Pfizer has confirmed it is exploring strategic alternatives for its animal health and nutrition businesses.

The US giant is considering options that may include "a full or partial separation of each of these businesses" through a spin-off, sale or other transaction. The strategy switch is designed to sharpen Pfizer's focus on its established products and consumer healthcare businesses.

The animal health business brought in revenues of $3.6 billion last year through sales of products such as vaccines, medicines, diagnostics and genetic tests. The nutrition unit, acquired through the purchase of Wyeth and specialising in baby food and formula, contributed $1.9 billion.

Pfizer intends to concentrate  more on the emerging markets, in which " the fastest-growing segment is off-patent medicines and their generic equivalents". The firm believes it is "well positioned to capture the opportunities being created by the demographics and rising economic power within these markets" It also sees consumer healthcare as an area of future growth.

Attractive but non-core businesses

Chief executive Ian Read said that both animal health and nutrition are strong divisions "with attractive customer bases and solid fundamentals, but distinct enough from our core businesses that their value may be best maximised outside the company". He added that the plans are "driven by the potential to create value for shareholders and enable Pfizer to become a more focused organisation, better positioned for future success".

JP Morgan will advise on the animal health business, while Morgan Stanley and Centerview Partners have been hired to help with the nutrition unit.  Pfizer said it does not anticipate making any further announcements regarding strategic alternatives until "sometime in 2012".

The announcement came as no great surprise, given that Mr Read said earlier this year that he was looking to radically change the structure of the company. In April, Pfizer agreed to sell Capsugel, its hard-capsules business, to an affiliate of investment firm Kohlberg Kravis Roberts (KKR) for $2.38 billion.

Following the announcement, Sanford Bernstein analyst Tim Anderson, issued a note saying that "our best guess is that animal health could be a spin-out, a tax-free transaction like Bristol-Myers Squibb did with Mead Johnson in 2009, and that nutrition could be sold”. At first glance, it seems investors are not too pleased about the plans and Pfizer shares ended the day down nearly 2.7% at $20.23.