Spinoff #5: Merck (MRK) Spinning Off Its Animal, Consumer Health or Research Arms
Merck (MRK) faces an uncertain future, as do many Big Pharma companies that enjoyed a huge run-up in the days of blockbuster heart treatments … but a burning desire for new revenue as patents on those big-name drugs expire.
So there have been a lot of deals going on in pharma as a result. During the recession, there were megamergers such as the $68 billion purchase of Wyeth by Pfizer (PFE). More recently there have been smaller but substantial biotech deals, including the 2012 purchase of Human Genome Sciences by GlaxoSmithKline (GSK).
But there have also been some interesting splits to note. Take the Pfizer split with Zoetis (ZTS), its animal health unit.
Merck could follow that lead with its animal health unit.
Another example is Abbott Laboratories (ABT) splitting off AbbVie (ABBV) to differentiate its legacy drug business from its high-growth research arm that is working on new products and a bunch of other big brands. Why not separate the pantry from the prescriptions?
At any rate, Big Pharma has seen its share of deals both by companies expanding and contracting the scope of their business. Merck could be a ripe target for one of these moves.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via@JeffReevesIP. As of this writing he did not own a position in any of the stocks named here.