Jazz Pharmaceuticals (NAS: JAZZ) looks to be taking a clue from its big pharma brethren, slimming down and becoming more focused.

Just on a slightly smaller scale.

While Pfizer (NYS: PFE) sold off its nutrition business for nearly $12 billion and Bristol-Myers Squibb (NYS: BMY) spun out Mead Johnson Nutrition (NYS: MJN) -- now a $15 billion company -- Jazz is slimming down, selling its women's health business for $95 million to Meda.


Jazz obtained a portfolio of women's health products in its acquisition of Azur Pharma, which it closed at the beginning of the year. The move focuses Jazz on its central-nervous-system products including narcolepsy treatment Xyrem and Luvox CR, which treats obsessive compulsive disorder -- as well as the products it got from Azur, including chronic pain treatment Prialt and FazaClo for treating schizophrenia. The company also markets oncology and critical-care products that it acquired when it bought EUSA Pharma this year.

For spec pharmas like Jazz, the key to success isn't hitting a home run with a blockbuster; its top selling drug, Xyrem, brought in less than $90 million in the second quarter, and sales of the rest of its drugs were considerably lower than that. Instead, spec pharmas have to turn a profit by minimizing expenses. Specializing in one or two areas maximizes the use of its sales reps since they can hock multiple drugs for the different diseases that the doctor treats.

Women's health is an awfully large specialty, so it seems like a good move to divest out of the six products. Last year, their combined sales were only $30 million.

Selling the division for a little over three times sales isn't a great price for a typical drugmaker, but these are likely products that aren't growing very quickly. And Jazz should be able to use the $90 million to create a larger profit than its getting from the women's health business by licensing additional products that fit into its current focus.

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The article Does This Pharma Deal Make Sense? originally appeared on Fool.com.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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