By Janelle Weaver

It was less than two years ago that the pharmaceutical giant Pfizer made headlines when it acquired the drugmaker Wyeth for a cool $68 billion. But these days Pfizer is generating a buzz for mulling over a different way to bump up its bottom line: shedding some of its nonpharmaceutical divisions. The potential plan has not won over all industry analysts, some of whom say that scooping up smaller companies with strong drug pipelines—particularly those in developing markets—still offers the best path to profits.

The takeover of Genzyme by Sanofi this past spring was only the latest in a string of companies combining, going back to the Merck-Schering-Plough and Roche-Genentech fusions in 2009. These strategic rearrangements of industry titans have largely been a response to looming patent losses. Over the next two years, patents will expire on more than a dozen blockbuster drugs with combined annual sales of about $50 billion, according to the research organization EvaluatePharma in London.

Notably, New York–based Pfizer will bear the brunt of the so-called ‘patent cliff’ this year, when it loses its exclusivity rights for the cholesterol fighter Lipitor (atorvastatin)—the best-selling medication in the US—and the antacid Protonix (pantoprazole). More than two thirds of the company’s portfolio—worth more than $35 billion—will be at risk in the next three years owing to patent expirations, according to EvaluatePharma.

The company could increase its profits by becoming a leaner machine and focusing on neuroscience, vaccines and other core therapeutic areas with the greatest growth potential according to David Amsellem, a New York–based analyst with Piper Jaffray. He cites Sanofi’s decision to sell its dermatology business to focus on high-growth areas as an example of this type of strategy. “You’re going to see these kinds of transactions become increasingly common,” says Amsellem.

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