Reckitt Benckiser, the consumer goods giant that makes Nurofen and Dettol, plans to spin off its US-based pharmaceutical business.
The FTSE 100 firm has announced that RB Pharmaceuticals will be floated on the London stock exchange as a standalone company.
RBP, based in the US state of Virginia, generates nearly all its revenues from Suboxone, a heroin addiction treatment, but revenues have been shrinking as cheaper generic copies have come onto the market. Analysts have valued RBP at up to £2.9bn or £4 a share, but say that information gaps prevent them from getting the full picture.
Reckitt Benckiser's chief executive Rakesh Kapoor has been keen to focus the company on its 19 "powerbrands", which include Durex condoms and Finish dishwasher tablets. The spin-off of the "non core" RBP business was flagged last October when the company announced a strategic review of the shrinking unit. The business once accounted for around one fifth of Reckitt Benckiser's profits, but takings have dived since Suboxone lost its US patent protection.
Kapoor said he expected the listing of RBP to take place over the next 12 months, allowing the rest of the company "to focus on its core strategy to be a global leader in consumer health and hygiene".
The decision to spin off the pharmaceuticals division, which now accounts for 7% of revenues, came as the company announced a 4% rise in like-for-like sales in the first half of 2014, excluding the Suboxone business. Profits have risen 16% to just over £1bn.
The change at Reckitt Benckiser comes as GlaxoSmithKline, the UK's largest pharmaceutical company, signalled a possible spin-off of its consumer health division, a £6bn business that includes Panadol painkillers and Corsodyl mouthwash.
Sir Andrew Witty, GSK's chief executive, said he was open to the idea, although stressed it was not likely in the short-term.
In an interview with the Financial Times he said GSK had the option to spin off its consumer healthcare business if a time came when it offered more value as a standalone company. But he also made a case for keeping the consumer business attached to the broader group because of links between pharmaceuticals and over-the-counter drugs, particularly in emerging markets where categories are less clear cut.
GSK has been embroiled in a corruption scandal in China that has seen its former head of operations in the country charged with bribery. Witty repeated previous statements that the company had a zero-tolerance approach to wrong-doing, suggesting that whistle-blowing was a common feature of the industry. "Any company that doesn't get whistleblower letters isn't looking hard enough... If you are not getting anything: don't dream. It can't be perfect 100 per cent of the time."
