Pfizer responded to Interface News on November 14th, stating, "We do not comment on the recent rumors and debunking emails regarding the sale of business units
Previously, according to reports citing insiders, Pfizer, the "largest pharmaceutical company in the universe," is exploring opportunities to sell its Hospital Business Unit. Currently, Pfizer has hired Goldman Sachs to collaborate in evaluating potential buyers, including private equity firms and other pharmaceutical companies, but the sale is not the final decision and Pfizer may also retain the division.
This department's business involves a range of sterile injections, including antibiotics such as Sulperazone (cefoperazone sodium, sulbactam sodium), ZaviceFTA (cefotaxime avibactam sodium, Sifutol), Zithromax (azithromycin, cilostazol), steroids Medrol (methylprednisolone, metoprolol), immunoglobulin Panzyga, etc. Its business also involves the China region.
On November 14th, there were also rumors circulating online that Pfizer China had released an internal debunking email. It said, "The recent false reports by the media on our hospital's emergency business may have raised some unnecessary doubts and concerns. We hope to take this opportunity to clarify and reiterate the strategic importance of our hospital's emergency business in China and our firm commitment... Pfizer will not comment on false media speculations, but I assure everyone that the company has not made any relevant strategic adjustments at present
Screenshot of Pfizer China's internal debunking email circulating online.
In fact, Pfizer's division originated from the acquisition of Hospira in 2015. The latter was the largest injectable pharmaceutical manufacturer in the world at that time. To this end, Pfizer invested $17 billion to acquire the company in order to strengthen its biosimilar drug pipeline. This also became Pfizer's biggest deal after the unsuccessful acquisition of AstraZeneca.
Subsequently, Pfizer merged Hospira's biosimilar products with its other departments and established a new hospital business unit for anti infective drugs and sterile injections in the business restructuring in July 2018. This department is under the innovative drug sector. Along with innovative drugs were mature drugs and consumer health businesses, which together formed Pfizer's three major segments at that time.
Until now, some products from the hospital's pharmaceutical department are still considered 'able to be used'. In 2023, the sales of Sulperazon, ZaviceFTA, and Zithromax were $757 million, $511 million, and $406 million, respectively, with year-on-year changes of -3.7%, 24%, and 22%, respectively. In the first three quarters of 2024, the sales of the three companies were $468 million, $427 million, and $357 million, respectively, with year-on-year changes of -24%, 13%, and 40%.
Among them, the Chinese market has made significant contributions to the sales of the aforementioned products. Shupu Shen has long occupied the top three positions in domestic hospital sales. At present, the decline in sales of this product may be due to the loss of labels in the eighth batch of national drug bulk procurement.
Pfizer also pointed out in its 2023 annual report that due to policies such as volume based centralized procurement of drugs in China, the prices of generic drugs have significantly decreased. Pfizer's Shupu Shen and Weifan (voriconazole) varieties were included in the scope of centralized procurement in 2023, but were not selected.
Afterwards, major varieties such as cefotaxime and avibactam sodium also met the conditions for centralized procurement. More drugs entering centralized procurement may continue to affect the revenue potential of Pfizer's pharmaceutical division, and thus become one of the factors for Pfizer to divest this part of its business.
More importantly, the former "No. 1 Pharmaceutical Factory in the Universe" lost its glory again after the COVID-19. In order to make up for the sharp decline in the demand for COVID-19 vaccines and antiviral drugs, alleviate the debt pressure, and maintain the continuous growth of future performance, Pfizer urgently needs to increase its income and reduce its expenditure.
On the one hand, Pfizer has released two cost cutting plans, including several rounds of layoffs, improving operational efficiency, improving work structure, and enhancing product portfolio, which are expected to save a total of $5.5 billion in costs. The company also sold a portion of Haleon's equity in October 2024 and stated that it will continue to evaluate non core assets that can be sold.
On the other hand, Pfizer also obtained huge amounts of cash from the COVID-19, which led to frequent acquisitions, and sold more than 70 billion dollars a year and a half in order to increase revenue.
For example, the company has successively acquired Biohaven, GBT, and Seagen, respectively strengthening the fields of neurology, rare diseases (blood diseases), and oncology. Among them, Pfizer relies on ADC (antibody conjugated drug) leader Seagen to focus on tumors and has established a new oncology division specifically for this purpose.
At the Goldman Sachs Healthcare Conference in June 2024, Pfizer Chairman and CEO Albert Bourla stated that the company will go through a period of respite in the future and will no longer continue with large-scale transactions to ensure its current business operations.
However, it remains to be seen how much performance these transactions will ultimately contribute. In the first three quarters of 2024, Seagen's four ADCs and Biohaven's migraine therapy Rimegepat contributed $2.441 billion and $870 million in revenue to Pfizer, respectively. But in September 2024, Pfizer decided to delist Oxbryta, one of the core GBT products, globally due to data showing that the drug may increase the risk of death and complications.
However, the capital behind Pfizer may not have as much patience. In October 2024, Pfizer's activist investor Starboard Value questioned the company's performance in mergers and acquisitions and research and development reporting. According to its statistics, during the period of 2023-2030, Pfizer's expected revenue return on R&D and M&A investments is only 15%, far below the industry average of 38%. Therefore, Starboard also demands that the company's board of directors hold the management accountable.
The latest performance shows that Pfizer's revenue for the first three quarters of 2024 was $45.864 billion, a year-on-year increase of 2%. Among them, the revenue of the third quarter rose by 32%, and the revenue of COVID-19 Paxlovid for oral medication exceeded expectations. Meanwhile, Pfizer has also raised its annual revenue guidance by $1.5 billion, updating it to $61 billion to $64 billion. According to Pfizer's own goal, its non COVID-19 drugs are expected to generate $84 billion in revenue by 2030.