(Bloomberg) -- Sales fell for a third straight quarter at the consumer-products business that Pfizer Inc. (NYSE:PFE) may offload, a slump that could pressure the price that the drug giant could get for the division.
The drugmaker plans to decide next year what to do with the consumer business, which sells brands including Advil, ChapStick, Centrum. The decision could impact a bigger, later deal that investors have been speculating about since Pfizer’s failed attempts to buy Allergan (NYSE:AGN) Plc and AstraZeneca PLC (LON:AZN).
While third-quarter adjusted earnings of 67 cents beat the 65 cents average of analysts’ estimates, Pfizer’s quarterly results have been overshadowed by speculation about its larger strategic plans.
“We see nothing remarkable about the quarter either way and believe the market will be most focused on management M&A commentary,” said Jeffrey Holford, an analyst with Jefferies. He has a hold rating on the shares.
At the consumer unit, third-quarter sales dropped to $829 million from $846 million in the previous three months.
Drugs Performance
Its pharmaceutical business -- which makes up more than 90 percent of the company’s sales -- is doing better. Sales from its innovative health segment, which includes the company’s newest drugs, rose 11 percent from a year prior. The New York-based drugmaker raised its 2017 adjusted earnings forecast to $2.58 to $2.62 a share.
Holford mentioned Bristol-Myers Squibb Co. as the target on investors’ minds. Bristol-Myers has been at the center of takeover speculation as it awaits data from a highly-anticipated lung cancer trial, and analysts have mentioned Pfizer as a potential suitor. Pfizer Chief Executive Officer Ian Read has said the drugmaker needs clarity about U.S. tax reform in order to figure out which potential targets are worth buying.
Pfizer shares were up 0.3 percent to $35.25 at 8:11 a.m. in New York.
The company’s biggest challenge may be its own size, and finding ways to replace past blockbusters that are losing patent protection, like the erectile dysfunction drug Viagra. Pfizer has made a number of large deals, such as the $14 billion purchase of Medivation in 2016, to add new assets, though none as large as the failed attempts for AstraZeneca or Allergan.
There are several potential buyers who could value the consumer unit at around $13 billion to $17 billion, according to Rosie Edwards, an analyst with Berenberg. Companies like Reckitt Benckiser Group Plc (LON:RB), Nestle SA (SIX:NESN), GlaxoSmithKline Plc, Johnson & Johnson (NYSE:JNJ) and Sanofi (PA:SASY) have been mentioned by analysts as possible suitors.
Pfizer plans to start the auction for the sale of its consumer business in November, Reuters reported last week. GlaxoSmithKline CEO Emma Walmsley told reporters last week that she plans to take a look at the consumer business. Reckitt Benckiser has also expressed interest, according to Reuters.
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