Pfizer considers divesting hospital drugs unit amid investor pressure and debt concerns

Pfizer is reportedly considering selling its hospital drugs unit in response to pressure from activist investors.

Potential Divestiture

The unit was established after Pfizer's acquisition of Hospira in 2015 and includes various sterile injectables and critical products. The potential divestiture reflects the challenges Pfizer faces in managing its portfolio and addressing investor concerns.

The hospital drugs unit generates around $500 million in annual EBITDA and could be valued at several billion dollars in a potential sale. However, Pfizer has not yet made a final decision and may choose to retain the unit.

Activist Investor Criticism

The exploration of a sale comes as activist investor Starboard Value criticizes Pfizer's management for its performance in mergers and acquisitions and research and development.

Starboard is concerned about Pfizer's high level of debt and its impact on future acquisitions and growth prospects.

Operational Challenges

Pfizer's injectables business has faced operational challenges in 2023, including supply disruptions due to a tornado damaging its manufacturing facility.

Financial Flexibility and Investor Confidence

As Pfizer considers the future of its hospital drugs unit, it must balance operational efficiency with shareholder expectations.

The potential sale could provide Pfizer with financial flexibility to address its debt levels and invest in areas of growth.

However, the company's ongoing dialogue with investors like Starboard will shape its path forward as it aims to improve financial performance and restore investor confidence.

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