Boots ready to sell off prescription drug arm

BOOTS, the stores and drugs group, is prepared to sell or shut down its prescription pharmaceuticals arm in the wake of last week's Manoplax disaster, which has cost pounds 155m in wasted research and other investment.

Senior Boots managers, advised by the US management consultancy Marikon, are putting the business under the microscope and will dispose of what is sellable, and close the rest, unless they are convinced that it will generate long- term value for shareholders.

The warts-and-all examination is expected to take months, but the deadline for a decision is thought to be in time for the interim results, due in November.

The business, Boots Pharmaceuticals, employs 7,800 people, including 2,200 in the UK. It has a large research team, two sales forces supplying GPs and hospitals, and production employees in plants at Nottingham and at Cramlington in Northumberland.

Alastair Eperon, director of corporate affairs at Boots, said: 'If the process of analysis of this business demonstrates that in the long term it's not going to be value-generating for shareholders, then we have to consider those options (disposal or closure).' His comments appear to signal a significant shift from earlier in the week when Boots said it was 'totally committed' to the business.

Sir James Blyth, chief executive, has to weigh up whether to continue to devote heavy capital expenditure to research and develop new drugs, a highly risky activity at which Boots, like Fisons, has had little recent success.

A team under David Thompson, the finance director, is putting each operating business under scrutiny. An earlier examination of Sephora, its poorly performing French health and beauty business, led to its disposal last week.

Last week Boots was forced to withdraw Manoplax, its drug for congestive heart failure, just months after launching it in the UK and US. Research showed it led to more hospital admissions, and that in larger dosages it hastened death. It was a bitter blow for Boots Pharmaceuticals, which has no other prescription drugs still under patent in the UK, and none likely to reach commercial exploitation for several more years.

Boots has already paved the way for a disposal of Boots Pharmaceuticals by separating it from its two other drug businesses, Boots Healthcare International and Boots Contract Manufacturing. BHI makes products which can be sold without prescription, such as Strepsils. BCM manufactures on behalf of third parties. It is thought that these two businesses would be retained, whatever the fate of Boots Pharmaceuticals. Together the three made operating profits of about pounds 130m last year. For the first time Boots plans to split out the profits of Boots Pharmaceuticals at its interim results.

Boots Pharmaceuticals' biggest sellers are Synthroid, a treatment for thyroid deficiency, with sales of pounds 124m, and Brufen and Froben with sales of pounds 65m and pounds 40m respectively.

These brands might attract bidders among the world's pharmaceutical companies, but the shortage of blockbuster drugs in the pipeline would depress the asking price. Prescription drug companies have plunged in value this year.

A disposal of the business would threaten jobs. Buyers would be more interested in the future income streams of existing products than the business's research and sales teams and infrastructure.

Boots is due to meet City analysts tomorrow to present details of its analysis of its 11 operating businesses. Do It All, its loss-making DIY retailing joint venture with WH Smith, has already undergone the treatment. Boots believes it can succeed in the long term, despite its horrendous losses.

Robin Gilbert, analyst with Panmure Gordon, commented: 'Boots Pharmaceuticals don't have a very strong position. It's difficult to believe they once bid for Glaxo.'

Manoplax heartache, pages 6-7

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
News
A poster by Durham Constabulary
news
Arts and Entertainment
books New York Times slammed over summer reading list
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine