Today Pfizer (NYSE:PFE) filed an S-1 with the Securities & Exchange Commission to spin off its animal health division, called Zoetis. The transaction is part of a major restructuring effort to focus on the core pharma business.
Founded over 60 years ago, Zoetis develops drugs and vaccines for both livestock and pets. Some of its brands include Revolution (a treatment for fleas and heartworms) and Covenia (an antibiotic for dogs and cats).
Zoetis is actually the largest player in the industry and competes against biggies like Merck (NYSE:MRK), Eli Lilly (NYSE:LLY) and Novartis. Last year the company generated revenues of $4.2 billion and adjusted net income of $503 million. Zoetis sells its products in 120 countries and has 3,400 employees.
The medical segment of the animal health market is about $22 billion, and its growth rate is 6%, according to research firm Vetnosis. Emerging markets have been key to that growth. As the populations there continue to increase and income levels improve, demand for livestock and even pet meds has been robust. Zoetis gets about 27% of revenues from Brazil, China and India.
The animal health business certainly has some advantages compared to the traditional phamra market. R&D tends to be less expensive and more predictable because of fewer regulations and clinical studies. Oh, and animal health doesn’t rely on health insurance or government programs for purchases!
As for the Zoetis IPO, the offering will likely be completed in the first half of 2013. The lead underwriters on the deal include J.P. Morgan (NYSE:JPM), BofA Merrill Lynch (NYSE:BAC) and Morgan Stanley (NYSE:MS).
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.