Shares of Pfizer Inc. rose Tuesday as a Goldman Sachs analyst suggested the world's largest drugmaker may be a few years away from separating itself into multiple companies.
Analyst Jami Rubin said Pfizer CEO Ian Read is open to the possibility of separating Pfizer into two companies over the next few years. One of the remaining companies would be a pharmaceutical company that develops new brand-name drugs and potentially delivers strong growth from new products, and the other would be a generic drug company that would have "stable value."
In a recent meeting, Read "expressed an openness to going further with separations beyond animal health and nutrition if the conditions make sense," Rubin wrote. He rates Pfizer shares at "Buy," and raised his price target to $26 per share from $25.
Pfizer spokesman Ray Kerins said Pfizer will base its decisions on creating value for its business and delivering value to shareholders.
Pfizer is the biggest drug company in the world in terms of revenue in July, it said it might sell or spin-off its animal health and nutrition businesses, and in August, it sold its medicine capsule-making business. Rubin said the company may be following the template of Abbott Laboratories Inc., a drug and medical device company that announced a split in October.
Before the end of 2012, Abbott will separate into Abbott Laboratories, a company that makes nutritional formula, generic drugs and medical devices, and AbbVie, which makes branded drugs.
Read became Pfizer's CEO in December 2010, and he has narrowed the focus of Pfizer's drug development work and cut back on research costs to help make up for declines in sales of big-name drugs like the cholesterol fighter Lipitor.
Pfizer shares rose 40 cents, or 1.8 percent, to $22.56 in afternoon trading. Earlier in the day the shares rose as high as $22.80. Pfizer stock is up 2.4 percent since March 16, the day the company reported fourth-quarter earnings.
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