Pfizer 2011 Annual Report Download - page 10

Financial Review
Pfizer Inc. and Subsidiary Companies
Our Business Development Initiatives
We are committed to capitalizing on growth opportunities by advancing our own pipeline and maximizing the value of our in-line
products, as well as through various forms of business development, which can include alliances, licenses, joint ventures,
dispositions and acquisitions. We view our business-development activity as an enabler of our strategies, and we seek to generate
profitable revenue growth and enhance shareholder value by pursuing a disciplined, strategic and financial approach to evaluating
business development opportunities. We are especially interested in opportunities in our five high-priority therapeutic areas—
immunology and inflammation; oncology; cardiovascular, metabolic and endocrine diseases; neuroscience and pain; and vaccines.
The most significant recent transactions are described below.
•In early 2011, we announced that we were conducting a strategic review of all of our businesses and assets. On July 7, 2011, we
announced our decisions to explore strategic alternatives for our Animal Health and Nutrition businesses that may include, among other
things, a full or partial separation of each of these businesses through a spin-off, sale, or other transaction. We believe these potential
actions may create greater shareholder value, enable us to become a more focused organization and optimize capital allocation. Given
the separate and distinct nature of Animal Health and Nutrition, we may pursue a different strategic alternative for each of these
businesses. Although the timeline for each evaluation may differ, we expect to announce our strategic decision for each of these
businesses in 2012 and to complete any separation of these businesses between July 2012 and July 2013.
We will continue to assess our businesses and assets as part of our regular, ongoing portfolio review process and also continue
to consider business development activities for our businesses.
•On February 26, 2012, we completed our acquisition of Alacer Corp., a privately owned company that manufactures, markets and
distributes vitamin supplements, including Emergen-C, primarily in the U.S.
•On December 1, 2011, we completed our acquisition of the consumer healthcare business of Ferrosan Holding A/S, a Danish company
engaged in the sale of science-based consumer healthcare products, including dietary supplements and lifestyle products, primarily in
the Nordic region and the emerging markets of Russia and Central and Eastern Europe. Our acquisition of Ferrosan’s consumer
healthcare business strengthens our presence in dietary supplements with a new set of brands and pipeline products. Also, we believe
that the acquisition allows us to expand the marketing of Ferrosan’s brands through Pfizer’s global footprint and provide greater
distribution and scale for certain Pfizer brands, such as Centrum and Caltrate, in Ferrosan’s key markets.
•On November 30, 2011, we completed our acquisition of Excaliard Pharmaceuticals, Inc. (Excaliard), a privately owned
biopharmaceutical company focused on developing novel drugs for the treatment of skin fibrosis, more commonly referred to as skin
scarring. Excaliard‘s lead compound, EXC-001, is an antisense oligonucleotide designed to interrupt the process of fibrosis by inhibiting
expression of connective tissue growth factor (CTGF) and has produced positive clinical results in reducing scar severity in certain
Phase 2 trials. For additional information, see Notes to Consolidated Financial Statements—Note 2C. Acquisitions, Divestitures,
Collaborative Arrangements and Equity-Method Investments: Other Acquisitions.
•In October 2011, we entered into an agreement with GlycoMimetics, Inc. for their investigational compound GMI-1070. GMI-1070 is a
pan-selectin antagonist currently in Phase 2 development for the treatment of vaso-occlusive crisis associated with sickle cell disease.
GMI-1070 has received Orphan Drug and Fast Track status from the FDA. Under the terms of the agreement, Pfizer will receive an
exclusive worldwide license to GMI-1070 for vaso-occlusive crisis associated with sickle cell disease and for other diseases for which
the drug candidate may be developed. GlycoMimetics will remain responsible for completion of the ongoing Phase 2 trial under Pfizer’s
oversight, and Pfizer will then assume all further development and commercialization responsibilities. GlycoMimetics would be entitled
to payments up to approximately $340 million, including an upfront payment as well as development, regulatory and commercial
milestones. GlycoMimetics is also eligible for royalties on any sales.
•On September 20, 2011, we completed our cash tender offer for the outstanding shares of Icagen, Inc. (Icagen), resulting in an
approximately 70% ownership of the outstanding shares of Icagen, a biopharmaceutical company focused on discovery, development
and commercialization of novel orally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, we
acquired all of the remaining shares of Icagen. For additional information, see Notes to Consolidated Financial Statements—Note 2C.
Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Other Acquisitions.
•On August 1, 2011, we sold our Capsugel business for approximately $2.4 billion in cash. For additional information, see Notes to
Consolidated Financial Statements—Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Divestitures.
•On January 31, 2011 (the acquisition date), we completed a tender offer for the outstanding shares of common stock of King at a
purchase price of $14.25 per share in cash and acquired approximately 92.5% of the outstanding shares. On February 28, 2011, we
acquired all of the remaining shares of King for $14.25 per share in cash. As a result, the total fair value of consideration transferred for
King was approximately $3.6 billion in cash ($3.2 billion, net of cash acquired). Our acquisition of King complements our current
portfolio of pain treatments in our Primary Care business unit and provides potential growth opportunities in our Established Products
and Animal Health business units. For additional information, see Notes to Consolidated Financial Statements—Note 2B. Acquisitions,
Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisition of King Pharmaceuticals, Inc.
King’s principal businesses consist of a prescription pharmaceutical business focused on delivering new formulations of pain
treatments designed to discourage common methods of misuse and abuse; the Meridian auto-injector business for emergency
drug delivery, which develops and manufactures the EpiPen; an established products portfolio; and an animal health business
that offers a variety of feed-additive products for a wide range of species.
2011 Financial Report 9