Merck & Co., Inc. (NYSE:MRK) is mulling over its options as it continues to strategize about how best to separate its consumer and animal health businesses. Regardless of what path the company decides to take, the company is expected to complete action towards separation of the two units by the end of 2014, Reuters reports.
The company is trying to “determine the most value-creating option for each” but, “could reach different decisions about the two businesses,” Merck said in a statement released early Monday ahead of an investor conference the same day. The statement leaves much to speculation about which business might get the ax, or be sold in favor of beefing up resources for the other.
As previously reported, Merck has been entertaining the idea of trading its over-the-counter products unit for Novartis AG‘s (NYSE:NVS) animal health and human vaccines business. The trade could potentially be an earnings boost for both companies, but there’s been some hesitancy since comparing the value and relative attraction of the two units has proved difficult.
The will to separate the company’s different businesses is part of a plan Merck unveiled in October of last year and which was designed to annual operating costs by $2.5 billion by the end of 2015 with approximately $1 billion realized at the end of 2013.
Merck isn’t the only company in the industry to see the benefit in separating and shedding units in order to focus on core strengths; the strategy has become a trend in the pharmaceutical industry, with several other companies, including Pfizer Inc., Bristol-Myers Squibb Co., and Abbott Laboratories all selling businesses which didn’t align with their primary areas of focus in the past two years, according to Bloomberg.
Merck’s animal health business is currently the second biggest in the industry; it brought in approximately $3.40 billion in in sales in 2012. Merck’s shares were trading at $49.96 before the bell Monday, according to Reuters, a figure which is up from the stock’s Friday closing price of $49.86.