Pfizer Reportedly Taking Bids For Hospira
By Jof Enriquez,
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Pharmaceutical giant Pfizer is reportedly accepting bids for its struggling Hospira business, but no deal is imminent.
British engineering firm Smiths Group Plc and German healthcare company Fresenius SE are among those who have placed bids for Hospira, reports Bloomberg, citing people privy to the information. In addition, private equity firm Pamplona Capital Management also made a second-round bid for Pfizer's pumps and devices business, which could be worth as much as $2 billion. Pfizer is said to be accepting final bids until the end of May, and has not decided on a particular deal.
Representatives for Smiths Group, Fresenius, Pamplona, and Pfizer have not commented regarding Bloomberg's report.
Last year, New York City-based Pfizer paid $17 billion for Hospira, a manufacturer of generic injectable drugs and biosimilars, to boost its own generic drug division, called the Global Established Pharmaceutical (GEP) business. Pfizer stated that combining with Hospira would allow it to compete in the global market for generic sterile injectables, which is expected to be worth $70 billion in 2020, and the biosimilars market, which could be worth around $20 billion.
The Hospira acquisition also netted Pfizer a substantial medical device portfolio consisting of intravenous sets and catheters, syringes, bags, vials, and infusion pumps. But the business has struggled over the years, including running afoul of the U.S. Food and Drug Administration (FDA), which issued a cybersecurity alert against Hospira’s Symbiq infusion pump systems last year. Hospira said newer pumps are less vulnerable to cyber attacks.
Replacing an aging pumps portfolio with secure, more innovative models remains a challenge, though, given the regulatory environment surrounding the drug-delivery space and market trends in 2016, according to a top executive of Hospira.
"A bigger part of therapy will move toward transdermal drug delivery, things like the patch and advances in microneedles. I don’t think you are going to see much on the infusion side. With the current focus on cybersecurity, the regulation evaluations and the new requirements that will be defined are putting delays on product development. The “smart pump” is probably a few years away," said Christopher Eustace, VP of Quality Device Operations at Hospira, in an interview with MDO recently.
Bloomberg reported in January that Pfizer was looking to sell Hospira to leave the drug-delivery market and become more of a “pure-play drugs unit” ahead of a possible split of the company into two entities. At that time, Pfizer had been preparing for a merger with Allergan.
However, Pfizer nixed the proposed $160 billion mega-merger due to new rules introduced by the U.S. Treasury, designed to curb tax inversion deals which have swept the medtech and healthcare industries. The merger would have made it likely for Pfizer to sell its portfolio of cash-generating, but slower-growth drugs.
“We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016, consistent with our original timeframe for the decision prior to the announcement of the potential Allergan transaction,” stated Pfizer CEO Ian Read. “As always, we remain committed to enhancing shareholder value.”