Reckitt Benckiser set for at least £2bn in heroin treatment sell-off
Reckitt Benckiser chief executive Rakesh Kapoor today hung a For Sale sign above the Cillit Bang and Dettol-maker’s treatment for heroin addiction, with analysts predicting at least a £2 billion price tag.
The Suboxone heroin replacement product has for decades been the treatment of choice for US doctors trying to wean addicts off the killer drug. But its patent has now expired and cheap generic copycats are rapidly eating into the market.
Now Kapoor has launched a review of the future of the business, which is likely to lead to it being sold. Reckitt will continue to own its consumer medicines such as Nurofen, Gaviscon and Strepsils.
Analysts said there would be no shortage of bidders in the global pharmaceuticals industry who have expertise at managing medicines that have come off patent. Reckitt has tried to deal with the issue by creating a new format for the medicine — an impregnated film that users put under their tongue.
Reckitt claims this patent is safer than the previous tablet version as some addicts have been dissolving the tablets and injecting them. However, generic tablets remain popular among price-conscious US healthcare providers and Reckitt’s share of the market has fallen to 68%.
Reckitt advisers seeking bidders will promote the idea of looking for growth outside the US, where Suboxone has not made many inroads, although the company admits it continued to expect long-term erosion of the film’s share of the overall market. Shares in Reckitt jumped 5% on the news, gaining 231p to 4731p. “Rakesh has always been clear: the focus [of Reckitt] will be on where the positive rather than the negative news is,” said Oriel Securities analyst Chris Wickham.
The company would not comment on whether the proceeds would be returned to shareholders or invested in more acquisitions.
The share price gain was also due to Reckitt issuing a strong update on trading in the past quarter, shrugging off concerns among rival consumer goods companies like Unilever about slowing growth in emerging markets. Stripping out new product launches, revenues are growing at 5%, thanks to the company’s focus on health and hygiene products in those regions.
With the exception of Southern Europe all European regions were now growing, with Scholl footcare faring particularly well and only partly offset by poor sales of Airwick amid stiff competition.
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