Pfizer (NYSE:PFE) is grappling with claims that it misled investors who purchased the company shares from 2000 to 2005, regarding the prospects of its two pain relief drugs Celebrex and Bextra. The claims state that the company hid the fact that the drugs may have adverse cardiovascular effects, and, as a result, investors filed lawsuits against the company in 2004. Pfizer recently failed to block the class-action status in suits regarding the prospects of two chronic pain-relief drugs, Celebrex and Bextra. The company is still vigorously disputing the merits of the litigation.
Separately, Pfizer is also planning to spin off its animal health business. Previously, it had plans of selling off the entire unit but is now considering to spin off the business segment. Pfizer is one of the largest company in the healthcare industry having operations in only pharmaceuticals. Its key competitors include Merck (NYSE:MRK), Johnson & Johnson (NYSE:JNJ) and Abbott Labs (NYSE:ABT).
Celebrex Lawsuit and Implication
Celebrex is the only drug that Pfizer has in its Musculoskeletal Drugs segment and contributes nearly 10% to the company value. Though this lawsuit is unlikely to impact the segment and the company’s market share in the Musculoskeletal market, the company could face hefty liabilities in the event of a settlement.
Animal Health Spin-Off
Pfizer is shrinking its portfolio by divesting non-core businesses such as animal health and infant nutrition. The company had earlier considered to sell the segment entirely but ruled out the option as that would have resulted in a hefty tax bill.
Animal care products are part of Pfizer’s Diversified Legacy Drugs & Alliances segment which accounts for nearly 32% of the company value. If the event the spin-off happens, the company would split into two entities, and the shareholders would most likely be presented with the option to choose between the shares of either company or a combination of both.
We maintain a Trefis price estimate of $25.11 for Pfizer, nearly 13% above the current market price.