transaction should generate at least $10 billion after taxes.
However it occurs, the sale will leave New York-based Pfizer, the largest drug company in the world, with a pile of cash to pursue acquisitions.
An emerging trend in the industry has seen the big pharmaceutical makers snapping up small biotechnology firms in an effort to gain a foothold in the burgeoning biotech field.
In April, Pfizer purchased Rinat Neuroscience Corp., a South San Francisco, Calif., company that develops treatments for diseases that affect the central nervous system. Terms were not disclosed.
Whitehouse Station-based Merck & Co. and Novartis, whose U.S. headquarters are in East Hanover, have also been busy acquiring and partnering with biotechs.
Analysts have said the strategy is especially important for Pfizer as it seeks to replace billions in lost revenues to generic competition as one after another of its blockbuster drugs loses patent exclusivity.
Seeking to address the shifting landscape, Pfizer is attempting to streamline its operations, both through a restructuring program announced last year and through the sale of its consumer products unit.
Napodano of Zacks Independent Research said profit margins are much higher for Pfizer's pharmaceuticals, which include the cholesterol fighter Lipitor, the world's biggest-selling drug, than for its consumer products such as mouthwash.
"Pfizer has been looking for ways to cut costs and raise profitability. A sale of its consumer goods unit would allow them to cut a significant amount of costs," he said.
As for New Brunswick-based Johnson & Johnson, picking up the consumer group and its nearly $4 billion in revenues would only enhance the company's stature among investors as a broadly diverse health care conglomerate, Napodano said.
He added that GlaxoSmithKline, the second-largest drug maker in the world, is likely seeking to enhance its presence in the United States by acquiring Pfizer's consumer business.
A Pfizer spokesman did not return a call seeking comment. GlaxoSmithKline spokesman Brian Jones declined comment, as did Jeff Leebaw, a spokesman for Johnson & Johnson.
E-mail: prial@northjersey.com
Copyright © 2006 North Jersey Media Group Inc.
Copyright Infringement Notice User Agreement & Privacy Policy
posted by Jones Lang LaSalle NJ News Blog at 9:53 AM
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