That day will come quickly, so it's never too early to consider the impact for Pfizer -- and Zoetis --shareholders. Here are three things for investors to watch.
1. Which end of the leash do you want?
Pfizer's IPO registration indicated that the company will sell up to 20% of Zoetis. That means that Pfizer seems likely to hold Zoetis on a pretty tight leash, at least at the start.
There could be an interesting decision for current Pfizer shareholders to make. The company may allow investors to swap a portion of their Pfizer shares for Zoetis shares. A decision on this hasn't been finalized, but it raises the question of which company would be the better pick.
A good case can be made for Zoetis over Pfizer. New animal pharmaceuticals can typically be brought to market more quickly and less expensively than those for humans. Concerns about how much government programs or insurance companies will reimburse are minimal. And Zoetis won't have the loss of patent exclusivity on its best-selling drug to worry about.
Current Pfizer shareholders should keep a close watch on their alternatives with the Zoetis IPO. The potential to swap out shares might be one to seriously consider.
2. How wild will the call of the wild be?
Merely mentioning the term "IPO" brings the animal out in some investors. Their hair grows longer, and their teeth become sharper. They can't wait to pounce on that red meat Wall Street refers to as an IPO. To some, IPOs are tantamount to a call of the wild.
The Zoetis IPO should attract plenty of investor interest. Pfizer's animal health unit is solid, with 2011 revenue of $4.2 billion. That amount increased by 17% compared with the prior year.
Prospective Zoetis investors should look out, though, for the pricing on the new company's shares. Several analysts value the business around $15 billion. Watch the IPO share price to make sure that it doesn't peg a ridiculously higher valuation to the new company. Sometimes, the call of the wild can be too wild.
3. Grazing in new pastures?
Pfizer currently claims a 19% share of the animal pharmaceuticals market. That ranks the company as the largest in the field.
Other big pharmaceutical companies also compete in the animal health market. The animal health business segment of Merck
What could be interesting to see is if Zoetis expands its business to compete more heavily in animal diagnostics. While Pfizer maintains a presence in animal diagnostics, IDEXX Laboratories
It remains to be seen if the sole focus on animal health will result in Zoetis grazing in new pastures or perhaps gobbling up a smaller player. Watch for any signs that the new company plans to follow this path of expansion. Such a move could mean faster growth.
Wait, watch and win
Zoetis seems positioned to be a good choice for investors when it goes public in 2013. The animal health business has proven to be a profitable one for Pfizer through the years.
Investors should win through this spin-off. Pfizer gets to raise more cash to help with its dilemma of funding R&D to replace cash-cow drugs losing patent protection as the revenue from those drugs drops off. That could improve the prospects for its stock.
Current Pfizer shareholders also will gain ownership in a promising new public entity. With any luck, they will even have the alternative of trading Pfizer shares for Zoetis shares. We don't know yet if that would be the best thing to do, but having options is always nice. For now, investors can wait, watch, and prepare to win.
If you like hunting for potential big winners like the Zoetis IPO, check out the Fool's new free report titled "Middle-Class Millionaire-Makers: 3 Stocks Wall Street's Too Rich to Notice." Get your free copy now!