Pfizer plans to split into 3 units, foray into hospital business

Drugmaker Pfizer (PFE) is embarking on a major reorganization, under which it will be divided into three units. The highlight of the initiative is the separation of the Consumer Healthcare division, which the company had put on sale last year. Pfizer plans to explore other options for this division and take a final decision later this year.

The other two divisions are Innovative Medicines and Established Medicines. A hospital business division will be added to the Innovative Medicines unit, marking Pfizer’s entry into the hospital segment. Generic and off-patent drugs and those prescribed for the treatment of neurological diseases will come under the Established Medicines division.

The restructuring is expected to come into effect early next year. The announcement comes on the heels of the management’s decision Tuesday to hold price hikes for about six months after President Donald Trump criticized American drugmakers including Pfizer for raising the prices of essential medicines.

Considering its performance last year, the company estimates that post-split, the Innovative Medicines business and Consumer Healthcare business together will account for approximately three-quarters of the total revenues.

A hospital business division will be added to the Innovative Medicines unit, marking Pfizer’s entry into the hospital segment

“This new structure represents a natural evolution of these businesses, given the ongoing strength of our in-market products and our late-stage pipeline and the expected significant reduction in the impact of patent protection losses post-2020,” said Pfizer CEO Ian Read.

Recently, Pfizer and the other leading pharma companies had come under fire from Trump for allegedly putting patients in dire straits by hiking drug prices. He also urged regulators to take steps to keep a tab on drug prices on a priority basis.

Meanwhile, the companies including Pfizer, which hiked the prices of some of its drugs like Viagra earlier this month, justified their move citing the mounting costs of research and drug development.

However, most pharma stocks remained unaffected by Trump’s comments. Pfizer shares have been on an uptrend after suffering a sharp fall at the beginning of the month. The stock pared some of those gains when the market opened Wednesday and traded lower in the early hours.

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