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    SAN   FR0000120578

SANOFI

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Pfizer plans animal health IPO

06/07/2012 | 05:23pm EDT

(Reuters) - Pfizer Inc plans to separate its animal health unit into a stand-alone company, a move Wall Street expected as the largest U.S. drugmaker focuses more intently on its core pharmaceuticals business.

Pfizer said on Thursday that preparations were under way for a public offering of a minority stake in the new animal health company, which would be called Zoetis.

The business, which generated revenue of about $4.2 billion last year, sells medicines, vaccines and other products for livestock and pets. It has more than 9,000 employees and markets products in more than 120 countries.

Pfizer said it would provide details of the proposed IPO in the coming months, when it reports second-quarter earnings.

New York-based Pfizer, which agreed in April to sell its baby formula business to Nestle SA for $11.85 billion, had also been shopping its animal health unit since last year. But Chief Executive Officer Ian Read has said in recent months that any separation of the animal health business would probably be in the form of an IPO, to avoid hefty taxes.

ISI Group analyst Mark Schoenebaum valued the animal health unit at about $15 billion, and estimates Pfizer could generate $3 billion in cash proceeds by spinning off 20 percent of the business through an IPO.

"Pfizer did not provide any information on what they will do with the majority stake that they will continue to own," he said in a research note.

Schoenebaum speculated Pfizer would eventually divest its possible 80 percent remaining stake by offering those shares of Zoetis to Pfizer shareholders at a slightly discounted price. By doing so, he said the drugmaker would reduce by about 8 percent the number of outstanding shares of Pfizer.

In the meantime, however, Pfizer will treat the animal health business as a continuing operation.

The Pfizer unit competes with thriving animal health operations of Merck & Co, Eli Lilly and Co and Sanofi SA, all of which are able to use knowledge from their human medicines to develop products for pets and farm animals.

Animal health operations are also attractive, compared with prescription drugs, because there are fewer concerns about patent expirations and regulatory interventions that can decimate sales of their products. Moreover, middle-class populations are growing in emerging markets such as China, with adequate disposable incomes to acquire pets.

Pfizer's animal health sales jumped 16 percent in the first quarter to $982 million, boosted by the company's recent acquisition of King Pharmaceuticals and its Alpharma animal health brands. By contrast, Pfizer's sales of prescription drugs slumped 2 percent in the quarter to $14.2 billion, hurt by the loss of U.S. patent protection on its Lipitor cholesterol fighter and ensuing competition from cheaper generics.

In the case of Merck, its animal-health sales - also from livestock and pets - rose 7 percent in the first quarter to almost $760 million, eclipsing the 2 percent growth for its prescription drugs.

The contrast was even more stark at Lilly. Sales from its Elanco animal health business soared 33 percent to $491 million in the quarter, while overall company sales fell 4 percent due largely to generic competition for its Zyprexa schizophrenia drug.

Despite Pfizer's strategy of focusing on its prescription drugs, which have high profit margins, the company has decided to hold onto its consumer products business, including Centrum vitamins and the Advil painkiller.

Shares of Pfizer were up 0.4 percent at $22.02 in early afternoon trading.

(Reporting By Ransdell Pierson and Lewis Krauskopf; Editing by Lisa Von Ahn and Tim Dobbyn)

By Ransdell Pierson

Stocks treated in this article : Eli Lilly & Co., Merck & Co., Inc., Nestle SA, Pfizer Inc., SANOFI

ę Reuters 2012
Stocks mentioned in the article
ChangeLast1st jan.
ELI LILLY AND COMPANY 0.15% 243.58 Delayed Quote.44.27%
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 0.02% 160.725 End-of-day quote.16.73%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 -0.18% 122.7 End-of-day quote.8.83%
MERCK & CO., INC. 0.79% 77.85 Delayed Quote.-4.83%
NESTLÉ S.A. 0.17% 114.52 Delayed Quote.9.84%
SANOFI -0.53% 87.12 Real-time Quote.10.70%
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Financials
Sales 2021 36 920 M 43 655 M 43 655 M
Net income 2021 5 925 M 7 005 M 7 005 M
Net Debt 2021 6 704 M 7 927 M 7 927 M
P/E ratio 2021 18,2x
Yield 2021 3,76%
Capitalization 109 B 129 B 129 B
EV / Sales 2021 3,14x
EV / Sales 2022 2,89x
Nbr of Employees 99 412
Free-Float 88,3%
Chart SANOFI
Duration : Period :
Sanofi Technical Analysis Chart | SAN | FR0000120578 | MarketScreener
Technical analysis trends SANOFI
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 26
Last Close Price 87,12 €
Average target price 102,63 €
Spread / Average Target 17,8%
EPS Revisions
Managers and Directors
Paul Hudson Chief Executive Officer & Director
Jean-Baptiste Chasseloup de Chatillon Chief Financial Officer & Executive Vice President
Serge Weinberg Chairman
John C. Reed EVP & Global Head-Research & Development
Nestle Frank Global Head-Immunology Therapeutic Research Area
Sector and Competitors
1st jan.Capi. (M$)
SANOFI10.70%129 202
JOHNSON & JOHNSON9.71%452 602
ROCHE HOLDING AG11.50%327 852
PFIZER, INC.14.37%234 040
NOVARTIS AG-0.17%221 954
ELI LILLY AND COMPANY44.27%221 084