Reckitt Benckiser to spin-off heroin treatment drug in £3bn deal
RBP, based in the United States, makes up around 7 per cent of RB’s sales
Monday 28 July 2014
Reckitt Benckiser,the maker of Nurofen tablets and Durex condoms, has announced plans to float its £3 billion heroin addiction treatment arm.
Reckitt Benckiser Pharmaceuticals (RBP) owns the Suboxone heroin addiction treatment. Its parent, Reckitt Benckiser, now called RB, said on Monday it would spin off the group within the next year to list as a separate entity – valued at around £3bn.
RBP, based in the United States, makes up around 7 per cent of RB’s sales. It has been under pressure after the launch of rival generic drugs and has sought to develop other drugs to offset the loss of sales.
It launched a film version of Suboxone, with patent protection until 2030, to replace the tablet version for which it began to lose patent protection in 2009. It has also created a nasal opioid overdose antidote, is developing an alcohol addiction drug called arbaclofen placarbil, and will look at treatments for cocaine overdose.
Shaun Thaxter, RBP’s chief executive, said the group has made good progress on its “pipeline, licensing and geographic opportunities” and plans to become a “global leader in the treatment of addiction”.
RB, the group behind Dettol disinfectant and Finish dishwasher tablets, announced the strategic review of RBP last year and plans to focus on its core consumer health, hygiene and home brands. Its chief executive, Rakesh Kapoor, said the separation of the group will “deliver significant long-term value creation”. He did not rule out a trade sale, which remains an option, alongside the plans to list, and he said RB may keep a stake in the new entity once it has listed. The new group will become a UK resident and registered entity.
The market reacted well to the news, though analysts at Jefferies called the news “paradise postponed” and “an anti-climax”, saying it had hoped for more “concrete plans”.
However, the Cillit Bang-to-Vanish giant also reported half-year results in line with expectations and the shares jumped 135p to 5,205p. Currency fluctuations hit the company but it said cost cutting had enabled it to meet targets.
Mr Kapoor said: “In the first half, despite currency headwinds, we managed 60 basis points gross margin improvement. … There is always juice in the lemon – you can always squeeze some out.”
It reported a 4 per cent rise in comparable sales in the first half, excluding the Suboxone business, and operating profit jumped 16 per cent to just over £1bn with second-quarter sales growth of 3 per cent.
Its consumer health business was particularly strong, with sales up 10 per cent; but its home-cleaning brands were weak, with organic growth down 1 per cent in the second quarter owing to “tougher market conditions”. RB pointed to some weak spots including its Airwick air freshener brand. It has been improving its Vanish cleaning label.
Regionally, the group improved in Russia, the Middle East and Africa, where sales were up 7 per cent, compared with analyst expectations of about 4 per cent.
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