Pfizer Explores Options for OTC Drug Unit

By THERESA AGOVINO

NEW YORK – Pfizer Inc. said Tuesday it is exploring various options for its nearly $4 billion over-the-counter drug unit, including selling or spinning off the business which includes Listerine mouth wash, Visine eye drops and Lubriderm skin lotion.

The move comes as Pfizer struggles to improve its sales and earnings in the wake of patent losses on several important drugs, sluggish sales of key medicines and an overall more competitive marketplace. Analysts surveyed by Thomson Financial expect only 1 percent earnings growth this year.

Pfizer said it will discuss its alternatives for the consumer business, which include retaining it, when it meets with analysts and investors on Friday to provide earnings guidance and a business overview. Last April, Pfizer told Wall Street it would have double-digit earnings growth this year but rescinded the guidance six months later, citing slowing prescription growth and a competitive marketplace.

Bert Hazlett, an analyst at Suntrust Robinson Humphrey, viewed the announcement as a positive.

“It is heartening that it (Pfizer) is considering multiple strategic option to improve its overall business,” Hazlett said.

It also makes sense for Pfizer to redeploy the money and energy it puts into the consumer business into higher growth opportunities, he said.

Sales of the consumer business, which also includes Luden’s cough drops and Bendadryl products for colds, sinus and allergies, rose 10 percent to $3.9 billion last year. The business accounts for 7.5 percent of Pfizer’s $51 billion in yearly revenues. However, over-the-counter medicines have lower margins than prescription drugs.

This is the first time in three years that Pfizer has taken a major step toward divesting itself of a noncore business. Between 2002 and 2003, Pfizer sold its Adams confectionery business, Schick-Wilkinson Sword razor blade operation and Tetra aquarium supplies, all of which were acquired when it purchased Warner-Lambert in 2000.

Pfizer isn’t alone in shedding consumer products. Last year, Bristol-Myers Squibb Co. sold its U.S. and Canadian consumer medicines business to Novartis AG for $660 million in cash. In 2002, Bristol-Myers sold its line of Clairol hair care products.

Pfizer also makes a line of prescription drugs and vaccines for animals. Sales for those products rose 13 percent to $2.2 billion last year.

Pfizer shares rose 9 cents to close at $25.18 in trading on the New York Stock Exchange, before news of the possible sale was released. The stock gained another 44 cents, or 1.8 percent, in late-session activity.