Long plagued by slumping sales for some of its top products, Reckitt Benckiser said this summer it would spin off its pharma unit to shed the extra weight. Now, the British consumer goods company is moving forward with its slimdown regimen, planning to list the addiction control-focused pharma unit on the London Stock exchange before the end of the year.
The new spinoff, dubbed "Indivior," will be fully separate from Reckitt, and investors will receive one share in the new company for every Reckitt share they owned, the company said in a statement. Shareholders will convene Dec. 11 to approve the spinoff, and if all goes according to plan, shares in the new company will begin trading on Dec. 23.
Shaun Thaxter will head up the new pharma business, and Howard Pien, a financial adviser overseeing the deal, will lead Indivior's board. Analysts estimate the company's value at between £1.1 billion and more than £4.4 billion, but recent figures put the new business in the ballpark of around £2 billion to £2.5 billion, The Financial Times reports.
The spinoff could help Reckitt achieve its OTC ambitions, as it aims to become a "global leader" in consumer health and hygiene. In March, the company snatched up Johnson & Johnson's ($JNJ) K-Y brand of sexual products, complementing its Durex condom business, but in April dropped a bid for Merck's ($MRK) consumer health unit.
But Thaxter will have his work cut out for him, as Reckitt continues to deal with slumping sales and generic competition for off-patent opioid addiction treatment Suboxone. Analysts expect the company's drug revenues to drop by about 12.5% to £680 million this year and operating profits to fall to £345 million, according to the FT.
Still, Invidior's new CEO remains optimistic that the company can bounce back as demand for anti-addiction therapies grows worldwide. An estimated 5 million people in the U.S. have some form of opioid dependency, the FT article notes, and of these, only 2 million have been diagnosed and 750,000 treated.
"In the past, people have tended to look at people who suffer from addiction as bad people who have made bad choices," Thaxter told the FT. "Increasingly it has become understood as an everyday problem where patients need help."