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Did Pfizer's No-Split Decision Cost Investors a Lot of Money?

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But this isn't the best comparison. I'd instead look at a similar choice faced by Abbott Labs (NYSE: ABT) . Back in 2011, Abbott announced plans to separate into two companies -- one focused on branded prescription drugs and the other focused on products including medical devices and generic drugs. Abbott CEO Miles White promoted the split as a move that would stir investor interest and create more value for shareholders.

White was right on target. On Jan. 2, 2013, AbbVie (NYSE: ABBV) opened its doors as a new publicly traded company. The biotech's products included blockbuster drug Humira and a strong pipeline. Here's how shares of AbbVie and Abbott have performed since then:

ABT data by YCharts .

Could Pfizer have achieved these kind of results with a PfiVie spin-off? Maybe not. After all, Pfizer doesn't have a drug that matches the superstar status of Humira. However, the company's innovative health segment includes blockbuster drug Lyrica IH, which posted an impressive 19% year-over-year growth rate in the first half of 2016. Several other drugs are rising stars, with Ibrance and Xeljanz leading the way.

Acquisitions are also bolstering Pfizer's innovative health lineup. The buyout of Anacor Pharmaceuticals in June added promising atopic dermatitis drug crisaborole. Pfizer's recently completed acquisition of Medivation gives it prostate cancer drug Xtandi.

Meanwhile, Pfizer's essential health unit includes plenty of drugs with declining sales like Lipitor and Zoloft. Last year's acquisition of Hospira added injectable drugs and biosimilars, which give the essential health business segment a pathway to growth.

The right call?

Pfizer says that it can drive value more effectively for shareholders by remaining intact. By operating two units within the same corporate umbrella, Pfizer is "already accessing many of the potential benefits of a split -- sharper focus, increased accountability, and a greater sense of urgency," says CEO Ian Read.

I don't doubt that Read is correct. However, I wonder if the company might have underappreciated the psychological boost a split could have had in the investor community. Pfizer has been something of a "blah" stock for a while now. I'm just not sure that's going to change significantly without a major splash like a split could have provided.

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Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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