Reckitt hires a pharma chairman, stoking talk of a spinoff

Nothing makes analysts happier these days than a prospective spinoff. And with a new chairman stepping in to help conduct the ongoing strategic review of the struggling Reckitt Benckiser pharma unit, some say one could be on the way for the British group.

Reckitt Wednesday announced the appointment of new pharma chairman Howard Pien, who will help decide the ailing division's fate, Reuters reports. Eyes have been on the unit, worth an estimated £1.5 billion ($2.5 billion), since October, when CEO Rakesh Kapoor hinted it could end up on the block. Now, however, the new hire has some thinking Reckitt could be pursuing a different strategy

"The appointment of a chairman of this business might be taken as implying a spin-out is a serious possibility," Credit Suisse analysts wrote in a research note seen by Reuters.

Things have been up in the air for the pharma unit ever since generic competition hit for Suboxone, the opioid addiction drug on which its business depends. Like many pharma companies, Reckitt last year attempted to block would-be copycats, but the FDA rejected its petition. Instead, Reckitt voluntarily yanked Suboxone tablets from the market, restricting sales to its film-strip format.

Since then, pharma has been a drag on sales, with the unit's net revenue declining 8% in 2013; Q4 alone saw an 18% drop, Reckitt said Wednesday, following up a 16% slide in Q3. Those kinds of numbers have led the company to its present review.

Analysts and investors alike have recently cheered a wave of similar assessments across the pharma world, inspired by Pfizer's ($PFE) successful divestments. Drug giants such as Novartis ($NVS) and Merck ($MRK) are evaluating units one by one; Reckitt itself is said to be in the mix of buyers, should Merck's consumer healthcare unit come up for sale. Most recently, Goldman Sachs analyst Jami Rubin pushed for "bold steps" from generics leader Teva ($TEVA), which is foundering amid leadership changes, controversial cost cuts and an impending loss of exclusivity on its top seller.

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