Pfizer Mulls Options for Consumer Unit

Pfizer (PFE) said Tuesday it plans to explore strategic alternatives for its consumer health business, the segment whose over-the-counter products range from Listerine mouthwash to Rogaine hair-growth treatment to Dramamine motion-sickness drug.

"Strategic alternatives" is usually a Wall Street code word for divestiture. Pfizer said in a brief press release that the options could include keeping the consumer products unit, spinning it off or selling it.

"The objective of the review is to unlock the value of the business for Pfizer shareholders at a time when market valuations are attractive for large, high-quality consumer businesses," the company said about 90 minutes after the markets had closed. In regular trading, the stock rose 9 cents to $25.18. After hours, the stock gained 42 cents.

The company may provide more information Friday, when it holds its annual meeting with analysts and unveils its financial guidance for 2006 and, perhaps, 2007.

Pfizer's consumer health care products accounted for $3.88 billion in sales last year, or 7.5% of corporate revenue. Consumer products' revenue rose 10% from 2004. Pfizer doesn't break out profit margins at its divisions, but patent-protected prescription drugs usually command higher margins than over-the-counter products that must slug it out with many competitors.

Many Big Pharma companies have consumer products divisions that provide a steady stream of revenue and, often, important name recognition such as Johnson & Johnson's (JNJ) Band-Aids.

But some have decided to refocus their efforts on prescription products and narrow their R&D and marketing activities. Bristol-Myers Squibb (BMY) sold its U.S. and Canadian consumer medicines businesses to Novartis (NVS) last August.

Novartis paid $660 million for the rights to such products as Excedrin, Bufferin and No-Doz. The deal included rights to the U.S. over-the-counter brands in Latin America, Europe, Middle East and Africa. However, Bristol-Myers Squibb retained other consumer health care businesses in Japan, China, Latin America, Europe, the Middle East and Africa.

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