Reckitt to Start Strategic Review of Pharmaceutical UnitMatthew Boyle
Reckitt Benckiser Group Plc, the maker of Nurofen painkillers and Durex condoms, said it will start a strategic review of its pharmaceutical unit following calls from analysts for it to exit the business.
The review will take “some time” and Reckitt Benckiser plans to update investors during 2014, the Slough, England-based company said today in a statement. It also raised its full-year revenue guidance, sending the shares up as much as 5.1 percent.
Analysts including Andrew Wood at Sanford C. Bernstein have advocated a sale of the pharmaceutical unit, whose main product is the opiod-dependency drug Suboxone. The division’s sales fell 16 percent at constant exchange rates in the third quarter, Reckitt Benckiser said today, hurt by a decision to stop making tablet versions of Suboxone amid increased generic competition. Since 2010, the drug has been sold in a film-strip format.
“We’ve always said it’s a fantastic business, but it’s not core to the company,” Chief Executive Officer Rakesh Kapoor said in a telephone interview. “I’ve said that several months after the entry of generics we will confirm the resiliency of the film business and the impact of generics. We are now in that phase. Nothing is ruled out.”
The review will consider “all options for maximizing value for our shareholders,” Kapoor said in the statement.
Reckitt Benckiser rose 4.6 percent to 4,705 pence at 8:17 a.m. in London. The stock has gained 21 percent this year.
The company said it expects full-year revenue to grow at least 6 percent, including acquisitions and divestments and excluding results from the pharma unit. Non-pharmaceutical sales advanced 5 percent on a comparable basis in the third quarter. The median estimate of 10 analysts was for a 4.7 percent gain.
The company had previously expected non-pharmaceutical revenue growth at the upper end of 5 percent to 6 percent in 2013, including acquisitions and disposals, and stable operating profit margins.