Pfizer Will Sell Consumer Unit To J&J

Pfizer has agreed to sell its consumer health care business, a marketer of personal care products and over-the-counter (OTC) drugs, to Johnson & Johnson for $16.6 billion in cash.

The consumer business had $3.9 billion in sales last year of well-known products such as Listerine, Visine, Sudafed, Benadryl, and Zantac. J&J is already a big player in the OTC products business, selling Band-Aid, Tylenol, Neutrogena, and other consumer products.

Pfizer put the business up for sale in February, saying it wanted to "unlock the value of the business for Pfizer shareholders at a time when market valuations are attractive for large, high-quality consumer businesses."

The company, the world's largest prescription drug maker, has been revamping its operations since early 2005, when patent expirations started to take a toll on prescription drug sales. Pfizer's core drugs business saw its sales drop 4% last year to $44.3 billion, while the OTC business enjoyed a 10% sales gain.

CEO Hank A. McKinnell says the proceeds from the sale will allow Pfizer to focus on advancing its pipeline of new drugs and to continue buying products and technology that support its core pharmaceuticals business. The company is also increasing the amount of stock it will purchase in a buyback plan announced in June 2005.

In contrast with Pfizer, J&J calls itself the world's most broadly based manufacturer of health care products and actively embraces a strategy of balancing prescription drugs against OTC products and diagnostics. It, too, has struggled in the prescription drug business, sales of which rose less than 1% last year to $22.3 billion, while consumer product sales jumped 9% to $9.1 billion.