Pharma major Pfizer is reportedly considering selling Pfizer Hospital, its hospital drugs unit, in response to demands from activist shareholder Starboard Value.
The move is part of Pfizer’s strategy to divest its non-core assets, reported Reuters, citing three sources with knowledge of the matter.
Pfizer formed the hospital drugs unit after the $17bn acquisition of Hospira in 2015. The business has a portfolio of sterile injectables, such as the antibiotics Sulperazon, Zithromax, and Zavicefta, an immune globulin product called Panzyga, and Medrol, a steroid.
The company has engaged Goldman Sachs to explore interest from potential buyers, including private equity firms and other pharmaceutical firms, as per the sources.
After acquiring Hospira, Pfizer merged its biosimilars business with its own unit for producing lower-cost, near copies of costly biotech drugs.
In 2016, the pharma major sold the hospital infusion system business that it had acquired through the Hospira deal to ICU Medical for $1bn.
Currently, the Pfizer Hospital unit now operates as a subsidiary focusing on antibiotics and other drugs administered as sterile infusions or injectables in hospitals and clinics.
Valued at a few billion dollars, the business generates nearly $500m in EBITDA, as per the sources. However, they cautioned that a sale is not guaranteed, and Pfizer may decide to retain the division.
Pfizer, which is carrying $61.5bn in long-term debt at the end of 2023, has been offloading non-core assets to cut down its debt.
In October, the company sold a $3.26bn stake in British consumer healthcare firm Haleon.
Pfizer, led by CEO Albert Bourla, is under pressure from Starboard Value, which has criticised the company for overspending on large acquisitions. The pharma giant has also been criticised for failing to generate profitable new drugs from those deals or its research and development (R&D) efforts.
Last year, Pfizer made one of its biggest acquisitions, purchasing cancer drugmaker Seagen for $43bn.
In its latest post-earnings call, Pfizer chief financial officer Dave Denton said that the company will continue to review non-core assets for potential sale.
Last month, the drugmaker reported a net income of $4.46bn for Q3 2024.
