Pfizer Inc. (PFE) is planning to maintain its core medicine producing business and divest of its nutrition and animal food divisions. Ian Read, Pfizer’s CEO, organized a study which lead to the conclusion that Pfizer would be best to concentrate on what it knows best and to have 2 divisions. One division would be generic drugs and the second would be developing new drugs. The businesses complement each other because much of the technology and research is very similar. Also new patents developed can immediately be manufactured by the generic drug division.
According to Frank D’Amelio, Pfizer’s CFO, the company is still looking into how to divest its other divisions. He said that the divestitures are likely to be next year. In addition, D’Amelio said that Pfizer would be cutting research budgets to increase bottom line. While this is a known tactic to improve profits, Eli Lilly, CEO John Lechleiter, points out that this may slow down development of new drugs in the future. That means fewer profits, but I guess that Pfizer will cross that bridge when they come to it.
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