Has the Pfizer Break-Up Begun?

| About: Pfizer Inc. (PFE)
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Several months after signaling plans to sell its Capsugel manufacturing unit, the drugmaker has made good on its intention and signed a deal to hand the division over to KKR for $2.38 billion in cash. And the proceeds will be used to hearten shareholders with additional stock buybacks above and beyond the previous $5 billion in buybacks announced.

The move comes after the drugmaker recently made a point of telling a Wall Street analyst that plans are being considered to spin off or sell all of its non-pharma units, including nutritionals, consumer health and animal health, and may even shed what it calls the Established Products division, a $10 billion operation that includes off-patent meds, the Greenstone generics unit and biosimilars (back story).

The nutritional business, in particular, has been the subject of speculation. Since the unit is forecast to grow faster than divisions, there may not be tax consequences and a spin off reduces the dividend burden. Meanwhile, responsibility for the nutritionals unit was recently transferred to Pfizer (NYSE:PFE) general counsel Amy Schulman, who previously had no such operational role at the drugmaker (read this).

The developments occur as Pfizer CEO Ian Read, who replaced Jeff Kindler four months ago, hastens the shrinking of the research and development apparatus. Two months ago, the drugmaker announced plans to close an R&D facility in the UK, which employs 2,400 jobs, and shift some operations from its Groton, Connecticut R&D facility in the US to its Cambridge, Massachusetts site, which is being expanded, as it moves to slash $1.5 billion from R&D spending (look here).

This comes on top of myriad other cuts. Over the past few years, Pfizer has cut more than 19,000 jobs to save costs and also combine operations after acquiring Wyeth. Overall, Pfizer employs about 110,600 people and the goal to eliminate up to another 5 percent of its global workforce.

In contrast to many Pfizer scientists and other stalwart employees, shareholders appear to be enthused. Since Kindler resigned in early December, Pfizer stock has climbed approximately 25 percent and is now trading at levels not seen since July 2009. As part of the Capusgel announcement, by the way, Pfizer lowered its revenue forecast range by $800 million to $65.2 billion to $67.2 billion.