Splitting itself up could depend on the next President's tax plan.
For Pfizer, breaking up is hard to do—but it might be easier depending on who wins the presidential election in November, the company said Tuesday.
Pfizer has long been musing about splitting itself up, promising to deliver a decision on the matter by the end of this year. Indeed, it has already spent $600 million to lay the groundwork for a split internally, separating its faster-growing new drugs and its “established” pharmaceuticals into different units. The company is considering whether the two parts could be more valuable as standalone entities than the whole is worth today—if there is “trapped value”—as well as the potential tax benefits of a breakup.
Tax savings have been a primary motivator in Pfizer's M&A strategy, such as with its proposed mega-merger with Ireland-based Allergan, which it scrapped in April after the U.S. Treasury issued new rules that negated the benefits. Still, Pfizer CEO Ian Read indicated recently that splitting up the company might allow for at least part of it to pursue a more favorable tax jurisdiction.
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