Pfizer and AstraZeneca both made deals official Monday morning.
Pfizer said early Monday morning that it has entered an agreement to sell its infant nutrition business to Nestle for $11.85 billion in cash.
That segment of Pfizer had revenues of about $2.1 billion in 2011, an increase of 15 percent from 2010.
Pfizer had said in July it was exploring options for that unit and its animal products division in hopes of focusing its efforts on producing drugs. Pfizer is among the pharmaceutical companies that has trimmed its own research and development ranks in recent years, so perhaps it will mean that Pfizer looks to buy smaller companies that are ahead of the pack in producing one drug or another. But first will be buybacks of shares.
“The sale of the Nutrition business to Nestlé is consistent with Pfizer’s intention to generate the greatest value for shareholders by maximizing the value-creation potential of our businesses and prudently managing our capital allocation,” Pfizer chief executive officer Ian Read said in a statement. “We remain focused on enhancing shareholder value and, following the completion of this divestiture, we expect to allocate the after-tax proceeds to further share repurchases, or invest in other business-development opportunities, with the return on share repurchases remaining our case to beat.”
AstraZeneca, which had been under great pressure from market analysts, announced that it would pay $1.26 billion for Ardea, a San Diego based company that has a promising drug for gout.
AstraZeneca is based in the United Kingdom, but has operations in Wilmington and Newark, Del. The company's top selling drugs face generic competition, putting pressure on executives to find other revenue. The company has had several rounds of layoffs.
The gout drug is lesinurad (formerly known as RDEA594) and is now in phase III trials, which is usually the last step before an application is made to the U.S. Food and Drug Administration. The drug is supposed to be a potential treatment for the chronic management of hyperuricaemia in patients with gout.
“This attractive Phase III program is an excellent opportunity to leverage AstraZeneca’s global specialty and primary care sales and marketing capabilities,” AstraZeneca chief executive officer David Brennan said in a statement. “The Ardea team has done a great job developing lesinurad along with a promising next-generation gout programme. These compounds have real potential to benefit patients.”