Pfizer yesterday filed for an initial public offering (IPO) for its animal health unit Zoetis Inc, as part of its plan to pay off debt and focus on its core business.

However, it will not relinquish its controlling interest in Zoetis, even after the IPO.

Under a regulatory filing with the US Securities and Exchange Commission, Pfizer,  the world's largest drug maker, will offer up to a 20-per cent stake in Zoetis in the IPO scheduled for the first half of 2013,  did not reveal detail the size of the offering or the anticipated share price.

Zoetis, which sells medicines, vaccines and other products for livestock as well as for pets, could have a market value of nearly $18 billion, according to analysts, which would value the 20 per cent stake offered in the IPO up to $3.6 billion.

New York-based Pfizer said it will exchange Class A common shares to its debt holders, who will then opt to sell the stock on the open market, but retain a 100-per cent interest in Zoetis through Class B shares that it may give to shareholders as dividend payouts.
                       
Pfizer and Zoetis will not receive any proceeds from the IPO. Both Class A and Class B shareholders have one vote per share on all matters except the election of directors where Class B shareholders have 10 voting rights.

In July 2011, Pfizer said that it was exploring alternatives, including a possible sale of its animal health and nutrition businesses, in the next two years in order to focus on expanding its low-cost pharmaceuticals unit. (See: Pfizer plans to sell animal health and nutrition businesses)

Pfizer had hired Morgan Stanley and Centerview Partners to evaluate the businesses and complete any transactions in 12 to 24 months.

Last year it sold its Capsugel unit to private equity firm KKR & Co for nearly $2.38 billion, and in April this year it sold its nutrition business to Swiss food giant Nestle SA for $11.85 billion (See: Nestlé to acquire Pfizer's nutrition business for $11.85 billion).

Zoetis, the world's largest animal health company, is a leader in the discovery, development, manufacture and commercialisation of products, including vaccines, medicines, diagnostics and genetic tests to prevent and treat disease in livestock and companion animals.

The company sells more than 300 product lines to livestock producers and veterinarians, and has operations in over 60 countries, an extensive research and development network with major research centre on four continents and strong market positions across several geographic regions, including the US, Europe, Africa and the Middle East, Canada and Latin America, and Asia-Pacific.

Around 66 per cent of its revenue come from products used to prevent or treat conditions in livestock, with the remaining one-third coming from pet-care treatments and vaccines.

Zoetis, which competes with the animal health businesses of Merck & Co, Eli Lilly and Co, Sanofi, and Novartis, holds a 19-per cent share of an estimated $22-billion global market and contributed $4.2 billion to Pfizer's revenues in 2011.

In December 2010, it acquired veterinary diagnostics company Synbiotics Corp, in a bid to enter into the $735 million global immunodiagnostics market.

Pfizer animal health's entry into veterinary diagnostics follows a series of moves it made in 2010 to become a leader in the animal health industry, which includes expanding into the rapidly growing aquaculture segment with the acquisition of Microtek International and entry into animal health generic medicines with the acquisition of Vetnex in India.