Reckitt Benckiser to spin off pharmaceutical business
- Within the next 12 months, Reckitt Benckiser (RB) will spin off its pharmaceutical division, RB Pharmaceuticals.
- The remaining core company will focus on consumer health and hygiene.
- Reckitt Benckiser managers have noted that the company’s second-quarter growth rate could have been higher without the pharma division (4% instead of 3%)---and suggest that separating pharma out will increase growth in the core company.
Reckitt Benckiser’s CEO, Rakesh Kapoor, would like to focus RB’s main business activities around consumer health and hygiene. It is not clear whether RB will retain a stake in the spinoff, but it is clear that RB’s consumer health business has become an increasingly important part of revenue generation. The consumer health business is growing, in part because of acquisitions as well as new products. In 2005, consumer health business generated 5% of the revenues, a figure that has risen to more than one-third of revenues.
The pharma division has revenues of $1.3 billion, most of which came from sales of Suboxone (buprenophone/nalaxone).Sales of Suboxone, for the treatment of opioid addition, have slowed due to generic competition. In 2010, RB adopted a film-based delivery system using PharmFilm technology from US-based MonoSol Rx. Currently, Suboxone has approximately 68% of the market, but worldwide sales have slipped.
Although there does not seem to by any interested buyer for RB Pharmaceuticals at the moment, the company has two new pharmaceutical projects under development. According to estimates from Deutsche Bank analysts, the company is worth close to $5 billion.